Travel executives often say uncertainty is bad news for business. Now one group is trying to show just how bad.
The Global Business Travel Association on Friday said it has developed an “uncertainty forecast” to highlight the impact of “mounting geopolitical uncertainty” on the economy.
“There is no question that uncertainty is bad for business travel and bad for the global economy,” executive director and chief operating officer Michael McCormick said in a blog post.
In the forecast, the association projects a $1.3 billion loss in overall travel-related spending this year in the United States from Europe and the Middle East (see chart below). That total includes hotels, food, rental cars, entertainment, and shopping that travelers would have done while here. It also factors in airfare that would have been spent within the U.S.
Another $943 million is expected to be lost on airfare that would have been purchased in Europe and the Middle East, $332 million of that for business-related travel.
The projection looks at anticipated lost inbound travel solely from those two regions at this point. While it includes leisure and business figures, GBTA also breaks out the business totals: A loss of nearly $250 million in travel-related spending in the U.S. is expected this year.
U.S. gross domestic product could take a $300 million hit, the forecast said, with 4,200 jobs potentially lost.
“This isn’t, from our perspective, about ideology, it’s not about which party or what administration is in office,” McCormick said. “This is about taking a look at a combined set of conditions and saying that the impact is real and it has a significant impact on not just the travel industry but the economy.”
The forecast follows a year full of disruptive news under President Donald Trump, including two now-paused or withdrawn attempts at banning travel from several Muslim-majority countries and a security measure forcing travelers coming to the U.S. from several countries in the Middle East and Africa to put laptops and tablets in checked bags. The UK followed suit with similar restrictions affecting a smaller number of airports.
“The earlier travel ban type of orders really set the stage for that uncertainty,” McCormick said in an interview. “It’s not any one action, it’s all of these combined effects over the last four or five months that are causing the concern.”
Awaiting Wider Laptop Ban
Now the travel industry waits to find out whether the U.S. will expand the ban from 10 airports in eight countries to all flights coming from Europe. Officials with the U.S. and European Union met to discuss the possible expansion on Wednesday.
In the blog post, McCormick wrote that the rumored expansion presents “yet another uncertainty factor.”
He said expanding the ban to European countries — and keeping business travelers from doing work on their devices while flying — could result in $900 million in lost productivity. And while the industry prioritizes safety, McCormick said the hope is that security concerns could be addressed with other methods such as more thorough screenings.
“While it is certainly different from the travel ban executive orders, and there is no doubt that the electronics ban is based on a clear security threat, it is the cumulative impact of anti-travel policies that leave the perception to many that the United States is closed for business,” he wrote. “It goes without saying that GBTA strongly supports all efforts keep our skies safe, but we encourage TSA to pursue alternative options to effectively reduce the risk of terrorism.”
Other business travel groups have also warned about the impact of expanding the laptop ban. In an email this week, Greeley Koch, executive director of the Association of Corporate Travel Executives, said he had been talking to buyers about whether they’re prepared for a wider ban. Some were planning to use video conferencing more, others were working with technology teams to safeguard data, and others still weren’t ready.
“We have been vocal in our response to an extended ban, as we believe economies around the world, including the U.S., are set up to lose—big time,” Koch wrote in the email. “This ban will severely hamper travel to the U.S. and elsewhere, and it hits us where it hurts the most: lost productivity for businesses and major disruptions to the airline, hotel and ground transportation industries. The lost revenues from tourism are also significant and cannot be ignored.”
With Numbers in Hand, a Plea
GBTA crunched numbers from sources including first-quarter ticketing data from the Airlines Reporting Corp., publicly available pricing data, and its own research and models to come up with loss estimates.
The group cautioned that there’s a longer-term threat to travel spending in the U.S. if companies plan business travel, events, and meetings outside the country in the future. A survey earlier this year showed that 45 percent of European members said they would be less wiling to plan meetings and events in the U.S. due to the travel ban.
McCormick said the association is taking its case to lawmakers and the administration to encourage more travel-friendly policies. Involving more industry stakeholders would be a good move, he said, as would expanding trusted traveler programs.
“Continuing to enact policies that discourage business travel will cause a rippling effect across the travel industry and the overall economy,” he wrote. “We urge the Trump Administration to consider the important lasting impact of business travel and enact policies going forward that preserve both our national security AND our economy for the future.”
|In millions of USD$ except Jobs||All Travel||Business Travel|
|2017 Q1||Full Year||2017Q1||Full Year|
|Lost Airfare in Country|
|Lost/Postponed Trip Spending in U.S.|
|U.S. Economic Impact in Lost GDP|
|Lost Jobs (in annual jobs)||4,300||24,200||800||4,250|
Source: Global Business Travel Association