The travel industry has performed very well in the last 10 years, but with strong performance now, comes a chance of decline later. A future recession will have an impact on business travel and some companies have already taken notice.
Changes in the Economy
Economies around the world are softening and there is uncertainty concerning trade relations, currency issues and political headwinds. The U.S. Federal reserve just cut interest rates and some say this is being done only to prepare for a recession that is soon to come. According to a recent GBTA (Global Business Travel Association) study, “Escalation of trade wars would be the biggest downside risk to our global price forecast. Spillover effects on consumer and business confidence could further erode economic and corporate performance in key global business travel markets, leading to additional downward pressure on business travel demand and more benign travel price increase in 2020.”
The Future Travel Market
Though challenges are ahead, there are still other sectors within the economy that are strong. Consumption, retail sales and earnings are high, all while the unemployment rate is at a very low level. As travel being one of the easiest controllable spends in business, many companies are scaling back business travel plans for the rest of the year, but there is a chance to rebound next year. The GBTA forecast estimates 3.1% growth this year and a 4.1% increase in 2020. By 2022 business travel spend should steadily increase to 6% and the business travel market should get back on track.
With the strong growth in travel, we are also seeing a modest increase in fares, with most regions expecting a 1-2% increase, with the exception of 3% in Latin America, and flares remaining flat throughout Europe.
Source: BCD Travel 2020 Industry Forecast