GBTA BTI™ Outlook: Annual Global Report & ForecastC2%81... · 36 Global Business Travel:...

GBTA BTI™ Outlook: Annual Global Report & Forecast Prospects for Global Business Travel 2015-2019

July 2015

2 GBTA BTI™ Outlook – Annual Global Report & Forecast

© July 2015 GBTA Foundation. All Rights Reserved.

GBTA BTI™ Outlook – Annual Global Report & Forecast July 2015

Introduction: Business Travel Returns to Lead Global Growth .......................... 3 Research Challenge ............................................................................................................3 Approach and Data Sources ................................................................................................3 About Rockport Analytics ....................................................................................................5

Executive Summary: Business Travel Performance Mixed, but Accelerating ... 6

The Global Economy: Recovery Continues Improving Prospects for Business Travel ...................................................................................................................... 13

Global Overview and Issues Shaping Performance ............................................................ 13 Global Growth Will Gradually Rise and Return to Long Term Trend ................................... 25 Key Business Travel Markets Economic Highlights ............................................................. 28

U.S Growth to Slowly Accelerate .......................................................................................... 28 European Momentum Remains Positive but Growth Still Weak ......................................... 30 China Remains a Growth Leader But at Slightly Slower Rates ............................................. 32 India Takes its Place among the Movers and Shakers .......................................................... 34 Russia Backslides into Recession: Lower Oil and Sanctions Hammer Trade and Investment .............................................................................................................................................. 35

Top 15 Business Travel Markets: Economic Performance & Outlook Summary ................... 36

Global Business Travel: Developed Markets Regain Their Prominence on the World Stage ............................................................................................................. 37

Overview ......................................................................................................................... 37 Shifts in the Business Travel Landscape: Identifying Risks & Opportunities ........................ 38 Global Trade, Airline & Hotel Performance ....................................................................... 42 Business Travel Around the Globe .................................................................................... 45 GBTA BTI™ ....................................................................................................................... 52 Business Travel by Industry Sector .................................................................................... 54 A Look Back at Last Year’s Global GBTA BTI™ Outlook: How Did We Do? ........................... 57

Country Profiles: Business Travel Spending in the World’s Top Markets ....... 59

Appendix I: Summary of Spending Growth By Country ..................................... 77

Appendix II: Approach, Methodology, Data Sources, and Definitions .............. 79 Principal Data Sources ...................................................................................................... 79 Methodology & Approach ................................................................................................. 80 Definitions ....................................................................................................................... 81




Introduction: Business Travel Returns to Lead Global Growth

Research Challenge

Business travel is a term that encompasses many activities and purposes. Travel suppliers see it as a significant source of revenue and a primary market segment. Corporate management sees business travel as both a critical business input and a controllable expense. Travel managers view it as a resource optimization challenge. Informed policymakers see travel as a generator of jobs, income, and tax revenue. Finally, veteran road warriors see it as an important part of their jobs.

The activity of business travel lacked a comprehensive global description and set of metrics from which travel managers, suppliers, and facilitators could plan for the future. In 2009, the Global Business Travel Association (GBTA) Foundation embraced this challenge by producing the first-ever study of global business travel activity. The result was an exhaustive study of business travel spending, productivity, and growth that covered 72 countries across 48 industries over fifteen years, including a rolling 5-year projection. The analysis has been enhanced and updated each year since then.

Approach and Data Sources

For 2015, the GBTA Foundation and its research partner, Visa Inc., have once again updated the study, projections and companion database. Given the significant global economic and market challenges that remain some six years after the Great Recession, tracking economic progress and keeping a watchful eye on business travel performance remains paramount.

Rockport Analytics has built a report covering the demand side of the business travel market. Measures such as industry sales, business travel spending, and travel productivity have been developed from the business traveler backwards to the corporate sponsor and travel supplier. Moreover, our comprehensive definition of business travel includes all kinds of trips and trip purposes, as well as all categories of trip spending, not just those reimbursed by the organization. Most measures of business travel available in the market today originate from supply side sources (e.g. airline performance, hotel occupancy, rental car revenue, etc.). While certainly

The 2015 GBTA BTI™ Outlook – Annual Global Report and Forecast is an exhaustive study of business travel spending and growth covering 75 countries across 48 industries. Now in its sixth year, the report and companion database have become a critical planning reference throughout the industry.




critical to this analysis, these sources typically cannot easily distinguish between business and leisure trips.

The nature and detail of the business travel metrics contained in this report and its accompanying database are largely dictated by available data from both secondary and primary sources. Supplier-based information from airlines, hotels, and rental car companies has been reconciled with demand-side sources from governments, traveler research panels, and travel management companies in an effort to create the most comprehensive view of business travel. For a complete list of data sources, please see the appendix at the end of this document.

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What determines and drives business travel? There are eight distinguishing charac-teristics that influence the level and rate of growth of business travel in our analysis:

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Size of the economy –The level of general economic activity is paramount.

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Land mass, population, and business dispersion –Larger countries with widely dispersed populations require more travel to facilitate economic and business development.

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Industry mix –countries whose economies are dominated by sectors that are more travel-intense by nature will have greater amounts of business travel relative to jobs, output, or population.

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Technology and the productivity of business travel –Business travel is a material/service input to virtually every industry. Like other inputs, it is subject to gains/losses in productivity.

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Degree of export dominance –countries with large trade sectors (Brazil, Germany, Japan, Indonesia) will tend to engage in more international business travel. Countries where economic activity is dominated by consumption (U.S., India, U.K.) will be more prone to domestic business travel.

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Physical location –Countries that are far from their markets or suppliers will require more business travel to succeed.

Infrastructure development –Is the transportation and hospitality infrastructure sufficient for business travel to flourish

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Environmental, tax, security, and regulatory policy –Do governments help or hinder business travel?

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Business Travel Spending Tracks GDP and Global Sales

Nominal Global Sales 2014 @ USD $139.8 T

Source: International Monetary Fund, IHS Global Insight, Rockport Analytics

Global Business Travel Spending 2014 @ USD $1.2T

Nominal Global GDP 2014@ USD $77.3 T



GBTA BTI™ Outlook – Annual Global Report & Forecast

July 2015

Our view of the contribution of business travel to each country-sector combination has been established by analyzing trends in the business travel “purchasing” behavior of 48 sectors across 75 countries over a period of 15 years. By modeling trends in the level of business travel spending per dollar of industry sales (a measure of business travel productivity) over time, we are able to extend these factors into the future. The combination of industry sales (macroeconomic environment) projections and trends in business travel spending per dollar (business travel intensity & productivity) are a key factor in generating the resulting forecasts of business travel spending.

Thanks to our research partner, Visa, Inc., we also have the benefit of more frequent (quarterly or semiannually) and in-depth analysis of ten of the largest business travel markets to incorporate into this analysis and overlay into the global companion database1

About Rockport Analytics

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Rockport Analytics capabilities include:

Rockport Analytics, LLC (www.rockportanalytics.com) is a research and analytical consulting firm providing high quality quantitative and qualitative research solutions to business, government, and non-profit organization clients across the globe. Headquartered in West Chester, PA, USA, Rockport’s focus is on creative and actionable research in the travel & tourism market. We provide fast, nimble service in a transparent environment.

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Market Analysis and Forecasting

• Economic Impact Assessment, Tourism Satellite Accounting, and Economic Development

• Market Modeling and Decision Support Tools

• Project Feasibility Assessment

• Primary Research and Secondary Research Synthesis

Contact Stakeholder Surveys –internal & external

For more information or specific questions, please contact:

Colleen Gallagher Communications & Public relations GBTA 703-684-0836 ext. 133 [email protected] Andy Gerlt Corporate Relations Visa Inc. 650-432-8375 [email protected]

1 GBTA BTI™ Outlook – United States, Brazil, China, Western Europe (Germany, U.K., France, Italy, and Spain), Russia, India. The U.S. is published quarterly, the others on a semi-annual basis.

mailto:[email protected]�

mailto:[email protected]�




July 2015

Executive Summary: Business Travel Performance Mixed, but Accelerating

• Despite mixed business travel performance in 2014, with some markets performing admirably and others continuing to struggle, aggregate spending growth returned to a healthy pace. In fact, global business travel spending grew 6.5% - well above the long run average of 4.6% annual growth. The year was highlighted by the European business travel recovery, strong business travel growth in India, stable growth in the U.S. and weaker-than-normal business travel growth in both China and Japan. Global business travel spending totaled $1.178 Trillion USD in 2014.

• Extending on the gains of last year, the global business travel market is off to a great start in 2015. Leading the way in performance are the United States and other developed markets including Germany, the U.K. and Spain. Diverging from the trend over the last few years, these key business travel markets are once again returning to roles of prominence in the global travel community.

• The large majority of business travel spending in 2014 occurs in a few dominant markets. In fact, over two-thirds of total business travel spending continues to occur in the U.S., China and Western Europe. We expect spending on global business travel will hit $1.254 trillion this year, 6.5% growth over 2014. Spending growth will hit a cyclical peak next year growing 6.9% and will remain strong over the forecast horizon growing 6.0% in 2017, 6.4% in 2018 and 5.8% in 2019 as it slowly moderates back towards the historical mean.

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Business Travel Spending Growth Continues to Build Momentum

FORECAST




July 2015

• Despite a marked slowdown in global economic activity during the first quarter of 2015 (about 3% year-over-year), global economic growth continues to slowly strengthen within an environment of modest inflation. The early 2015 deceleration was driven by slower U.S. performance coupled with weakeness in many key emerging economies. While the U.S.’s weaker outturn appears to be primarily weather related, many emerging markets are struggling with a frailer trade environment, falling commodity prices, and depreciating currencies. Having said this, our expectation for the next few years remains largely the same –moderate and more uneven growth gradually rising back to long-term trend (+3.5%/yr) by 2016.

• There are three factors shaping the current recovery that have helped to produce more uneven performance. First, the dramatic drop in oil prices, nearly 50% from July 2014 to January 2015, has quickly created economic winners and losers while significantly altering prospects for inflation and currencies. More on this later. Second, the decline of other commodity prices (e.g. metals, agricultural products, livestock) have helped to raise purchasing power in developed economies while lowering export values and weakening currencies in emerging markets. Third, the relatively aggressive stance of monetary policy in developed economies and some emerging markets has helped to keep inflation from devolving into deflation, compensate for mostly contractionary fiscal conditions, and further stimulate domestic demand.

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• Inflation across the globe averaged only 3.5% in 2014. The trend in inflation divergence has continued, however, with variances across countries actually

It is still safe to use the gazelle and elephant metaphor for describing global growth, but the gap in performance has narrowed markedly during this recovery. Many external factors and domestic challenges have conspired to narrow the gap between advanced and emerging economies. Emerging markets have struggled with declining oil revenues (e.g. Russia, Venezuela), debt imbalances (e.g. China, Turkey), rising inflation (e.g. Argentina, Ukraine), rapid currency depreciation (e.g. Brazil, Russia), and capital flight.

Total Business Travel Spending: Top 15 Markets - 2014

2014 Total BTS

($ Billions USD)

Annual Growt

h in BTS

(2014) United States $288.4 5.4% China $261.5 16.6% Japan $61.5 1.1% Germany $57.9 7.7% UK $43.5 5.4% France $36.0 2.0% South Korea $32.1 3.9% Brazil $32.0 3.7% Italy $30.9 1.3% India $26.4 9.7% Canada $22.5 3.8% Russia $20.9 -6.7% Australia $20.5 1.3% Spain $18.0 6.8% Netherlands $17.8 -1.7% Global Total $1,178 6.5%




July 2015

expanding in last year. Most of the advanced economies experienced headline rates in 0.5-2% range (average of 1.4%), this despite even more aggressive monetary expansion. Meanwhile, many emerging markets saw double-digit rate gains (2014 average of 5.1%).

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The divergence of growth and inflation, the rise in volatility, and the fall in oil prices has also had a significant impact on the value of many currencies against the U.S. dollar. These changes reflect relative risk (political, financial, & economic) and differing potential asset yields around the globe with profound impacts on foreign trade, capital flows, financial markets and inflation.

• Considering all of the positive and negative influences, the prospects for global growth remain favorable. We expect global GDP to accelerate from 3.5% this year to 3.8% in 2016 and average 3.9% for the rest of the decade. Overall growth will still be driven by emerging markets in the longer term, albeit at lower rates than before the global financial crisis. Advanced economies will continue to be powered primarily by rising domestic demand. Meanwhile, emerging markets will begin to see stronger trade results, rising commodity prices, and improving financial conditions.

The recent and dramatic fall in oil prices has been a double-edged sword for the global economy. On one hand, lower fuel and energy bills for consumers and businesses leaves more disposable income for spending and a boost to the bottom line. On the other hand, oil exploration and their capital goods providers have seen revenues plummet, investment fall, jobs reduced, and profits squeezed. Oil importing countries tend to be the beneficiaries of lower oil prices (e.g. Europe, Japan, U.S.), while oil exporters feel the pinch of lower revenues and related tax revenues (e.g. Russia, Venezuela, Saudi Arabia). Fortunately, most of the largest business travel markets are in oil importing countries.

• As always, there are still risks associated with the outlook. And aside from the upside risk of lower oil prices, most other unknowns are clearly to the downside.

• Besides economic growth, global trade is probably the most important economic metric driving business travel. This is particularly true when it comes to international business travel – which generated 18% of global business travel spending in 2014. In April, the World Trade Organization (WTO) again cut its world trade growth forecast from 4% to 3.3%. The original forecast for the year was 5.3%. This weak environment for trade comes at a time when economic growth around the world is performing relatively well and the longstanding trend of global trade

Geopolitical risks associated with the Ukrainian crisis and Middle East could draw Europe into Russia’s current recession or cause a spike in oil prices. China’s balancing act between debt imbalance repair and continued growth could result in the postponement of the necessary corrections needed for longer-term prosperity. A Greek default and euro exit could spook financial markets and drag down other peripheral and much larger European economies. Finally, declining inflation in Europe could devolve into persistent deflation, backsliding the region into recession (see Japan’s “Lost Decade” of the 1990s).




