Bad For Business

A newly released business travel forecast by the GBTA Foundation has confirmed that the U.S. presidential election is having an impact on business travel.

The GBTA BTI Outlook – United States 2016 Q3 forecast also found that along with the election, sluggish global expansion, low inflation, weak investment and choppy geopolitical conditions are also continuing to shackle business travel volume and spending growth.

The GBTA Foundation reports that total business travel volume is expected to advance 1.0% in 2016, while spending is projected to fall by 0.6%.

In 2017, GBTA predicts spending will increase 3.8% reaching $293.1 billion, although that will largely be driven by price inflation.

Three critical macro drivers of business travel are cited in the report as continuing to provide mixed signals.

These include:

• Business confidence – In general, indicators of management confidence remain weak, but narrowly positive suggesting a definitive lack of enthusiasm for the near-term outlook.
• Corporate Profits — After-tax profits fell for the fifth consecutive quarter in 2016 Q2, and although they appear poised to return to the plus side during the second half of 2016, expect the continuation of tighter expense controls, lethargic capital spending and constrained business travel growth for at least the rest of the year.
• International Trade — Weakness among key U.S. trading partners combined with a strong currency continues to plague export performance.

Indicators point to a better, but still-modest 2017 for the U.S. economy with 2.4% GDP growth.

American businesses are hiring, the labour market is doing well, consumer confidence is rising, consumption spending is robust and the housing sector is improving, yet capital equipment, bricks and mortar and business travel spending remain low.

Rising uncertainty and weak labor productivity are to blame, resulting in more caution and a wait-and-see attitude, particularly with decisions that have longer-term implications.

Michael W. McCormick, executive director and COO of GBTA, said: “Businesses are hiring and paying better wages, but business travel spending is stalled – something we rarely see happen.”

McCormick noted that: “The ongoing global uncertainty and added heartburn from a presidential election unlike any we have ever seen are causing many businesses to stay in a holding pattern, taking an extremely cautious wait-and-see approach bordering on paranoia.”

And he continued that: “This begs the question of whether many of these companies will be ready when growth does re-accelerate. To be prepared for lasting business growth, companies must be ready with the newest technologies, the most productive workforce and the critical customer relationships necessary to take full advantage.”

For more, go to http://www3.gbta.org/l/5572/2016-10-05/3zzcdp .