The business travel sector is still bullish on growth, even if financial markets have entered a state of uncertainty. So long as the economy continues to hum along, experts think everything will be fine.
With a lingering government shutdown affecting travel to and from the U.S., and economic headwinds in play following instability in global stock markets, there is some concern that global business travel growth will be affected in 2019.
The latest update from the Global Business Travel Association shows that its members are seeing a significant impact from the shutdown so far; half of those polled this week have seen canceled bookings and concerns from travelers about delays and the security situation. Two-thirds of the business travel professionals polled expect a deeper impact should the shutdown linger past the end of the week.
But how is the overall economic situation for business travel shaping up in 2019? Experts are still bullish on growth as global enterprise continues; what’s happening is seen as the usual turbulence from world affairs that routinely impacts the sector, not a major shift foreboding a future decline.
The U.S. Travel Association’s forward-looking data shows that fundamentals are strong, even if something anticipated could slow business travel growth this year. The group anticipates business travel will grow at a faster rate than leisure travel over the next six months,
“There’s a lot that could challenge business travel this year,” said David Huether, senior vice president of research, U.S. Travel Association. “That segment is all about confidence, which has been strong, but could quickly wane in the face of market volatility, the shutdown, trade tensions, and other uncertainty factors. That being said, the fundamentals are pretty good at the moment.”
American Express Global Business Travel’s annual Air Monitor report found that growth will slow slightly, but not enough to have a major impact on the sector. They still expect air routes to Asia to increase in number by three percent over the course of the year, leading to cheaper fares for business travelers should demand soften somewhat.
The U.S. State Department quietly adjusted its advisory last week to urge travelers to take care when visiting China. Despite this, it doesn’t seem like the advisory will keep U.S. business travelers from visiting China.
“Despite prompting significant client concern, the updated advisory has not meaningfully changed the overall travel situation,” said Brendan O’Reilly, an intelligence analyst for the Asia region at security firm WorldAware. “Keep in mind that the practice of ‘exit bans’ has apparently impacted a very small and specific sub-section of US nationals who face criminal or civil investigations in China, or whose immediate family members living abroad are wanted by Chinese authorities. I am not specifically aware of clients canceling trips or otherwise modifying their travel plans, although we have had many clients reach out for help in clarifying the issue.”
For now, demand remains strong for business travel from U.S. companies and this looks unlikely to change should the government shutdown continue. Further developments in U.S. negotiations with China, however, have the potential to change the situation for corporations that had planned to spend on travel this year.
The Skift Global Travel Economy Outlook 2019 from Skift Research found high optimism among corporations for the coming year in terms of their planned spending.
“Surveys of purchasing managers indicate that the demand environment remains healthy and that businesses continue to expand, though the pace of growth has slowed somewhat,” said Seth Borko, senior research analyst at Skift Research. “The greatest risk posed to business travel comes from changes in U.S. trade policy, which are only just starting to make themselves felt. Further escalation in the simmering U.S. trade conflict with China and other partners would have an outsized negative impact on business travel spending, 60 percent of which can be explained by trade volumes according to some studies.”
The Daily Newsletter
Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.
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Photo credit: An airport in Shanghai, China. mrhayata / Flickr