July 2015

growing at a 2x multiple to global GDP appears to be broken. The ability to raise the growth in trade volume back up to a healthy level (above 5%) will be the most important driver of both upside potential and downside risk to our global forecast over the next five years.

• Despite plummeting oil and jet fuel prices, we have yet to see relief in global airfares. Healthy demand and consolidation among major airlines have played a key role in increasing airfares. We have begun to see airlines raise capacity to capitalize on this strong global demand and while airfares have subsided in US Dollar terms (as the value of the dollar has increased against most major currencies) we continue to see price increases on the ground (in local currency terms). Carriers continue to manage capacity closely, although we are starting to see both international and domestic passenger load factors loosen slightly from recent all-time highs as carriers add capacity.

• The global hotel industry continues to garner extremely strong demand growth relative to supply growth. Despite low interest rates and healthy demand from both leisure and business travel segments, we continue to see less than adequate supply growth in every major world region. In fact, in both Europe and North America, hotel demand is growing at a multiple of 3 to 4 times hotel supply at present. In the booming regions of South America and Asia there is a bit more equilibrium but despite slowing leisure and business visitation growth, demand is still outstripping supply.

• Travelers in North America spent $318 billion USD on business travel in 2014. The United States generates the large majority (90%) of business travel spending from the region, with Mexico and Canada generating the remaining 10%. Growth in business travel spending generated from the U.S. has expanded at an annual rate of only 1.4% since 2000.

• The U.S. economy has shown a lot of improvement over the last year and the U.S. business travel market has followed suit. In 2014, business travel spending in the U.S. advanced a very healthy 5.4% and we continue to see improved performance in both the group and transient segments through the first two quarters of 2015. We expect spending on U.S. initiated business travel will grow another 4.9% this year. We expect Canadian business travel to remain in the 2 - 5% range through 2016, as lower energy prices will keep shackles on the Canadian economy in the near term. We expect performance to pick up the pace in 2017 and 2018, however. Mexican business travel had another good year in 2014 rising 4.6% and volume has been picking up in 2015. We expect Mexico will be, far-and-away the most robust business travel market on the North American continent over the next five years growing at a projected 7.7% per year over the period.

• Following a softer than expected first and second quarter in 2014, business travel in Western Europe growth got back on track for the remainder of the year when it expanded by 3.3%. We expect this healthy pace to build through 2015 and total business travel spending in the region will increase by 4.8% this year. Despite the building momentum in Western Europe’s business travel




July 2015

market, there is still a substantial amount of downside risk. Greece’s potential exit from the EU, unhealthy debt loads and shifts in ECB policy could derail the recovery at any time.

• We also continue to see a divide between the Northern Tier markets like Germany, the Netherlands and the U.K. and those in the Southern Periphery like Greece and Italy. Those in the north continue to experience stable and growing economies and business travel is flourishing while the markets in the south suffer from less stability that is weighing on business travel prospects. Leading the way, we are expecting 10.1% growth in German business travel spend in 2015 and 5.8% growth in both the U.K. and Sweden. This is juxtaposed to 0.1% growth expectations in Greece and 1% growth expected in Italy. The one Southern Tier market that is outperforming its peers is Spain, whose business travel market is being boosted by a robust economic recovery. We are expecting 7.7% growth in Spanish business travel spending this year.

• The Asia Pacific region is the largest business travel region in the world, comprising 39% of global business travel. Business travel spending in Asia Pacific totaled $459 billion USD in 2014. Business travel spending in the Asia Pacific region has grown 7.7%, annually, since 2000, more than doubling in size. We expect that business travel spending in the region will continue to grow at a 7+% annual pace over the next five years. Two-thirds of the business travel activity in the Asia Pacific region comes from China and Japan and that share continues to grow as China’s market outpaces the rest of the region.

• Business travel spending in China has grown from $32 billion USD in 2000 to $262 billion USD in 2014, an average of 16.2% per year. Growth has slowed significantly over the last few years given the economic moderation and we expect an average of only 8.9% over the next five years. Despite the slowdown, the combination of China’s size and growth continue to make this market unique. China surpassed Japan to become the second largest business

$775 $898 $940

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July 2015

travel market in the world in 2006 and will surpass the U.S. as the largest business travel market in the world by 2017.

• Latin American business travel totaled $52 billion in 2014. The majority of business travel activity within Latin America is generated in Brazil, which totaled $32 billion USD in 2014. The next largest market is Colombia with only $4.4 billion in business travel spend in 2014. Other key Latin American markets include Venezuela, Peru, Chile and Argentina – each tallied roughly $2.5 to 3 billion in business travel spending in 2014. Total growth in Latin American business travel spending has averaged 6.8% since 2000. Business travel spending in Latin America will grow 5.9% per year over the forecast horizon.

• The Middle East, Emerging Europe and Africa represent a total of $77 billion in business travel spend in 2014. Business travel in the Middle East remains highly correlated with the health of the energy sector and has slowed significantly over the last year as oil prices have tanked. This trend is affecting every major market in the region. Spending on business travel in Saudi Arabia grew only 1.8% in 2014 and will fall by -3.4% this year; spending in the United Arab Emirates (UAE) grew 2.3% last year and will fall -1.9% this year; and spending in Kuwait fell -3.4% last year and will plummet another -11.6% this year. Spending in Qatar grew 6.8% last year and will fall by -1.1% in 2015.

• Business travel in Emerging Europe has demonstrated some of the strongest growth in the world since 2000, growing at a compound annual rate of 10% over the last 14 years. However, growth has been significantly challenged as of late. First, the EU Recession challenged growth in the region in 2012 and 2013 and then the Ukrainian crisis and plummeting oil prices took over as primary economic headwinds. As a result, business travel spending grew only 0.3% last year and we expect only 2.3% this year. Russia, the largest economy in the region has taken an even harder hit – business travel spending fell -6.7% last year and is set to fall another -2.7% in 2015.

• The sector with the highest growth in business travel spending over the next five years, 20.4% on average, will be petroleum refining, which is expected to bounce back as the price of oil begins to rise. Spending in the Construction (7.3%) and Real Estate (7.9%) sectors will also continue to witness extraordinary growth over the next five years as the global Real Estate recovery continues. Lastly, we expect significant business travel spending growth in basic manufacturing and in sectors required to build and support infrastructure, as markets in Asia, South America, Africa and Eastern Europe continue to mature. These include Transportation Services (6.5%), Manufacturing of Communications Equipment (9.4%), Rubber & Plastic Manufacturing (9.4%) and Paper & Paper Products Manufacturing (8.6%).

• There have been a few notable changes in the ranking of global business travel markets over the past year. In 2014, both Brazil and Russia slipped one spot in the rankings as business travel growth slowed in Brazil and plummeted in Russia.




July 2015

Spain picked up one spot in the global rankings as the Spanish economy and business travel market saw significant recovery over 2013.

• An important part of the business travel forecasting process is to look back at past projections and assess accuracy. This provides important feedback that can help to improve both models and judgement. 2014 was a particularly difficult year given the high levels of volatility and divergence that we have covered at length in this document. Still, our ability to capture the direction and magnitude of business travel growth was above average. In aggregate, we over-estimated total growth by 0.4 percentage points. We projected growth of 6.9% while global spending expanded by only 6.5%. Among the top 15 business travel markets, we over-estimated about half and under-estimated the other half. The range of error for the Top 15 markets went from a low of -8.7% to +2.9%.




July 2015

The Global Economy: Recovery Continues Improving Prospects for Business Travel

Global Overview and Issues Shaping Performance Despite a marked slowdown in economic activity during the first quarter of 2015 (about 3%), global economic growth continues to slowly strengthen within an environment of modest inflation. The early 2015 deceleration was driven by slower U.S. performance coupled with weakeness in many key emerging economies such as China, Russia, and a number of South American markets. While the U.S.’s weaker outturn appears to be primarily weather related, many emerging markets are struggling with a frailer trade environment, falling commodity prices, and depreciating currencies. Having said this, our expectation for the next few years remains largely the same –moderate and more uneven growth gradually rising back to long-term trend (+3.5%/yr).

There are three factors shaping the current recovery that have helped to produce more uneven performance. First, the dramatic drop in oil prices, nearly 50% from

The global economy is now in its 7th year of recovery from the global financial meltdown and Great Recession. Performance has become more volatile and mixed in both advanced and emerging markets. Still, global momentum is rising.




July 2015

July 2014 to January 2015, has quickly created economic winners and losers while significantly altering prospects for inflation and currencies. More on this topic later. Second, the decline of other commodity prices (e.g. metals, agricultural products, livestock) have helped to raise purchasing power in developed economies while lowering export values and weakening currencies in emerging markets. Third, the relatively aggressive stance of monetary policy in developed economies and some emerging markets has helped to keep inflation from devolving into deflation, compensate for mostly contractionary fiscal conditions, and further stimulate domestic demand.

It is still safe to use the gazelle and elephant metaphor for describing global growth, as emerging market growth continues to outpace growth in the advanced economies, but the gap in performance has narrowed markedly during this recovery (see chart above). Indeed, the map on the previous pages shows 2014 global GDP growth being driven by developing Asia and Africa, a now familiar story. Yet, many external factors and domestic challenges have conspired to narrow the gap between advanced and emerging

economies. Emerging markets have struggled with declining oil revenues (e.g. Russia, Venezuela), debt imbalances (e.g. China, Turkey), rising inflation (e.g. Argentina, Ukraine), rapid currency depreciation (e.g. Brazil, Russia), and capital flight.

Even among emerging markets

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Divergence Among BRIC Economies Illustrates Uneven Pattern of Global Growth

China India Brazil Russia Source: IHS Global Insight, International Monetary Fund, Rockport Analytics

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Source: IHS Global Insight, International Monetary Fund, Rockport Analytics




July 2015

a striking performance gap has developed over the past couple of years. Former powerhouses such as Russia and Brazil have struggled with weakening trade, lower commodity prices (especially oil), and plummeting currencies, while more domestic-focused or oil importing economies such as India, Chile, and Indonesia have been better able to maintain growth. The chart at the bottom of the previous page tracks GDP growth among the BRIC economies and clearly shows the divergence in growth that has developed since the early days of recovery. The latest readings show India and China expanding by 7.4% and 6.6% versus year-ago levels, respectively. On the other hand, Russia and Brazil are currently mired in recession as demonstrated by GDP declines of -5.0% and -1.4% in 2015Q1.

Meanwhile, advanced economies have benefited from lower oil prices, accommodative monetary policy, and stronger consumer spending. The U.S. has seen more robust consumer services demand, exploding auto sales, and better housing markets over the past year. And the Euro Area has now produced six consecutive quarters of positive growth, albeit at underwhelming rates. Other advanced economies such as Australia and South Korea are also strengthening. Unforeseen geopolitical shocks (e.g. Ukraine, a Greek “grexit”, Middle East meltdown) could quickly alter the global economic trajectory, but advanced economy improvement will continue to defuse to emerging markets and the rising tide of improving global growth will lift all boats.

The divergent nature of global growth is illustrated in the chart above. In general, emerging economies have led global growth, evidenced by the 2014 rate performance of Sub-Saharan Africa (+4.5%), Asia-Pacific other than Japan (+6.0%), and Middle East & North Africa (+4.5%). Latin America and Emerging Europe, past leaders in emerging market performance, have largely been watching from the sidelines, however. North America, particularly the United States, has been the most significant advanced economy contributor, both in terms of size and rate (2014 @+2.4%).

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After a Mixed 2015, Lower Oil, Accommodative Monetary Policy and (slowly) Improving Trade Help Build Growth Momentum

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* Including Mexico Source: IHS Global Insight, International Monetary Fund, Wells Fargo Securities, Rockport Analytics




July 2015

More importantly is how things will progress from here. With advancing trade, moderating commodity prices, and more predictable policy behavior, the emerging markets can be expected to continue to lead growth through 2020. Even the current emerging market laggards in Latin America and Eastern Europe will return to a more robust growth profile. Meanwhile, Western Europe and Japan will slowly gather momentum and, along with a stronger North America, begin to lift global performance back to or even above long term average. If as expected global GDP growth reaches 3.5% in 2017, it will have taken seven years to fully shake off the effects of the financial crisis and Great Recession.

Inflation is Very Mixed across the Globe Inflation across the globe averaged only 3.5% in 2014. The trend in inflation divergence has continued, however, with variances across countries actually expanding last year. Most of the advanced economies experienced headline rates in the 0.5-2% range (average of 1.4%), this despite even more aggressive monetary expansion. Meanwhile, many emerging markets saw double-digit rate gains (2014 average of 5.1%). Dramatically lower oil and other commodity prices plus still-high rates of unemployment have helped to mute overall inflation and relieve some labor cost pressure.

The chart above and table to the right illustrate the marked variance in inflation

Inflation Differentials are Striking % change in Consumer Prices 2013 2014 2015 2016 World 3.9 3.5 3.2 3.3 Advanced Economies 1.4 1.4 0.4 1.4 Emerging Markets 5.9 5.1 5.4 4.8 Euro Area 1.3 0.4 0.1 1.0 United States 1.5 1.6 0.1 1.5 Japan 0.4 2.7 1.0 0.9 Other Countries:

Argentina 10.6 14.6 18.6 23.2 Brazil 6.2 6.3 7.8 5.9 China 2.6 2.0 1.2 1.5 Greece -1.0 -1.4 -0.3 0.3 India 10.0 6.0 6.1 5.7 Indonesia 6.4 6.4 6.8 5.8 Russia 6.8 7.8 17.9 9.8 Spain 1.5 -0.2 -0.7 0.7 Ukraine -0.3 12.1 33.5 10.6 Venezuela 40.6 62.2 96.8 83.7

Source: IMF

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* includes Mexico Source: IHS Global Insight, International Monetary Fund




July 2015

rates across the regions of the globe. Latin America shows the highest rate of inflation with consumer prices advancing by 12.8% in 2014. Emerging Europe and Sub-Saharan Africa were not far behind with 2014 headline inflation rates of 5.7% and 7.1%, respectively. The bottom of the table highlights some of the extremes among individual countries. Venezuela and Argentina’s sky-high rates are in sharp contrast to Greece and Spain where average prices actually declined in 2014.

