Destinations

The U.S. travel industry will fall alongside the economy should it head off the “fiscal cliff”

Excerpt from HotelsMag.com

Nov 16, 2012 12:31 am

Skift Take

Spending on business travel will initially drop by $20 billion if the U.S. enters a recession, but could bounce back from lower interest rates and reduced deficits over the long run.

— Samantha Shankman

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If the U.S. economy falls over the “fiscal cliff,” it would have an immediate and severe impact on U.S. business travel, according to new research from the Global Business Travel Association Foundation. The new report analyzes the business travel impact of expiring tax cuts and automatic spending reductions – commonly referred to as the “fiscal cliff” – as well as the longer-term ramifications of leaving current levels of deficit spending unaddressed.

Fiscal cliff scenario: If the fiscal cliff occurs, the U.S. economy would enter a recession. This would lead to a total loss of US$20 billion in spending on U.S. business travel over the next nine quarters – a 2.5% decline – and a reduction of 32 million business trips.

No fiscal restraint scenario: If all provisions of the fiscal cliff are eliminated or delayed indefinitely, business travel would experience more robust trip volume and spending as a result of stimulus from lower tax rates and continued government spending.

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