INTERNATIONAL. Business travel, depressed for more than two years, is starting to rebound, according to the London-based Centre of Economics and Business Research (CEBR). And stronger growth is predicted for 2004.
The report forecasts that business travel volumes in the US should increase by +3.6% in 2004 after declining in three out of the past four years. European business travel volumes are likely to grow by +2.7% in 2004. The largest growth is forecast for Asia, where after a SARS-fuelled -7% decline in 2003, business travel should improve by +19.4% in 2004.
The report attributed the business travel downturn over the past three years to consecutive blows, including the worldwide set back on corporate spending (particularly on controllable corporate travel expenses), 11 September, the Iraq War and SARS.
CEBR surveys of US corporate travel purchasers indicate that since 2000 they have managed to negotiate down their prices for business travel by -20%.
However, the CEBR said it believes the underlying need for face-to-face contact in meetings is growing as globalisation gathers momentum. Business meetings generally cannot be replaced by the Internet and video-conferencing. “Maintaining and enhancing business relations both in-house and with customers and suppliers needs a regular dose of direct contact,” said the report.
It expects unit costs for business travel to continue to drop in 2004 and 2003, as prices remain under pressure. “As costs of manufacturing and back offices plummet, business travel spending becomes ever more exposed,” concluded the report.
Note: Forecasts are based on a CEBR report on the prospects for business travel worldwide presented to the Dublin conference of the Association of Corporate Travel Executives on 14 October.