With most central banks engaging in expansionary monetary policy in order to stimulate domestic demand, inflation had begun to accelerate in many emerging markets. This, in turn, helped to drive currency depreciation. On the other end of the inflation spectrum, Europe and Japan are dangerously close to outright deflation, a condition of widespread and sustained declines in prices. Neither extreme is healthy for sustained growth. Too much inflation reduces the real purchasing power of income, further devalues currency (which is itself inflationary), and raises real interest rates. Deflation can cause consumers and businesses to postpone purchases in hopes of even lower prices in the future. This can quickly devolve into recession at the very time that these economies are starting to resurface –think Japan’s “Lost Decade” of the 1990’s.

Lower oil and commodity prices have further muted inflation, particularly among those countries that are large oil/commodity importers. Metals, industrial materials, agricultural raw materials and crops & livestock have seen spot prices fall dramatically since 2011. Oil prices fell by almost 50% between July of 2014 and January of 2015, though they have rebounded by almost 20% since that time.

The adjacent chart tracks spot commodity prices from 2000 through2015. The run-up in commodity prices experienced during the first eight years of the last decade corresponded with the economic ascension of many emerging markets. Their retreat since 2011 has played a big role in their current economic and financial struggles. The forecasts are from the IMF which

does not anticipate a turnaround any time soon. IMF expectations for slowly rising oil prices (Brent Crude), however, is consistent with the consensus. The resulting impact on overall inflation is significant, exacerbating deflation fears in Europe, Japan, and even the U.S. The reaction has been an even more aggressive monetary stance by a number of advanced economy central banks including the European Central Bank (ECB)

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Falling Commodity Prices Have Really Hurt Emerging Economies…

Metals

Brent Crude Price (right)

Agr. Raw Materials

Industrial Inputs

Source: International Monetary Fund, Rockport Analytics

Forecast




July 2015

and Banks of England (BoE) and Japan (BoJ). The opposite is true for the most affected emerging market monetary authorities (e.g. Brazil, Russia).

A cursory look at housing prices across the globe shows a slow and steady resurgence with a relatively low risk of bubble development. Even in China, where many recently feared developing excess, authorities have been quick to reduce the upward pressure. The above graph depicts a weighted index of global housing prices. The index (blue line) shows a gradual recovery from the cyclical low experienced in 2011, one that has yet to regain its previous peak. On year-over-year percentage gain basis (red area) price increases have been healthy yet far from previous bubble-driven peaks.

Changes in Relative Growth, Risk and Inflation Profiles Have Caused Many Key Currencies to Fall Against the $USD The divergence of growth among global markets has also had a significant impact on the value of many currencies against the U.S. dollar. These changes reflect relative risk (political, financial, & economic) and potential asset yields around the globe with profound impacts on foreign trade, capital flows, financial markets and inflation.

The chart at right tracks the trade weighted value of the $USD from 2001. The Trade-Weighted USD Index is a weighted average (based upon trading partner shares) of the value of many key currencies vs. the USD. Reflecting stronger relative growth in the United States versus Europe, Japan, and many emerging markets during the past year, as well as differential inflation and interest rates, the $USD has appreciated by an average more than 20% since

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Global Housing Prices Continue to Recover, Still a Long Way to Go…


Index 2014Q4 @ 148.6

Y/Y% 2014Q4 @ 1.6%

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$USD Has Appreciated by 20% in One Year...

Source: U.S. Federal Reserve, Rockport Analytics

June 2015 @ 115.9

20% since mid-2014




July 2015

the middle of last year. The value of the dollar also reflects the timing and degree of the expected upcoming moves by the U.S. Federal Reserve to “normalize” interest rates.

While the trade-weighted average appreciated by 20% since last summer, many individual currencies have fared much worse, particularly those from certain emerging markets. The chart at right shows the value of the euro, yen, rupee, real, and ruble indexed to 2009 to highlight changes since that time. The euro, at $1.12 per $USD in May of 2015, is trading 20% lower than May of last year and primarily reflects stronger relative U.S. growth. Meanwhile, the Russian ruble (RUB) is off by 62% during that same period. For Russia, this raises inflation at home and causes capital to flow out of the country in search of the better yields offered by U.S. treasuries. Brazil’s real (BRL) is experiencing similar (more than 30%) depreciation and resulting impacts. These foreign exchange values also reflect differential relative economic growth, but embody added premiums that address declining oil export values, worsening fiscal balances, and high debt loads.

For foreign trade, currency depreciation of this magnitude dramatically raises import prices while lowering export prices. It also hurts the current balance of trade and financial flows which, in turn, strains public finances and raises borrowing costs. And this comes at a time of sluggish trade activity in general around the globe.

Speaking of trade, the chart at left shows a clear reversal in fortunes for global exports. Two clear underlying trends in export’s share of global activity are immediately evident. The first occurred in the late 1990s through the peak before the Great Recession. Exports were growing much faster than global GDP

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Entering a New Normal in Trade Contribution to Global Growth...


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Source: IMF, Rockport Analytics




July 2015

reflecting the trend in globalization and the “miracle” of emerging markets. Rising exports was the primary catalyst of the unprecedented global economic growth achieved before the Great Recession and financial meltdown. Moreover, rising world trade facilitated dramatic increases in international outbound business travel. Commodity prices were also rising at the time, increasing the value of those exports (see previous section). The recession clearly took a cyclical toll but recovery was strong and immediate. Since that time, however, exports have struggled to expand and global economic growth has largely been driven by domestic activity. This has been particularly hard on export-driven emerging markets such as China, Brazil, Russia, and others. Unfortunately, many analysts see this trend continuing for the foreseeable future. The graph also depicts the expectations of the IMF through 2020; after a modest recovery in oil and other commodity prices, trade’s contribution to global GDP is expected to flat line at about 30%.

This is not great news for international business travel, outbound or inbound. Since people lead and follow goods and services into foreign markets, international business travel growth rates will likely moderate in the future. This will vary by market of course, but the general trend will be for slower expansion over the next five years. An excellent illustration of the tight correlation between trade activity and international business travel comes from IATA’s data on premium class travel. Other research has shown that premium class passengers (first, business class) are primarily business travelers (about 90%). Tracking growth in those passengers versus global trade activity (imports plus exports) reveals the strong relationship. The good news is that current readings show trade and premium travel both growing. The bad news is that rates are very modest.

Lower Inflation & Sluggish Growth Keep Central Banks Aggressive With the absence of significant inflationary pressure and persistent unemployment in many markets, central banks have been very proactive in both advanced and emerging economies. Advanced market central banks have been stepping up asset purchase programs (e.g. ECB, Japan), sometimes called QE (quantitative easing), and keeping policy rates at essentially zero (e.g. US Federal Reserve, Bank of England). And even though the Fed and BoE have paved the way for future rate hikes, they continue to postpone those moves in search of stronger economic growth reports.




July 2015

Advanced economy interest rates have been below 1% for nearly seven years helping to stimulate growth and counter the general contractionary posture of fiscal policy caused by governments

having to deal with high debt and deficit challenges. Most analysts expect this to change soon. The US Fed and BoE have already announced their intention to break from the fold and begin to slowly and gradually raise rates. The ECB and BoJ will eventually join them. How financial markets respond to those initial tightening moves will profoundly impact the outlook for growth, especially among emerging markets.

Emerging market central banks were also driving rates down in the early days of the recovery. For many of them, debt and deficit problems left monetary stimulus as their only tool for helping to turn around growth. Inflation began to rise and their currencies falter, however. Slowing economic growth, U.S. Federal Reserve tapering, and growing fiscal and credit imbalances hit many emerging market economies hard beginning in late 2011. China’s impressive growth slowed, Brazil teetered on the brink of recession, and Indian and Russian GDP growth dramatically decelerated. This quickly resulted in rising inflation, falling currencies, and capital flight. Their central bank had little choice but to raise rates in response (see chart above), sharply in the case of Russia and Brazil. With

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Monetary Policy Remains Accommodative But The U.S. & U.K. Are Expected to Soon Break Rank…

United States Eurozone Japan United Kingdom

Advanced country policy rates are essentially zero

Source: International Monetary Fund, IHS Global Insight, Rockport Analytics

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Meanwhile, Emerging Market Central Banks Must Respond to Rising Inflation & Falling Currencies...

Source: Peoples Bank of China, Banco Central do Brasil, Reserve Bank of India (RBI), Central Bank of Russia

June 2015: Russia: @ 11.5% India: @ 7.25% Brazil: @ 13.75% China: @ 5.1%




July 2015

inflation rates beginning to fall and their currencies stabilizing, many emerging market central banks have once again begun to loosen.

During this period of monetary policy dominance, governments around the world have been busy addressing the issues of high debt and fiscal imbalances, often out of the attention of the media. Austerity programs, tighter government spending, and growth-driven increases in tax revenue have slowly chipped away at fiscal deficits. Progress has been made in most regions (see chart above). Much work remains to be done, however (e.g. Greece, Italy, Argentina). Analysts do expect a continuation of the trend towards improvement.

Lower Oil Prices Have Dramatically Altered the Global Economic Landscape The recent and dramatic fall in oil prices has been a double-edged sword for the global economy. On one hand, lower fuel and energy bills for consumers leaves more disposable income for spending on other goods and services. Reduced energy costs also provide a boost to the bottom lines of businesses. On the other hand, oil exploration and their capital goods providers have seen revenues plummet, investment fall, jobs reduced, and profits squeezed. From a macroeconomic perspective, oil importing countries tend to be the beneficiaries of lower oil prices (e.g. Europe, Japan, U.S.), while oil exporters feel the pinch of lower revenues and related tax revenues (e.g. Russia, Venezuela, Saudi Arabia). The chart at right illustrates the impact on annual GDP growth of lower oil prices for the major countries in Latin America. Brazil, Mexico, and Columbia, as net exporters, are expected to feel a growth headwind while Chile, Peru, and Argentina will benefit.

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Austerity & Economic Growth Are Helping to Improve Fiscal Balances Across the Globe

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* Includes Mexico Source: International Monetary Fund, IHS Global Insight, Rockport Analytics




July 2015

Oil prices had been relatively stable since the middle of 2011 at the $100/barrel level, but rapidly growing supply against only modest increases in demand left the global market flush with product. Prices fell sharply beginning in mid-2014 (see chart at right). Brent Crude (orange line) dropped by 56% in six months. Jet fuel (dark blue) fell to $1.50/gallon during that same period, a 55% plunge. Gasoline (green) fell from $3.70/gallon in May of 2014 to $2.20 in February of this year. Crude and petroleum product prices have since clawed back about 30%of those losses and appear to be stabilizing.

Contrary to established norms, OPEC and other producers did not pull back production in response to falling prices, even as higher cost producers started to take marginal losses (see graph at left). There has been much speculation as to why OPEC chose this strategy. One theory suggests that many OPEC members desperately need the revenue, even at lower prices. Another theory proposes that OPEC is trying to mute U.S. shale-driven gains in global market share.

Regardless of whether a country is a net importer or

exporter of oil, lower prices have certainly hurt investment activity. Indeed, some of the sluggish economic growth experienced by the U.S. in the first quarter of 2015 was due to the abrupt slow-down in exploration investment. The chart at the top of the next page from the IMF shows the long-term correlation between oil price (orange line) and investment (blue and red bars) among major global oil producers. According to the IMF,

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Jet Fuel: June 2015 @$1.85/gal

Beginning to stabilize

Gasoline: June 2015 @ $2.80/gal




July 2015

the impact of lower prices on investment is both strong (a 1% decline in price is associated with 0.6% decline in investment) and immediate (strongest impact occurs in the same year and lasts up to 3 years). This suggests sluggish drilling activity and weak equipment spending for 2015 and 2016, at least, unless an unlikely and rapid rebound in prices occurs.

Lower fuel costs have also buoyed airline profitability. Approaching 50% of overall operating costs, lower

kerosene prices have joined rising demand and constrained capacity in boosting profits and share prices dramatically across the globe. The table at left is from the latest IATA survey of top global airlines and demonstrates the dramatic shift in operating profit versus

early last year. Europe, while still showing 2015Q1 losses, has seen operating profit improve by over 85% from year-earlier levels. Airfares have not yet fully reflected these advantages, but recent airliner deliveries suggest that we may see load factors ease and fares begin to fall as the year progresses -both retail and managed fares.

In the net, the positive impacts of lower oil prices will outweigh the negative but the timing of those income and cost benefits takes much longer.




July 2015

Global Growth Will Gradually Rise and Return to Long Term Trend Considering all of the positive and negative influences, the prospects for global growth remain favorable. We expect global GDP to accelerate from 3.5% this year to 3.8%in 2016 and average 3.9% for the rest of the decade. After this year, GDP growth will benefit from expansive monetary policies in the developed countries, favorable currency conditions in Europe, gradually rising commodity prices, and gradual increases in Federal Reserve policy rates.

Overall growth will still be driven by emerging markets in the longer term, albeit at lower rates than before the global financial crisis and after Russia, Brazil, and other Latin American countries recover. Advanced economies will continue to be powered primarily by rising domestic demand, particularly

A Weak Start to 2015, But Global Growth Will Still be Driven by Emerging Markets

% change in Real GDP 2013 2014 2015 2016 ’17-‘19

World 3.4 3.4 3.5 3.8 3.9

Advanced (elephants) 1.4 1.8 2.4 2.4 2.1

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Japan 1.6 -0.1 1.1 1.2 0.6

United Kingdom 1.7 2.6 2.8 2.6 2.2

United States 2.2 2.4 2.5 3.1 2.4

Emerging Markets (gazelles) 5.0 4.6 4.3 4.7 5.1

Brazil 2.7 0.1 -1.0 1.0 2.3

China 7.8 7.4 6.8 6.3 6.1

India 6.9 7.2 7.5 7.5 7.6

Russia 1.3 0.6 -4.1 -0.8 1.3

Source: IMF, HIS Global Insight, OECD, Rockport Analytics

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July 2015

consumption. Advanced economy growth over the longer term will be challenged, however, by aging populations, weaker investment, and lower productivity. Meanwhile, emerging markets will begin to see stronger trade results, rising commodity prices, and improving financial conditions. China’s growth will continue to moderate in the 6-6.5% range as central authorities continue to address debt imbalances while continuing to rebalance the sources of growth.

