Comment: Business travel is up but challenges loom in 2012

Comment: Business travel is up but challenges loom in 2012

by Sujata Bhatia, Europe and Asia vice-president at American Express Business Insights

It’s no surprise for anyone working in the sector that business travellers are significant contributors to the travel industry.

Data from American Express Business Insights shows that this group makes up 34% of travellers in the UK and 35% in Europe. As such, business spending is an important indicator of the overall health of the sector.

During the global financial crisis of 2008 to 2009 there was a pronounced drop-off in business travel as companies cut their travel budgets in an effort to reduce costs.

This led to some discussion that a permanent shift in the way we do business was underway, with a move away from face-to-face meetings to be replaced with virtual communication.

However, business travel proved to be resilient, recovering strongly in the first half of the year.

While not yet back to pre-downturn levels of 2008, business spending on travel dropped off more slowly and rebounded more quickly than leisure travel.

In the UK this was largely driven by spending per trip, rather than the number of travellers.

Our data shows that in the first half of 2011 average spending per traveller increased by 7%. During the same period the number of business travellers increased by a more modest 2% year on year.

We also saw the growth in business travel largely benefit London, with other parts of the UK not performing as well.

In Europe we found that the growth from business travellers was also due to a rise in the average spend per traveller, which increased by 5% year-on-year in the first half of 2011. The number of travellers, however, remained flat. 

Further afield, the picture is more mixed. In the US, as in Europe, spending per traveller increased – in this case by 8%, but the number of travellers remained flat.

In Australia, the spend per traveller rose by 6%, whilst the number of business travellers declined by 3%, perhaps a reflection of the strong Australian dollar.

In India, both the spend per traveller and the number of travellers increased. Year-on-year spending has risen by 6% per traveller in the first half and the number of travellers increased by 7%.

Overall our analysis paints a moderately encouraging picture of the business travel sector.

However, as the year comes to an end, with the UK economy continuing to struggle and ongoing concerns about Europe, we know that some companies are once again looking very closely at budgets for non-essential travel.

Looking ahead to 2012, we will continue to keep a watchful eye on this crucial group and follow with interest whether the current economic challenges will have lasting effects on the travel industry and the way we do business.


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