Geopolitical and Financial Risks Are Ever Present After six years of repairing financial and fiscal excesses, the global economy is poised to return to trend. Advanced economies have already begun to see improvements in consumer spending, production, employment, and housing. The U.S. has been leading the way, but Europe, after a very slow start, is gathering stride. Emerging markets have diverged based upon their levels of debt and whether they are oil producers or consumers, but are generally improving. As always, there are still risks associated with the outlook. Aside from the upside risk of lower oil prices, most other unknowns are clearly to the downside.

Geopolitical Risks Associated with the Ukrainian Crisis and Middle East Could Backslide Europe and Russia into Recession

Geopolitical conflicts, which could result in disruptions to activity in the Middle East and Eastern Europe (Ukraine and Russia), and have a global impact via trade and financial channels remains a considerable risk to the global economy. The energy links between Russia and Europe are critical and an escalation in tensions could result in further sanctions or even a potential embargo. Middle East conflicts always carry the risk of possible oil price spikes.

China’s Balancing Act between Debt Imbalance Repair and Continued Growth Could Result in the Postponement of Necessary Corrections

The current slowdown in Chinese growth could be more serious than expected. This would likely result in renewed stimulation policies focused on investment, including real estate. This would delay, perhaps even worsen, local and corporate debt imbalances leading to possible insolvency and central government intervention. The result could be a hard landing for the economy with reduced growth and higher inflation. Given the many other emerging markets whose prospects are tied to China, a hard landing would have serious global growth implications.

A Greek Default and Exit from the Euro Could Spook Financial Markets and Drag Down Other Peripheral European Economies

At the time of this writing, the probability that Greece will default and leave the union has increased dramatically from previous default episodes –some analysts now peg it above 30%. At the same time, the risk of contagion dragging down other European economies has fallen due to ECB and EU policies.

With its economy already in shambles (GDP has declined 25% since 2007), Greece has every reason to come to an agreement but it must do so without compromising the reform agenda aimed at enhancing the country’s capacity for growth and ensuring that it is financially self-sufficient. It is still anyone’s guess as to how current negotiations will




July 2015

turn but a lack of an agreement would mean default and economic contraction. For European authorities, it would test the ability to circumvent financial contagion and the commitment to the euro.

Declining Inflation in Europe Could Devolve into Persistent Deflation and Backslide the Current Recovery

While the European Central Bank and the Bank of England have had their respective feet on the monetary accelerator, contractionary fiscal policy (austerity), high unemployment, sluggish credit markets, and slow global and domestic demand have driven inflation to uncharacteristically low levels. And falling oil prices have further reduced inflationary pressure. In fact, the concern is over current rates of disinflation (decelerating inflation) giving way to deflation (falling prices). Steadily and broadly declining prices can send future price expectations negative damaging economic growth (see Japan’s “Lost Decade” of the 1990s) as households and businesses delay purchases in anticipation of lower future prices. The risk of a potential backslide was serious enough that the ECB jumped into action with its own quantitative easing (QE) program to increase liquidity across the EU.




July 2015

Key Business Travel Markets Economic Highlights

U.S Growth to Slowly Accelerate The U.S. economy continues to forge ahead but growth has been somewhat erratic and uninspiring. GDP growth for 2015Q1 is case in point having declined by -0.2% (Q/Q at annualized rate), down from +5% just two quarters before. Real GDP also declined in the first quarter of 2014 (-2.1%) due to severe winter weather. It then proceeded to quickly snap back. Many analysts are expecting the same this year.

The Q1 decline appears to be a temporary phenomenon caused by cumulative impacts of a number of factors including:

(1) extremely cold and snowbound winter weather

(2) weak global growth and a very strong dollar produced a trade drag on GDP,

(3) lower oil prices curtailing crude production and essentially halting nearly all exploration investment,

(4) the continuing impact of sequestration on government spending, and

(5) a West Coast port labor dispute which caused work stoppages/slowdowns and hampered freight movement in and out of the country.

The good news is that these were mostly temporary issues, ones the U.S. economy should quickly shrug off.

Despite the economic slowdown in the first quarter, businesses are generally faring well. Sales, cash flow and profits are advancing, albeit more slowly than management might like. Likewise, hiring continues at a strong pace and business travel has been relatively robust. Management confidence remains elevated and, other than the oil & gas sector, equipment investment is also performing well. Finally, bankruptcy filings continue to decline as well. This is all good news for business travel, particularly domestic trips and spending.

Particularly important to business travel is the performance of corporate profits. The chart at the top of the next page illustrates year-on-year growth in this pivitol indicator. After the snapback from the Great Recession in 2010, growth rates have been decelerating, but profit levels have remained elevated, having reached the $2 trillion level for the first time in the second half of 2012 and remaining there since that time.

U.S. Economy Still Leading the Charge

• The US expansion gathers steam despite winter weather setbacks

• U.S. job market is improving; particularly those sectors that use business travel more intensely.

• Consumer spending will pick up with job gains, rising wages, and lower oil prices.

• The Fed is expected to begin its program to “normalize” rates in 2015H2, raising them gradually.

• Resilient profit performance, rising business confidence, and strong hiring suggest better business travel results over the next few years.

• International outbound travel will be tested by slower global trade.




July 2015

Meanwhile, hiring has been strong and wages are finally starting to rise, more good news for consumer spending, top-line business revenue, the housing market, and business travel. Nonfarm payrolls advanced by 280,000 in May after an April advance of 221,000, both helping to erase the memory of March’s 94k weather-related disaster. Across the board gains in sectors such as construction, professional services, and education & health care provided further evidence of broad strength. Moreover, it was good to see many of the most travel-prone sectors showing improved hiring, a good sign for domestic business travel.

Despite recent challenges, our expectations for the US economy remain optimistic. The underlying momentum of job growth, wage gains, and rising confidence will continue to compensate for weak global growth and postponed oil & gas investment. Consumer spending and housing are already showing positive reactions to rising disposable income. Real GDP will advance only 2.5% in 2015, reflecting the unexpected weakness in Q1. Rising levels of quarterly growth for the rest of the year will help return the economy closer to long-term averages. Moving into 2016 and beyond, trade will exert less of a headwind and investment will rise on tighter capacity and slightly higher oil prices.

All eyes remain on the Fed for signs of “liftoff,” the point where the central bank begins the process of raising its policy rate. Chairwoman Yellen continues to state that there is no predetermined schedule and that timing is dependent on the economic statistics. Most analysts are expecting the initial rate increase to take place in the September time frame, beginning a series of gradual increases lasting through 2016. The real question is how the U.S. and global economies will react.

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Weather-related hiccups

Forecast




July 2015

European Momentum Remains Positive but Growth Still Weak Despite six more months of improving debt and fiscal balances, an even more aggressive monetary stance, and lower energy prices, the European economy continues to inch along. Eurozone GDP rose 0.4 % (1.6% annualized rate) in 2015Q1 vs. the previous quarter. Germany (0.3%) was weaker than expected, but was offset by stronger performances in France (0.6%) and Italy (0.3%). Still, Q1 did register the sixth consecutive quarter of positive performance. Most of this growth came from consumption, capital spending, and, to a lesser extent, net exports (exports minus imports).

A slowly improving labour market is helping to drive gains in household expenditures. The Euro Area added about 3.3 million new jobs at a slowly rising pace throughout 2014. And we continue to make progress on unemployment (@ 11.1% in May) led by Germany, the United Kingdom, Denmark, Ireland, and Spain. The slow pace of jobs gains against still-persistent unemployment is keeping wage gains in check, however, contributing only modestly to household income. Consumer confidence continues to build with retail sales beginning to show signs of stronger performance ahead.

Another boost for Europe’s consumers is found in sharply lower energy prices. With oil expected to stabilize around the USD$60-65 per barrel level in 2015, consumers will receive an unexpected windfall. European consumers should see a 10-15% decline in their fuel bills resulting in an increase in real household income of 1-1.5%. Unlike a bonus payment or a tax refund, however, this income boost will accumulate slowly over time.

Another significant positive force shaping the European recovery is monetary policy. The European Central Bank (ECB) and Bank of England (BoE) have continued to keep short-term interbank borrowing rates at essentially zero. Both are also engaged in the purchase of assets via quantitative easing (QE), the ECB beginning this past January with a program to purchase about €60 billion per month in mostly sovereign bonds of member countries. QE is aimed squarely at curbing expectations of falling inflation,

Europe’s Momentum is Positive but below Long Term Trend

• The Eurozone is growing again, albeit slowly, aided by lower oil prices and aggressive monetary policy.

• Growth is being led by Germany, U.K., the Nordics, and Spain. Other southern periphery members are still struggling but yr/yr comparisons are improving.

• Exports, too, are firming but sluggish global growth is negating the advantages of a weaker euro. This will improve in 2015 & 2016.

• European debt and fiscal imbalances have improved markedly in 2014. Credit markets are starting to thaw.

• Greece’s probability of default and exit are higher than previous crises but the risk of contagion is now lower

• The threat of deflation and grexit has caused the ECB to launch an asset buying program (QE).




July 2015

further repairing private bank balance sheets, stimulating much-needed lending, and backstopping possible contagion from a Greek default or “grexit”. The ECB’s asset purchase program will likely result in an even weaker euro this year, however. Some analysts see QE driving the euro down to parity by year-end, particularly if the Fed raises rates later in 2015.

Greece has been in and out of the headlines since late February when European finance ministers and new Prime Minister Tsipras agreed on a bail-out extension. So far, an agreement on the release of the latest tranche of bailout funds, about €7.2 billion, has not been reached and the June IMF debt payment of €1.7 billion is now past due. Meanwhile, at time of this writing, the Greek government continues to burn through cash and has been forced to temporarily close banks in order to slow massive withdrawals. Greek stocks and bond yields have responded accordingly but, unlike past Greek crises, the contagion has not spread to other periphery financial markets. Odds are that the two sides will eventually reach agreement since it remains in both of their best interests. Ironically, the probability of a Greek default and exit from the euro is higher now than during previous crises, yet the odds of the contagion dragging down other economies are now lower.

The Euro Area economy finished 2014 with performance better than the year before with a modest degree of forward momentum. Europe should continue this momentum boosted by lower energy costs, liquidity injections via QE, weaker currencies, and neutral-to-slightly-stimulative fiscal policies. GDP growth among our five Western European economies (WE-5) for 2015 will range from a high of 2.8% for the United Kingdom to a low of 0.3% for Italy. Growth will be even stronger in 2016 and beyond when even Italy posts GDP performance above 1%.

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Profits: Germany & U.K. Lead the Charge...

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2014Q4: Germany @ 3.1% Italy @ -1.9% U.K. @ 8.2%

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Source: IMF, OECD, Moodys Analytics, Rockport Analytics

Forecast




July 2015

China Remains a Growth Leader But at Slightly Slower Rates Almost four decades ago, China's leadership began a policy of economic reform and "opening up" to the outside world. Since that time, their economy has flourished driven by stellar export and investment growth. China is now the world's second-largest economy and second-largest stock market by market capitalization. Even as China's growth is decelerating, the opening up of its capital markets is accelerating. China's share of the global economy will continue to grow, even if it does so at a slower pace.

China’s “soft landing” continued during 2014 and early 2015 as overall growth moderated in an orderly fashion while underlying growth drivers shift from investment and exports towards consumption. China’s central authorities have skillfully applied fiscal, banking, and regulatory policies to ensure that both growth and rebalancing continues –all while avoiding rapid increases in inflation and overheating debt. 2015Q1 GDP growth registered 7.0% versus year-earlier levels. This was the slowest rate of annual growth since 1990. Central authorities’ target growth rate for 2015 is 7%, down from last year's 7.5% target.

Consumer spending, another growth driver in 2014, has held up well despite a slowdown in nominal wage gains. Growth was on the upswing during the first half of 2015, with y/y retail sales rates averaging above 10% for the first five months. Vehicle sales are up sharply and, with the number of licensed drivers still way outnumbering the size of the privately held fleet, the Chinese auto market has plenty of room to run.

Housing prices have continued to fall over the past year, in part due to policies put in place in late 2013 to cool an overheating market and, in part, due to oversupply, particularly in China’s smaller cities. Banks’ more cautious take on mortgage lending further dampened demand in 2015H1. Real estate price appreciation began to slow in late 2013 and actually turned negative at the beginning of 2013Q3. Moreover, housing price declines have been widespread. China’s NBS reported that all 70 of its surveyed cities registered year-on-year housing price declines last December. Given the outsized role that real estate plays in the overall economy

China’s Balancing Act Continues

• China continues to lead global growth, albeit at more moderate rates.

• Central authorities are engaging in a delicate balance of policies that will sustain growth, reduce debt, and rebalance their economy. So far, so good.

• Concerned about overshooting the mark in trying to cool real estate markets, policy has recently shifted to be more accommodative.

• Consumer spending and exports have both improved during the past 18 months reducing dependence on investment to maintain growth.

• Authorities have ample room to further stimulate the economy in the event that consumption or exports falters.

• Demographics and productivity remain favorable for long-term growth in business travel.




July 2015

(property investment accounts for about 15% of GDP and over 20% of all bank loans), Chinese authorities have become increasingly concerned with overshooting the mark, so much so that efforts to revive housing demand are already underway.

Our expectations for China’s economic outlook have changed very little since our last outlook report. Chinese authorities have been able to maintain growth while continuing their longer-term strategy of rebalancing. With nimble policy moves centered on investment, authorities have been able to keep growth near 7% while simultaneously addressing credit and debt imbalances. With a surprise boost from exports and consumer spending, along with lower oil prices, there is every reason to believe that the Chinese economy will continue on its current path of growth moderation over the forecast horizon. We expect GDP to expand by 7.1% in 2015, at or slightly above government targets, followed by a controlled deceleration into the mid-6% range through 2019.

Chinese authorities also have ample room to stimulate the economy in the event that addressing financial imbalances (e.g. real estate, local government debt burdens) overshoots the mark and weighs down overall growth. The central bank could easily inject more liquidity via quantitative easing, reduce interest rates and reserve requirements, and/or spur bank lending in other ways. Moreover, the central government could quickly ratchet up infrastructure spending in an effort to simulate demand. The central government is in a relatively strong debt position with a favorable budget outlook. All of this suggests that central authorities will be able to support growth while still addressing needed fiscal consolidation at the local level.

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12.7 14.2

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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China GDP Expected to Continue Growth Moderation with Rebalancing...

Source: NBS, IMF, Moodys Analytics, BBVA Research, Rockport Analytics

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New Home Prices Have Declined Dramatically Since Late 2013

Source: NBS

May 2015 @ -5.7%

Policy slowly shifting to temper further

declines




July 2015

India Takes its Place Among the Movers and Shakers

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GDP Growth: India & China Converging?

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India GDP Growth Accelerating

Yr/Yr: 2015Q1 @ 7.5% Qtr/Qtr: 2015Q1 @7.5%

Source: Ministry of Statistics and Programme Implementation (MOSPI), OECD

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Source: Ministry of Statistics and Programme Implementation (MOSPI), OECD

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Modi’s India Surges Ahead

• Recent indicators suggest a steadily improving economy.

• The decline in oil prices lifts India’s economy through lower consumer and business costs, along with smaller trade and fiscal deficits.

• A moderation in inflation has enabled the Reserve Bank of India (RBI) to cut its policy rate twice in 2015, with more cuts on the way.

• Policy reforms are moving forward, but much still needs to be done to open markets, improve infrastructure, and raise productivity.

• India’s economic outlook continues to brighten. Consumer spending, government demand and investment are poised to propel India forward.

• Thanks to what the World Bank calls “the Modi dividend” the investment sector is expected to make an even bigger mark on the economy in 2015 and beyond.




July 2015

Russia Backslides into Recession: Lower Oil and Sanctions Hammer Trade and Investment

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Russian Economy Backslides into Recession...

Source: Federal State Statistics Service

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Retail Sales Falling Off The Cliff in Early 2015

Source: Federal State Statistics Service

May 2015 @ -9.2%

Consumers stock up in anticipation of higher prices, shortages

Conditions worsening...

Russia In for a Long Slog

• Russia’s economic prospects have worsened considerably since last summer. The “perfect storm” of falling oil prices, sanctions, and capital flight have pushed the economy into recession.

• As a result, the ruble has lost half its value against the dollar while investment and exports plummeted.

• Meanwhile, rising inflation is hurting household purchasing power and spending.

• Unfavorable demographics, outmoded manufacturing capacity, and an overburdened infrastructure will limit long-term growth.

• In the wake of worsening economic conditions and perhaps even stronger international sanctions, Russian GDP will decline by -4.1% in 2015. Conditions are expected to marginally improve the following year (-0.8%).

• Downside risks abound and the damage inflicted on investment is problematic for longer-term growth.




July 2015

Top 15 Business Travel Markets: Economic Performance & Outlook Summary

2013 2014 2015 2016 2017-2019 2013 2014 2015 2016 2017-

2019 Real GDP Growth % Unemployment Rate % Australia 2.1 2.7 2.8 3.2 3.0 5.7 6.1 6.4 6.2 5.8 Brazil 2.7 0.1 -1.0 1.0 2.3 5.4 4.8 5.9 6.3 5.7 Canada 2.0 2.5 2.2 2.0 1.9 7.1 6.9 7.0 6.9 6.7 China 7.8 7.4 6.8 6.3 6.1 4.1 4.1 4.1 4.1 4.1 France 1.7 0.4 1.2 1.7 1.9 10.3 10.2 10.1 9.9 9.5 Germany 0.5 1.4 1.7 2.1 2.3 5.2 5.0 4.9 4.8 4.8 India 5.0 5.8 6.4 6.5 7.6 n/a n/a n/a n/a n/a Italy -1.9 -0.2 0.3 1.1 1.8 12.2 12.8 12.6 12.3 11.6 Japan 1.6 -0.1 1.0 1.2 0.6 4.0 3.6 3.7 3.7 3.8

Korea 3.0 3.3 3.3 3.5 3.7 3.1 3.5 3.6 3.5 3.3

Netherlands -0.7 0.9 1.6 1.6 1.8 7.3 7.4 7.2 7.0 6.5 Russia 1.3 0.6 -4.1 -0.8 1.3 5.5 5.1 6.5 6.5 6.0 Spain -1.2 1.3 2.4 2.7 1.8 26.1 24.5 22.6 21.1 18.9 United Kingdom

1.7 3.2 2.8 2.6 2.2 7.6 6.2 5.4 5.4 5.4

United States 2.2 2.4 2.5 3.1 2.4 7.4 6.2 5.5 5.2 4.9 World 3.2 3.0 3.5 3.8 3.9 n/a n/a n/a n/a n/a

2013 2014 2015 2016 2017-2019

2013 2014 2015 2016 2017-2019

Real Exports Yr/Yr % Consumer Prices % Australia 6.1 6.8 4.7 5.6 3.5 2.5 2.5 2.0 2.3 2.5 Brazil 3.1 -1.9 7.9 5.2 6.0 6.2 6.3 7.8 5.9 4.7 Canada 2.0 5.4 4.6 4.1 4.1 1.0 1.9 0.9 2.0 2.1 China 8.7 6.4 6.2 6.5 6.5 2.6 2.0 1.2 1.5 2.5 France 2.4 2.7 5.5 4.5 4.7 1.0 0.6 0.1 0.8 1.3 Germany 1.6 3.9 4.3 4.5 4.8 1.6 0.8 0.2 1.3 1.6 India 4.5 6.6 6.8 8.1 8.1 10.0 6.0 6.1 5.7 5.3 Italy 0.5 2.7 4.2 3.3 3.2 1.3 0.2 0.0 0.8 1.1 Japan 1.5 8.2 6.9 6.4 4.0 0.4 2.7 1.0 0.9 1.4 Korea 4.3 2.8 3.2 4.0 4.4 1.3 1.3 1.6 2.5 3.0 Netherlands 1.8 7.7 4.2 4.0 3.9 2.6 0.3 -0.1 0.9 1.3 Russia 4.1 -1.0 -2.5 3.5 3.4 6.8 7.8 17.9 9.8 5.0 Spain 4.3 4.2 6.3 5.8 5.0 1.5 -0.2 -0.7 0.7 1.1 United Kingdom

1.5 0.4 3.8 3.8 3.9 2.6 1.5 0.1 1.7 2.0

United States 3.0 3.2 2.5 2.9 3.8 1.5 1.6 0.1 1.5 2.4 World 2.9 3.1 4.5 5.3 5.7 3.9 3.6 3.5 3.4 3.5

Source: International Monitary Fund, OECD, IHS Global Insight, Wells Fargo Securities, Rockport Analytics




July 2015

Global Business Travel: Developed Markets Regain Their Prominence on the World Stage

Overview Business travel and the global economy are now into their seventh year of economic recovery since the Great Recession. Leading up to the Recession, spending on global business travel grew at a compound annual rate of 5%. After falling -7.5% in 2009, business travel spending growth has gained 5.8% per year on average. Much of this growth occurred immediately following the recession as spending recovered 8% in 2010 and 9.3% in 2011. The surge slowed in 2012 and 2013 as Europe entered its recession, China’s economy slowed and the US economic recovery remained weak. Despite mixed business travel performance in 2014, with some markets performing admirably and others continuing to struggle, aggregate spending growth returned to a healthy pace. In fact, global business travel spending grew 6.5% - well above the long run average of 4.6% annual growth. The year was highlighted by the European business travel recovery, strong business travel growth in India, stable growth in the U.S. and less-than-stellar growth in both China and Japan. Extending on the gains of last year, the global business travel market is off to a great start in 2015. Leading the way in performance are the United States and other developed markets including Germany, the U.K. and Spain. Diverging from the trend over the last few years, these key business travel markets are once again returning to leadership roles in the global travel community. Results have been mixed, however, amongst the emerging business travel markets – those that have seen tremendous growth over the last 5 – 10 years. Many of these markets continue their race towards relevance on the global stage while others have inevitably stumbled as they try to keep pace with the breakneck speed of growth from the recent past. Leading the way among these markets is India, which has returned to a high rate of business travel growth after a significant slowdown in 2012 and early 2013. Economic struggles and slowing business travel performance in the remaining BRIC markets of Brazil, Russia and China continue, however. The large majority of business travel spending in 2014 occurs in a few dominant markets. In fact, over two-thirds of total business travel spending continues to occur in the U.S., China and Western Europe. We expect spending on global business travel will hit $1.254 trillion this year, 6.5% growth over 2014. Spending growth will hit a cyclical

Global business travel continued to build momentum in 2014. Major global markets in North America and Western Europe, many of which have been on the sidelines over the last few years, are finally regaining a leadership position in the global business travel arena.




July 2015

peak next year growing 6.9% and will remain strong over the forecast horizon growing 6.0% in 2017, 6.4% in 2018 and 5.8% in 2019 as it slowly moderates back towards the historical mean.

Source: GBTA Foundation, Rockport Analytics

Shifts in the Business Travel Landscape: Identifying Risks & Opportunities While the dominant regions of North America, Western Europe and the Far East currently account for the lion’s share of spending, we continue to see the increasing relevance of secondary and tertiary markets. One consideration when targeting these markets is the amount each country spends on business travel per capita. Those countries with relatively more commerce, and with more business travel-intense industries, tend to rank higher in per-capita spend. The scatterplot below highlights the stark differences between business travel spend per capita between countries – ranging from less than $10 USD per capita in Zimbabwe to over $1,500 in Norway. Many of the business-travel-intense markets are located in more mature, wealthy and global economies. For example, many Western European and Scandinavian nations spend a relatively high amount on business travel per capita. The less travel-intense markets include those countries with large populations and less economic diversity. There are, of course, exchange rate effects at play as well since all figures are denominated in dollars, so this view may not fully reflect real purchasing power.




July 2015

Another key consideration when targeting smaller markets is the country’s growth in business travel relative to its current size. This analysis helps us to target not only the large business travel markets, but also those that are rapidly compounding their current size through robust growth. The bubble chart below illustrates the relative size of some of the top business travel markets around the globe. The forward looking growth rates on the left axis highlight how much we expect these markets to add to their mass over the next five years. Interestingly, China is no longer the business travel growth leader that it was for years, being surpassed by both India and Indonesia. While we expect this trend to continue as economic growth in China further moderates, the enormous size of China’s business travel market assures that it will continue to see the greatest annual gains in the gross amount of spending on business travel for the foreseeable future.

Argentina

Australia

Austria

Bahrain

Belgium

Brazil

Canada

Chile China

Colombia

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Denmark

Egypt

Emirates (UAE)

Finland

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July 2015

Source: GBTA Foundation, Rockport Analytics In order to help travel suppliers anticipate shifts in the global business travel market and to identify emerging opportunities, we have distilled all of the world’s major business travel markets down into four key segments: (1) The Stalwarts, (2) BRIC Markets, (3) The Newly Emerging and the (4) Midsize Matures. These four segments are based on the current size of each business travel market and their potential for growth over the next five to ten years. The Stalwarts represent the largest segment of the market, accounting for a total of $629 billion USD in business travel spending in 2014. The Stalwarts are comprised of the world’s major economies and the segment includes major markets in Europe, North America and Asia-Pacific. The Stalwarts include markets that have registered slow-to-moderate growth since at least 2000 and are considered economically mature markets. While these markets are not growing nearly as rapidly many of those in other segments, they will continue to be the most dominant business travel markets over the next five years. The next largest segment is the BRIC Markets, which include Brazil, Russia, India, China. This segment of large and rapidly growing markets will be the first segment to challenge the Stalwarts in terms of market size. Total spending among the BRIC

Australia

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Belgium

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India Indonesia

Italy

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Mexico

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Major Market Business Travel Expectations: Expected Growth (2015 - 2019 CAGR) in Business Travel Spend (BTS) and

Current Level of BTS (size of bubble)




July 2015

markets was $340 Billion USD in 2014 and we expect this amount to snowball to $528 Billion by 2019. The third market segment is The Newly Emerging. These rapidly growing business travel markets are often overlooked, as they aren’t as large as the Stalwarts or the BRIC markets. It’s important to continue to follow these markets as their rapid growth all but assures that they markets will become the business travel markets of the future. The Newly Emerging can be found in Latin America, Eastern Europe and Southeast Asia. Business travel spending amongst this segment totaled $62 Billion USD in 2014 and is expected to grow to $93 Billion USD by 2019. The final segment we identified is the Midsize Matures. These are well-established business travel markets with between $5 Billion and $17.9 Billion in annual business travel spend. Midsize Matures are not growing rapidly, but markets in this segment are critical to global commerce and will remain important business travel markets well into the future. The majority of these markets are located in Western Europe and, in total, they accounted for $66 Billion in business travel spending in 2014. We expect that total to increase to $86 Billion by 2019.




July 2015

Global Trade, Airline & Hotel Performance

Besides economic growth, global trade is probably the most important economic metric driving business travel. This is particularly true when it comes to international business travel – which generated 18% of global business travel spending in 2014. The chart below highlights the tight correlation between changes in business travel and changes in the volume of global trade in goods and services. Besides the divergence that came at the beginning of the century (post-9/11), global business travel spending has tightly tracked the volume of trade activity. In April, the World Trade Organization (WTO) again cut its world trade growth forecast from 4% to 3.3%. The original forecast for the year was 5.3%. The WTO expects volume to increase by 4% in 2014. This weak environment for trade comes at a time when economic growth around the world is performing relatively well and the longstanding trend of global trade growing at a 2x

multiple to global GDP appears to be broken. The ability to raise the growth in trade volume back up to a healthy level (above 5%) will be the most important driver of both upside potential and downside risk to our global forecast over the next five years.

Despite the drop off in trade volume, we continue to witness relatively strong

growth in premium passenger traffic in most major global routes. In fact, by IATA’s measure, thirteen of the world’s major air routes exhibited gains in premium traffic over last year, year to date, while only six routes experienced declines. Premium travel is a good proxy for the health of a business travel route as business travelers fill many of the seats in premium classes of service. Also, increases in premium classes can represent expanding corporate budgets as some business travelers move from coach classes to premium classes as corporate purse strings are loosened. Among the fastest growing routes were those in the Mid Atlantic, those within the Far East, and those between the Middle East and Europe and the Middle East and the Far East. All of the routes with major declines include travel to or from Africa except for the route between North and South America which fell 8%, year to date.

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Global Trade Volume and Spending on Global Business Travel Are Tightly Correlated

Trade Volume Global BTS




July 2015

Despite plummeting oil and jet fuel prices, we have yet to see relief in the global airfares. Healthy demand and consolidation among major airlines have played a key role in increasing airfares. We have begun to see airlines raise capacity to capitalize on this strong global demand and while airfares have

subsided in US Dollar terms (as the value of the dollar has increased against most major currencies) we continue to see price increases on the ground (in local currency terms). Carriers continue to manage capacity although we are starting to see both international and domestic passenger load factors loosen slightly from all time highs as carriers add capacity. The latest figures from IATA (January 2015) point to

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Global Demand, Capacity, Air Fare Comparisons

Global Seat Capacity,SA Top 10 Markets Business Travel Spend, SA Average Managed Air Fare

Source: OAG, GBTA Foundation, CWT Solutions, Rockport Analytics

Falling airfares mainly a function of the appreciation in USD




July 2015

international load factors just below 80% in Asia-Pacific, Europe, North America and the Middle East and exceeding 80% in Latin America; African load factors remain below 70%. The global hotel industry continues to garner extremely strong demand growth relative to supply growth. Despite low interest rates and healthy demand from both leisure and business travel segments, we continue to see less than adequate supply growth in every major world region. In fact, in both Europe and North America, hotel demand is growing at a multiple of 3 to 4 times hotel supply. In the booming regions of South America and Asia there is a bit more equilibrium but despite slowing leisure and business visitation growth, demand is still outstripping supply.

Not surprisingly, these market dynamics are putting upward pressure on occupancy rates and ADRs around the globe. Occupancy rates have risen for the past two years across every region in the world. For 2014, STR Global reports occupancy rates of 63% and 64% in the Americas, while occupancy rates in both Asia Pacific and Europe are approaching 80%. Likewise, global

average daily hotel rates (ADRs) have been rising for the last two years, with the exception of the Asia Pacific region – whose declines are the result of weakening Asian

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July 2015

currencies (notably Japanese Yen). Interestingly, Europe is witnessing the largest increases in both occupancy and ADRs, driven by a lack of hotel development and a significant bounce back in both leisure and business travel demand. As we extend our view into 2015, we are starting to see declines in US Dollar- denominated ADRs in every region except the Americas. This trend, however, is driven by the depreciation of most major currencies against the dollar over the period and local currency ADRs continue to grow.

Business Travel Around the Globe Global business is dominated by traffic that originates in Asia Pacific, Western Europe or North America. In 2014, business trips initiated in these three regions combined to make up 90% of total spending on business travel around the globe – eclipsing a total of over $1 Trillion USD for the first time. Asia Pacific continued to gain market share in 2014 while both North America and Western Europe’s shares remained the same. Asia Pacific has picked up 5% of market share since 2010 and we expect it will pick up another three points by 2019 as spending shares in both North America and Western Europe diminish.

Travelers in North America spent $318 billion USD on business travel in 2014. The United States generates the large majority (90%) of business travel spending from the region, with Mexico and Canada generating the remaining 10%. Growth in business travel spending generated from the U.S. has grown at an annual rate of only 1.4% since 2000.

North America

Asia Pacific 39%

Emerging Europe

5%

Latin America 4%

Middle East & Africa

2%

North America 27%

Western Europe 24%

Other 11%

2014 Business Travel Spending By Region Domestic plus Outbound International




July 2015

Business travel in the U.S. is dominated by domestic trips – in 2014, domestic business travel spending comprised 88% of all business travel generated in the country. International outbound experienced extraordinary growth over the last fifteen years but has been significantly challenged in recent years first by the European Recession and slower growth in emerging markets like China and Brazil. After a brief recovery in 2013 and 2014, IOB is again facing headwinds as the global economy and global trade, in particular, have taken a nosedive. We do expect IOB will at some point regain its status as the true growth driver of business travel in the U.S. but it is likely to take a few years.

A much larger proportion of business travel initiated in Mexico and Canada is international outbound travel – a trend that is driven by trade with both the U.S. and Latin America (in Mexico). In 2014, international outbound comprised 28% of total business travel in both Mexico and Canada. Spending on business travel in Canada grew 3.8% in 2014, following a down year in 2013. We expect business travel to remain in the 2 - 5% range through 2016, as lower energy prices will keep shackles on the Canadian economy in the near term. We expect performance to pick up the pace in 2017 and 2018, however. Mexican business travel had another good year in 2014 growing 4.6% and volume has been picking up in 2015. We expect Mexico will be, far-and-away the most robust business travel market on the North American continent over the next five years growing at a projected 7.7% per year over the period. The U.S. economy has shown a lot of improvement over the last year and the U.S. business travel market has followed suit. In 2014, business travel spending in the U.S. advanced a very healthy 5.4% and we continue to see improved performance in both group and transient business travel through the first two quarters of 2015. We expect spending on U.S. initiated business travel will grow another 4.9% this year. Despite this stronger growth, the U.S. remains poised to relinquish its spot as the #1 business travel market in the world by 2017 as China’s growth continues to run at a faster pace.

Business travelers in Western Europe generated $271 billion in total business travel spending in 2014. Business travel in the region is highly dispersed with 15 countries totaling more than $4 billion USD in annual business travel spend. The largest business travel markets on the continent include Germany, the U.K., France, Italy, Spain

Western Europe




July 2015

and the Netherlands, which combined accounted for $204 billion in total business travel spending in 2014.

The last few years have been extremely challenging for business travel across Western Europe2

Despite the building momentum in Western Europe’s business travel market, there is still a substantial amount of downside risk. Greece’s potential exit from the EU, unhealthy debt loads and shifts in ECB policy could derail the recovery at any time. We also continue to see a divide between the Northern Tier markets like Germany, the Netherlands and the U.K. and those in the Southern Periphery like Greece and Italy. Those in the north continue to experience stable growing economies and business travel is flourishing while the markets in the south continue to suffer from less stability that is weighing on business travel prospects. Leading the way, we are expecting 10.1% growth in German business travel spend in 2015 and 5.8% growth in both the U.K. and Sweden. This is juxtaposed to 0.1% growth expectations in Greece and 1% growth expected in Italy. The one Southern Tier market that is outperforming its peers is Spain, whose business travel market is being boosted by a robust economic recovery. We are expecting 7.7% growth in Spanish business travel spending this year.

. The sovereign debt crisis, which weighed heavily on business spending, hiring, confidence, and borrowing in 2012, continued to lock many European firms into a defensive state and, as a result, management tightened travel policies and reduced budgets. Business travel spending in Germany and the UK witnessed small positive growth in 2012, but in Italy, Spain, and France growth rates tumbled – falling to -9.7%, -6.2%, and +1.2%, respectively. The following year brought further deterioration, but by late in the second half growth was beginning to improve, indicating the beginning of a turnaround. Following a softer than expected first and second quarter in 2014, business travel growth got back on track for the remainder of the year when it expanded by 3.3%. We expect this healthy pace to build through 2015 and total business travel spending in the region will increase by 4.8% this year.

The Asia Pacific region is the largest business travel region in the world, comprising 39% of global business travel. Business travel spending in Asia Pacific totaled $459 billion USD in 2014. Business travel spending in the Asia Pacific region has grown 7.7%, annually, since 2000, more than doubling in size. We expect that business travel

Asia Pacific

2 France, German, Italy, Spain, United Kingdom plus Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Sweden, Switzerland




July 2015

spending in the region will continue to grow at 7.7% annual pace over the next five years. Two-thirds of the business travel activity in the Asia Pacific region comes from China and Japan and that share continues to grow as China’s market outpaces the rest of the region.

Business travel spending in China has grown from $32 billion USD in 2000 to $262 billion USD in 2014, growing 16.2% per year on average. Growth has slowed significantly over the last few years and we expect an average of only 8.9% growth over the next five years. Despite the slowdown, the combination of China’s size and growth continue to make this market unique. China surpassed Japan to become the second largest business travel market in the world in 2006 and will surpass the U.S. as the largest business travel market in the world by 2017. The infrastructure development necessary to support the enormous growth in Chinese travel, both business and leisure, continues at a rapid pace. While overall passenger volume has been on the rise, it is being distributed more to the nation’s secondary airports as the share of total traffic amongst the top-10 has been declining. The construction of China’s most ambitious travel infrastructure project, Beijing’s second international airport with a total budget of $12.8 billion USD, began on December 26th of last year. The airport will house half a dozen civilian runways — double the number at Beijing’s current international airport.

Japan remains the third largest business travel market in the world – a total of $61 billion was spent on business travel in 2014 – but deflation and a stagnant economy have eroded some of the country’s relevance over the last ten years. Policies put into place by Prime Minister Abe in 2012 and 2013 have bolstered the domestic economy and stock market, although a sales tax hike in 2014 killed some of the momentum from that stimulus. The domestic economy is beginning to regain momentum, however, and we expect this momentum to trickle down to the business travel sector, which should grow by 1.1% this year. We are expecting average growth of 2.5% over the next five years, significantly better than the negative growth over the last five years.

Over the last fifteen years, India has worked its way up the rankings of major global business travel markets from #24 in 2000 to #10 in the world in 2013, spending a total of $24.4 billion on business travel. Prospects for Indian business travel have improved dramatically over the last year as the new Modi administration has boosted business and consumer confidence and a healthier economy is driving domestic performance. We expect spending on Indian business travel will grow 9.8% this year and 11.5% on average over the next five years. The four Asian Tigers, led by South Korea, will continue to grow business travel market share over the next five years. In aggregate,




July 2015

the Asian Tigers spent $44.5 billion on business travel in 2014 – around 10% of spending in the region. Slowing growth in China has taken some of the wind out of the Tiger’s sails but we still expect growth in the 4% to 7% range over the next five years. The majority of South Korea’s business travel market serves the domestic economy, but the other three Tigers – Singapore, Hong Kong and Taiwan – all maintain export-focused economies leading to a high proportion of spending on international outbound business travel.

Latin American business travel totaled $52 billion in 2014. The majority of business travel activity within Latin America is generated in Brazil, which totaled $32 billion USD in 2014. The next largest market is Colombia with only $4.4 billion in business travel spend in 2013. Other key Latin American markets include Venezuela, Peru, Chile and Argentina – each tallied roughly $2.5 to 3 billion in business travel spending in 2014. Total growth in Latin American business travel spending has averaged 6.8% since 2000.

Latin America

Business travel spending in Latin America will grow 5.9% per year over the forecast horizon.

Growth in business travel spending in Brazil has slowed significantly from its aggressive pace earlier in the decade and we continue to downgrade our forecast for both international and IOB business travel in Brazil. The struggling domestic economy, the lack of significant infrastructure improvements and troubled regional trading partners are all driving our less-optimistic forecast. Brazilian business travel spending totaled $32 billion in 2014, 3.7% annual growth and is poised to grow another 1.8% this year, significantly lower than the average of 7.9% annual growth achieved from 2000 – 2014.

The Middle East, Emerging Europe and Africa represent a total of $77 billion in business travel spend in 2014. Business travel in the Middle East remains highly correlated with the health of the energy sector and has slowed significantly over the last year as oil prices have tanked. This trend is affecting every major market in the region. Spending on business travel in Saudi Arabia grew only 1.8% in 2014 and will fall by -3.4% this year; spending in the United Arab Emirates (UAE) grew 2.3% last year and will fall -1.9% this year; and spending in Kuwait fell -3.4% last year and will plummet another -11.6% this year. Spending in Qatar grew 6.8% last year and will fall by 1.1% in 2015.

The Middle East, Emerging Europe & Africa




July 2015

Business travel in Emerging Europe has demonstrated some of the strongest growth in the world since 2000, growing at a compound annual rate of 9% over the last 14 years. However, growth has been significantly challenged as of late. First, the EU Recession challenged growth in the region in 2012 and 2013 and then the Ukrainian crisis and plummeting oil prices took over as primary economic headwinds in the region. As a result, business travel spending grew only 0.3% last year and we expect only 2.3% this year. Russia, the largest economy in the region has taken an even harder hit – business travel spending fell -6.7% last year and is set to fall another -2.7% this year.




July 2015

Share of Regional Business Travel Spend by Country

Business Travel Spend

2014 (mn US$)

% of Region 2000

% of Region 2014

% of Region 2018

China $261,534 19.7% 57.0% 61.9% Japan $61,514 45.8% 13.4% 10.1% South Korea $32,116 10.4% 7.0% 5.7% India $26,449 4.2% 5.8% 6.6% Other $77,586 19.9% 16.9% 15.6% Asia Pacific Total $459,198 100.0% 100.0% 100.0% United States $288,432 92.9% 91% 89.6% Other $29,964 7.1% 9% 10.4% North America Total $318,396 100.0% 100.0% 100.0% Germany $57,883 19.6% 21.3% 23.7% United Kingdom $43,512 18.6% 16.0% 16.3% France $36,013 12.9% 13.3% 12.3% Italy $30,933 13.2% 11.4% 10.3% Spain $17,987 5.6% 6.6% 6.8% Netherlands $17,807 6.9% 6.6% 6.3% Other $67,168 23.3% 24.8% 24.3% Western Europe Total $271,302 100.0% 100.0% 100.0% Russia $20,909 25.6% 39.7% 33.6% Turkey $14,955 35.8% 28.4% 31.3% Poland $5,372 13.4% 10.2% 11.3% Czech Republic $3,135 8.2% 6.0% 6.7% Other $8,256 17.0% 15.7% 17.1% Emerging Europe Total $52,626 100.0% 100.0% 100.0% Brazil $31,957 53.4% 61.5% 57.5% Colombia $4,380 7.6% 8.4% 11.1% Chile $3,187 5.9% 6.1% 6.3% Peru $3,283 5.2% 6.3% 6.3% Venezuela $2,870 7.6% 5.5% 5.3% Argentina $2,532 11.9% 4.9% 6.4% Other $3,715 8.4% 7.2% 7.0% Latin America Total $51,923

100.0% 100.0% 100.0%

South Africa $4,718 19.9% 19.4% 17.9% Israel $2,598 14.4% 10.7% 10.4% Saudi Arabia $2,518 13.5% 10.4% 10.5% Emirates (UAE) $2,116 6.8% 8.7% 8.1% Egypt $1,924 14.0% 7.9% 8.0% Other $10,441 31.3% 42.9% 45.1% Middle East & Africa Total $24,315 100.0% 100.0% 100.0%




July 2015

GBTA BTI™ The GBTA Foundation has constructed a headline measure of the current and projected level of business travel – the GBTA BTI™. This index of business travel activity has been created for total global business travel as well as every major business travel market in the world. The GBTA BTI is derived from total business travel spending and has been indexed on a base year of 2005.

The GBTA BTI™ trends show stark differences from country to country. The graph below shows the GBTA BTI™ of four key business travel markets – the U.S., China, India and Germany. The developed nations of Germany and the U.S. have both experienced modest growth in business travel – 48% and 33%, respectively, since the GBTA BTI™ base year of 2005. Meanwhile, the emerging business travel market of India is nearly 3x its 2005 base value

100 106 122 125 114 122 128 127 127 131 137 144 151 160 167 100 123

161 187 185 212 247 267 293 314 338 367 389

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Growth in GBTA BTI™: Developed vs. Emerging Markets

Developed Market GBTA BTI™ Emerging Market GBTA BTI™




July 2015

and China’s index is nearly 5x its 2005 base level. We will continue to see extraordinary growth in GBTA BTI™ among emerging markets. Despite the slowdown in China, we expect BTI will increase to 7.5x its base value by 2019. India will have increased nearly 5x its base value by the end of the forecast horizon. Developed market growth will continue to be more modest relative to emerging market growth although performance is picking up. We expect the German GBTA BTI™ to reach 217 by 2019, while the GBTA BTI™ for the U.S. to hit 161.

Global BTI™ got back on track in 2014 after slowing growth in both 2012 and 2013. The index gained 10 points to finish the year at 166. Despite the slowdown and global trade activity, we expect that the global economy will remain strong through 2019, which will support rapid growth in the GBTA Global BTI™. Our expectations are highlighted in the graph below that correlates the Global BTI™ to total global sales.

There is a clear positive correlation between the two metrics, although global sales tend to grow at a slightly higher rate than business travel over time, as the latter becomes more productive (i.e., as time increases, it takes less business travel to generate the same level of global sales). We also expect a clear divergence in 2015 as the U.S. Dollar is appreciating against most major currencies. This trend will lead to a drop in Global Sales when reported in US Dollars. Our business travel spending forecast does not suffer the same fate as we have made adjustments to the values to better reflect business travel as it happens on the ground, which mutes the impact of currency fluctuations.

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Global GBTA BTI™ and Global Sales (Indexed)

GBTA Global BTI™ Global Sales Index




July 2015

GBTA BTI™ Outlook: Top 15 Business Travel Markets 2014 2015 2016 2017 2018 2019

United States 133 140 147 152 156 161 % Growth 4.9% 5.1% 5.1% 3.5% 2.9% 2.8% China 472 539 604 651 699 758 % Growth 16.6% 14.2% 12.0% 7.8% 7.5% 8.4% Japan 108 109 111 114 117 121 % Growth 1.1% 1.0% 2.2% 2.4% 2.7% 3.0% Germany 148 162 178 189 207 217 % Growth 7.7% 10.1% 9.4% 6.2% 9.7% 4.6% United Kingdom 119 126 134 143 153 160 % Growth 5.4% 5.8% 6.2% 7.0% 6.5% 4.7% France 132 136 141 147 155 162 % Growth 2.0% 3.0% 4.0% 3.7% 5.6% 4.7% South Korea 151 148 159 166 175 183 % Growth 3.9% -1.8% 7.0% 4.9% 5.0% 4.7% Brazil 265 269 283 291 307 320 % Growth 3.7% 1.8% 5.0% 2.8% 5.6% 4.1% Italy 108 109 111 116 124 129 % Growth 1.3% 1.0% 1.8% 4.4% 6.4% 4.1% India 289 318 352 379 430 492 % Growth 9.7% 9.8% 10.9% 7.5% 13.5% 14.3% Canada 144 147 155 168 181 190 % Growth 3.8% 2.3% 5.3% 8.6% 7.5% 5.0% Russia 232 226 227 237 254 269 % Growth -6.7% -2.7% 0.7% 4.4% 6.8% 6.0% Australia 158 167 172 178 186 194 % Growth 1.3% 5.7% 3.2% 3.8% 4.2% 4.2% Spain 124 133 140 148 159 167 % Growth 6.8% 7.7% 5.4% 5.1% 7.6% 5.1% Netherlands 125 127 131 140 151 158 % Growth -1.7% 2.1% 2.8% 6.5% 8.0% 5.1% GBTA Global BTI™ 166 177 189 201 214 226 % Growth 6.5% 6.5% 6.9% 6.0% 6.4% 5.8%

Business Travel by Industry Sector Another important element of the GBTA Foundation’s business travel database estimates global travel spending by industry. In fact, each of the 75 countries in the database is further detailed by sector. Business travel is a critical input to virtually every industry and business. And some industries use travel much more intensely than others. This section of the report focuses on industry performance in 2014 and provides projections for 2015 through 2019. Industry top-line revenue or sales will be compared




July 2015

to business travel spending in absolute terms. We have also compared sectors on a relative basis identifying those industries that are more travel intense and those that are more concentrated across the globe.

Top Line Performance Business Travel Spending

Global Industry

2014 Industry

Sales (billions)

% of Global Total

2015-2019 CAGR

2014 BTS

(billions)

% of Global Total

2015-2019 CAGR

Business Travel

Productivity Growth

2015-2019

Utilities $3,633 2.50% 8% $107.30 9% 6.60% 1.20% Food Processing and Services $6,185 4.20% 7% $102.70 9% 4.90% 0.70%

Real Estate $8,211 5.60% 7% $85.60 7% 7.90% 3.50% Professional & Business Services $7,422 5.10% 8% $70.00 6% 1.40% -3.30%

Social & Personal Services $3,857 2.60% 6% $62.60 5% 6.60% 2.70%

Government $7,612 5.20% 6% $61.50 5% 4.60% 0.70%

Transportation Services $6,557 4.50% 8% $60.30 5% 6.50% 1.50%

Wholesale Trade $7,635 5.20% 7% $55.70 5% 1.60% -2.50%

Construction $10,071 6.90% 8% $51.60 4% 7.30% 1.50%

Banking & Finance $7,570 5.20% 8% $40.70 3% 3.70% -1.90%

Communications Services $3,287 2.20% 6% $40.70 3% 4.70% 1.40% Rubber & Plastic Manufacturing $1,595 1.10% 7% $40.30 3% 9.40% 4.50%

Agriculture, Hunting, Forestry, Fishing $5,484 3.70% 6% $40.10 3% 5.30% 1.70%

Equipment Rental & Leasing $929 0.60% 7% $31.20 3% 3.80% -0.60%

Petroleum Refining $3,789 2.60% 20% $27.80 2% 20.40% 2.40% Non-Metallic Mineral Products $1,744 1.20% 9% $26.00 2% 4.60% -1.50%

Paper & Paper Products $1,113 0.80% 7% $23.70 2% 8.60% 4.20%

Hotels & Restaurants $3,485 2.40% 7% $20.80 2% 6.20% 1.60%

Fabricated Metal Products $2,454 1.70% 7% $19.80 2% 4.60% 0.10% Communication Equipment $2,235 1.50% 7% $19.50 2% 9.40% 3.90%

Global Total $146,764.40 100.00% 8% $1,177.80 100% 6.30% 1.30%

The two tables in this section present the level and growth of business travel spending by industry, as well as how industries compare with respect to their utilization of business travel. This information can be used to help travel suppliers target segments and better allocate resources. Travel management can use this information to better understand how their organization differs from the average of all firms in their sector and how they compare in terms of travel utilization.




July 2015

The first table itemizes the performance of both global industry sales and business travel spending during 2014, along with our projections through 2019. The industries are ranked based upon the level of their 2014 travel spend reported in U.S. dollars. The Utilities sector leads the way with $107.3 billion USD in global business travel spending in 2014. This has been a long-term trend that we expect this to continue for some time as many emerging economies improve their basic utilities infrastructure. Further compounding the trend is the fact that utilities are relatively travel intense -on a per-dollar of sales basis, they require relatively more business travel on average. Our definition of business travel includes installation, maintenance, and customer service trips by utility employees. Food Processing and Services has a similar profile, hence its #2 spot in the rankings.

The sector with the highest growth in business travel spending over the next five years, 20.4% on average, will be petroleum refining, which is expected to bounce back as the price of oil begins to rise. Spending in the Construction (7.3%) and Real Estate (7.9%) sectors will also continue to witness extraordinary growth over the next five years as the global Real Estate recovery continues. Lastly, we expect significant business travel spending growth in basic

manufacturing and in sectors required to build and support infrastructure, as markets in Asia, South America, Africa and Eastern Europe continue to mature. These include Transportation Services (6.5%), Manufacturing of Communications Equipment (9.4%), Rubber & Plastic Manufacturing (9.4%) and Paper & Paper Products Manufacturing (8.6%).

Business Travel Productivity Growth identifies the relative growth of business travel spending versus the industry’s expected top-line sales growth. For those sectors with negative growth rates business travel productivity is rising. They are becoming relatively less business travel intense. That is, over time they will require less business travel spending to support the same level of industry sales. More mature industries, dominated by advanced economies, should be expected to see travel productivity

Industry

2014 Business

Travel Spend

(Billions $USD)

Travel Intensity

Index Equipment Rental & Leasing $31.2 419

Utilities $107.3 368 Rubber & Plastic Manufacturing $40.3 315

Paper & Paper Products $23.7 265 Food Processing and Services $102.7 207

Social & Personal Services $62.6 202 Non-Metallic Mineral Products $26.0 186

Communications Services $40.7 154 Real Estate $85.6 130 Professional & Business Services $70.0 118

Transportation Services $60.3 115 Communication Equipment $19.5 109

Government $61.5 101 Fabricated Metal Products $19.8 101

Grand Total $1,178 100

Petroleum Refining $27.8 92 Agriculture, Hunting, Forestry, Fishing $40.1 91

Wholesale Trade $55.7 91 Hotels & Restaurants $20.8 74 Banking & Finance $40.7 67 Construction $51.6 64




July 2015

improvement (declining growth rates). This is, in part, a function of the rising adoption and effectiveness of travel management programs.

The second table examines the question of relative travel intensity by industry. Those that show Travel Intensity Indexes above 100 identify industries that use business travel more intensely than the global average of all sectors. Utilities and Leasing firms lead this list due to their heightened use of installation, maintenance, and customer service-oriented business travel. On the other hand, industries such as Construction, Banking and Oil Refining, look to business travel as a less important input relative to their top-line sales and the global average of all sectors. Note that a lower Travel Intensity score does not imply that business travel spending is insignificant. The bottom two sectors in this ranking had business travel spending of over $40 billion USD each in 2013.

A Look Back at Last Year’s Global GBTA BTI™ Outlook: How Did We Do? The global economy has gone through a number of volatile years, as have the levels of business travel spending across the 75 countries featured in our analysis. Given the high levels of volatility and uncertainty, we feel it is important to look at how our model for assessing the future of global business travel is holding up against reality.

The table below highlights the GBTA BTI™ Outlook for the top 15-business travel markets in the world. There have been a few notable changes in the ranking of global business travel markets over the past year. In 2014, both Brazil and Russia slipped one spot in the rankings as business travel growth slowed in Brazil and plummeted in Russia. Spain picked up one spot in the global rankings as the Spanish economy and business travel market saw significant recovery over 2013.

The table below also compares last year’s outlook for 2014 business travel growth with actual 2014 growth rates reported in this year’s study. In aggregate, we over-estimated total growth by 0.3 percentage points. We projected growth of 6.9% but spending only grew by 6.5%. Among the top 15 business travel markets, we over-estimated about half and under-estimated the other half. Among the top 15 business travel markets there was a margin of error ranging from -8.7% on the negative side to a positive growth differential of 2.9%.




July 2015

2014 Business Travel Spending Annual Growth

Top 15 Markets 2014 Report - 2014 Growth

Projection

2015 Report - 2014 Growth

Actual

Percentage Point

Difference United States 6.8% 5.4% -1.4% China 16.5% 16.6% 0.1% Japan -1.8% 1.1% 2.9% Germany 7.0% 7.7% 0.7% United Kingdom 4.4% 5.4% 1.0% France 5.4% 2.0% -3.4% South Korea 5.8% 3.9% -1.9% Brazil 12.5% 3.7% -8.7% Italy 2.8% 1.3% -1.5% India 2.1% 9.7% 7.7% Canada 2.5% 3.8% 1.3% Russia -5.4% -6.7% -1.3% Australia 1.1% 1.3% 0.2% Spain 4.0% 6.8% 2.8% Netherlands 1.6% -1.7% -3.3% Grand Total 6.9% 6.5% -0.4%




July 2015

Country Profiles: Business Travel Spending in the World’s Top Markets

Globalization and shifting balances in trade, capital flows, demographics, and politics are reshaping the landscape of business travel. There are, of course, the longstanding dominant travel markets, such as the U.S. and Western Europe. There are also a handful of up and coming players, led by China, India, and Brazil, among others.

Using the master data cube created during the Global GBTA BTI™ Outlook 2015 - 2019, we have developed a profile of the top business travel markets. We present current levels of business travel spending, past trends, and our outlook through 2019 on one page for each country. We also break out travel spend by top 20 industry segments, helping to identify which sectors drive business travel activity in each market. In the industry table, we also categorize each sector by “status”, a way to group industries according to business travel opportunity. Finally, the 2014 GBTA BTI™ for each country is highlighted along with our expectation of where that index will be in five years’ time.

The Industry Status groupings are determined as follows:

Status Criteria Large Industry Small Industry

High Projected GBTA BTI™ Growth Star Emerging

Lower Projected GBTA BTI™ Growth Mature Low Priority




July 2015

Total Industry Sales Business Travel Spending BTS Growth Outlook

Industry 2014 Sales (bn US$)

2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $3,633 $107,295 9.1% 4.7% 2.3% 1.6% 6.6% Mature Food Processing and Services $6,185 $102,712 8.7% 4.5% 6.0% 6.0% 4.9% Mature Real Estate $8,211 $85,557 7.3% 5.5% 7.7% 9.2% 7.9% Star Professional & Business Services $7,422 $70,048 5.9% 1.9% 3.8% 4.1% 1.4% Mature Social & Personal Services $3,857 $62,568 5.3% 3.6% 7.2% 8.2% 6.6% Mature Government $7,612 $61,536 5.2% 3.7% 4.4% 5.2% 4.6% Mature Transportation Services $6,557 $60,309 5.1% 5.0% 6.4% 8.5% 6.5% Mature Wholesale Trade $7,635 $55,702 4.7% 2.8% 3.8% 5.6% 1.6% Mature Construction $10,071 $51,635 4.4% 5.6% 8.8% 9.2% 7.3% Star Banking & Finance $7,570 $40,662 3.5% 3.6% 5.6% 5.6% 3.7% Mature Communications Services $3,287 $40,661 3.5% 4.3% 5.8% 7.9% 4.7% Mature Rubber & Plastic Manufacturing $1,595 $40,313 3.4% 7.5% 11.9% 12.2% 9.4% Star Agriculture, Hunting, Forestry, Fishing $5,484 $40,065 3.4% 6.3% 5.9% 6.3% 5.3% Mature Equipment Rental & Leasing $929 $31,246 2.7% 2.2% 4.2% 5.7% 3.8% Mature Petroleum Refining $3,789 $27,841 2.4% 7.1% 0.9% -33.5% 20.4% Emerging Non-Metallic Mineral Products $1,744 $25,961 2.2% 5.1% 9.8% 9.2% 4.6% Low Priority Paper & Paper Products $1,113 $23,680 2.0% 6.3% 10.3% 11.3% 8.6% Emerging Hotels & Restaurants $3,485 $20,790 1.8% 3.5% 7.3% 8.8% 6.2% Low Priority Fabricated Metal Products $2,454 $19,839 1.7% 4.7% 8.1% 8.0% 4.6% Low Priority Communication Equipment $2,235 $19,467 1.7% 5.2% 12.5% 12.6% 9.4% Emerging Chemicals & Chemical Products $5,276 $17,494 1.5% 7.6% 9.6% 11.2% 7.8% Emerging

Grand Total $146,764 $1,177,761 100.0% 4.5% 6.5% 6.5% 6.3% Mature

World GBTA BTI™ 2014: 166

2019: 226 Total spending on global business travel reached $1.2 trillion USD in 2014, growing 6.5% over 2013. We expect the global economy will continue to gain momentum in 2015, pushing business travel spending to an annual total of $1.3 trillion USD. Spending growth will moderate slightly over the forecast horizon, totaling 6.3% on average through 2019. Real Estate, Construction and Rubber & Plastic Manufacturing will lead global business travel growth over the next five years. Mature business travel sectors including Utilities, Food Processing & Services, Transportation and Government will also remain key contributors to global business travel spending.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Real Estate $2,787 $33,923 11.8% 4.1% 7.6% 8.8% 6.4% Star Professional & Business Services $2,575 $28,010 9.7% 0.1% 4.8% 4.4% -0.5% Mature Government $2,427 $23,220 8.1% 2.1% 2.8% 3.3% 2.2% Mature Social & Personal Services $1,017 $19,468 6.7% 1.1% 8.5% 8.7% 4.9% Star Food Processing and Services $932 $18,959 6.6% 1.0% 3.6% 3.3% 1.3% Mature Utilities $442 $15,812 5.5% -0.9% 2.6% 0.3% 3.8% Mature Wholesale Trade $1,562 $13,978 4.8% 0.6% 2.9% 4.2% -0.9% Mature Communications Services $950 $13,641 4.7% 2.4% 3.5% 5.6% 1.4% Mature Banking & Finance $2,227 $13,566 4.7% 0.7% 7.5% 5.9% 1.9% Mature Equipment Rental & Leasing $320 $12,526 4.3% 0.3% 3.4% 4.5% 1.9% Mature Transportation Services $1,019 $11,750 4.1% 3.3% 7.3% 7.9% 3.9% Mature Petroleum Refining $786 $7,503 2.6% 6.4% 1.1% -34.6% 18.1% Star Construction $1,197 $7,438 2.6% 0.2% 7.4% 5.4% 6.7% Star Rubber & Plastic Manufacturing $235 $7,163 2.5% 2.9% 13.5% 13.0% 7.9% Star Hotels & Restaurants $880 $6,155 2.1% 1.7% 6.7% 8.3% 4.1% Emerging Education $1,254 $5,524 1.9% 6.9% 9.3% 11.6% 8.8% Emerging Computer Service & Related Activities $748 $4,706 1.6% 1.6% 2.1% 2.7% -1.9% Low Priority Paper & Paper Products $169 $4,247 1.5% 1.1% 3.7% 7.7% 4.9% Emerging Transportation Equipment $336 $4,199 1.5% 2.7% 8.2% 9.2% 8.3% Emerging Retail Trade $1,715 $3,882 1.3% 1.5% 6.7% 7.7% 2.5% Low Priority Agriculture, Hunting, Forestry, Fishing $441 $3,631 1.3% 2.4% -5.7% 5.4% 2.2% Low Priority

Grand Total $30,974 $288,432 100.0% 1.4% 5.4% 4.9% 3.6% Mature

United States GBTA BTI™ 2014: 133

2019: 161 Total spending on business travel originating in the U.S. reached $288 billion USD in 2014, $15 billion more than 2013 The U.S. economy continues to pick up steam and we expect an even stronger year for business travel in 2015. By 2019, spending is expected to hit nearly $350 billion USD, averaging growth of over 4% per year.

Over the next five years, business travel growth will be led by the real estate, construction, education and transportation sectors. Two of the largest business travel sectors in the country will struggle over the next five years – government will grow only 2.2% and Professional& Business Services will lose -0.5%.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $1,041 $31,574 12.1% 15.2% 10.1% 6.8% 7.7% Mature Food Processing and Services $1,704 $29,396 11.2% 17.7% 16.0% 13.2% 7.5% Mature Construction $2,770 $14,595 5.6% 19.8% 19.0% 16.4% 7.9% Mature Non-Metallic Mineral Products $874 $13,477 5.2% 17.9% 16.5% 14.4% 6.0% Mature Rubber & Plastic Manufacturing $462 $11,954 4.6% 20.4% 21.4% 19.2% 11.4% Star Wholesale Trade $1,550 $11,762 4.5% 11.8% 14.3% 12.9% 3.6% Mature Agriculture, Hunting, Forestry, Fishing $1,605 $11,202 4.3% 9.4% 10.7% 10.5% 5.9% Mature Communication Equipment $1,072 $10,092 3.9% 20.3% 21.6% 20.4% 11.7% Star Textiles $639 $9,826 3.8% 17.3% 19.1% 17.4% 10.4% Star Paper & Paper Products $395 $8,425 3.2% 23.7% 19.7% 17.8% 10.3% Star Electrical Machinery & Apparatus $842 $7,925 3.0% 23.4% 22.2% 20.6% 13.5% Star Transportation Services $890 $7,751 3.0% 13.3% 15.8% 16.7% 9.8% Star Real Estate $711 $7,342 2.8% 16.5% 14.5% 16.4% 11.1% Star Fabricated Metal Products $867 $7,145 2.7% 22.4% 17.9% 15.0% 6.2% Mature Professional & Business Services $688 $6,346 2.4% 16.8% 13.3% 12.2% 5.4% Mature Chemicals & Chemical Products $1,862 $6,113 2.3% 20.1% 20.2% 19.0% 9.8% Emerging Basic Metals Manufacturing $2,071 $5,999 2.3% 26.4% 21.2% 19.3% 11.1% Emerging Communications Services $475 $5,789 2.2% 15.3% 19.8% 19.3% 8.3% Low Priority Government $702 $5,694 2.2% 12.0% 17.8% 17.3% 9.3% Low Priority Petroleum Refining $663 $5,368 2.1% 15.3% 11.1% -26.9% 22.0% Emerging Industrial Machinery & Equipment $1,242 $5,035 1.9% 22.6% 20.6% 19.5% 10.2% Emerging


China GBTA BTI™ 2014: 472

2019: 758

China’s business travel market hit $261 billion USD in 2014, $37 billion more than 2013. Despite the slowdown in China’s economy, business travel continues to experience healthy gains, growing an average of 16.2% since 2000. Moderating economic growth will lead to slower growth over the forecast horizon as business travel advances an average of 8.9% per year through 2019. The top business travel market segments continue to be those associated with infrastructure building, exports, and service development. Some of China’s fast growing sectors like utilities, food processing and construction are starting to mature. Growth over the next five years will come from manufacturing & textiles.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $229 $7,239 11.8% -1.5% -0.8% -1.9% 3.4% Star Real Estate $662 $6,139 10.0% 1.6% 3.6% 5.7% 4.1% Star Food Processing and Services $302 $4,537 7.4% -2.4% -2.0% 0.1% 0.4% Mature Social & Personal Services $278 $4,099 6.7% -2.1% 2.3% 2.4% 3.1% Star Transportation Services $400 $3,230 5.3% -0.4% 3.6% 3.7% 3.5% Star Wholesale Trade $455 $3,012 4.9% -4.4% -3.2% -1.3% -1.6% Mature Construction $657 $2,910 4.7% -1.7% 1.5% 4.3% 4.4% Star Government $415 $2,860 4.7% -1.0% 1.9% 1.7% 0.5% Mature Professional & Business Services $343 $2,756 4.5% -3.1% -2.4% -2.2% -2.1% Mature Rubber & Plastic Manufacturing $122 $2,704 4.4% 1.4% 4.9% 3.5% 4.2% Star Banking & Finance $427 $1,935 3.1% -1.0% 0.1% 1.2% -0.1% Mature Hotels & Restaurants $319 $1,657 2.7% -0.7% 2.5% 4.7% 2.4% Mature Communications Services $151 $1,634 2.7% -1.6% 1.6% 5.6% 1.5% Mature Equipment Rental & Leasing $54 $1,587 2.6% -3.6% -2.1% 0.0% 0.9% Mature Petroleum Refining $215 $1,384 2.3% 1.5% -5.5% -37.2% 16.7% Emerging Paper & Paper Products $76 $1,377 2.2% 0.8% 6.1% 4.3% 4.5% Emerging Industrial Machinery & Equipment $298 $1,094 1.8% 3.8% 12.3% 12.8% 5.6% Emerging Communication Equipment $98 $990 1.6% -4.3% 1.7% -2.4% 3.4% Emerging Basic Metals Manufacturing $371 $932 1.5% 6.1% 6.2% 9.3% 5.4% Emerging Non-Metallic Mineral Products $67 $877 1.4% -3.9% 1.6% -0.3% 0.0% Low Priority Agriculture, Hunting, Forestry, Fishing $127 $829 1.3% -1.4% -1.0% -3.4% 0.2% Low Priority

Grand Total $8,640 $61,514 100.0% -1.4% 1.1% 1.0% 2.6% Star

Japan GBTA BTI™ 2014: 108

2019: 121 Japanese business travel has mostly moved sideways over the last fifteen years. From the period of 2000 – 2014, average spending growth is negative, falling -1.4% per year. Monetary and fiscal policies aimed at stimulating growth should help the Japanese economy and support higher levels of business travel over the next five years. We expect that the average growth in business travel spending will elevate to 2.6% per year over the period. Japan has a number of “Star” sectors leading the way – those business travel sector that are very large and also growing faster than total business travel within the country. These include Utilities, Real Estate, Social & Personal Services and Transportation Services.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $199 $6,141 10.6% 7.4% -0.2% 2.7% 7.7% Star Real Estate $484 $5,085 8.8% 5.3% 10.9% 14.0% 10.3% Star Professional & Business Services $486 $4,566 7.9% 2.4% 5.8% 7.8% 3.2% Mature Social & Personal Services $251 $4,149 7.2% 4.1% 9.6% 12.9% 8.3% Star Transportation Services $333 $3,683 6.4% 5.1% 10.1% 12.9% 7.8% Star Food Processing and Services $199 $3,489 6.0% 1.8% 5.9% 8.5% 6.1% Mature Rubber & Plastic Manufacturing $101 $2,660 4.6% 7.3% 11.0% 13.8% 9.9% Star Government $293 $2,423 4.2% 3.2% 8.2% 10.5% 6.6% Mature Equipment Rental & Leasing $69 $2,351 4.1% 1.7% 7.1% 10.7% 5.6% Mature Construction $354 $1,901 3.3% 3.2% 10.7% 14.4% 7.9% Star Banking & Finance $359 $1,890 3.3% 4.0% 5.4% 8.2% 4.5% Mature Wholesale Trade $242 $1,872 3.2% 1.1% 5.6% 9.9% 3.0% Mature Fabricated Metal Products $180 $1,507 2.6% 3.9% 7.6% 10.1% 5.0% Mature Communications Services $116 $1,433 2.5% 3.8% 8.3% 11.7% 6.4% Mature Electrical Machinery & Apparatus $139 $1,337 2.3% 6.1% 9.8% 13.2% 10.1% Emerging Industrial Machinery & Equipment $312 $1,290 2.2% 8.7% 12.5% 16.1% 11.0% Emerging Paper & Paper Products $51 $1,118 1.9% 6.0% 9.4% 12.5% 9.2% Emerging Motor Vehicles $479 $942 1.6% 7.6% 13.4% 11.1% 8.0% Emerging Non-Metallic Mineral Products $58 $914 1.6% 0.6% 7.8% 9.8% 4.0% Low Priority Chemicals & Chemical Products $235 $786 1.4% 5.2% 6.9% 12.6% 7.9% Emerging Petroleum Refining $94 $779 1.3% 5.3% 1.8% -32.7% 20.9% Emerging


Germany GBTA BTI™ 2014: 148

2019: 217 Considering the economic challenges Europe has seen over the past 5 years, Germany’s business travel performance has been remarkable. In 2014, total spending grew to $58 billion USD, up $4 billion from 2013. Germany’s strong domestic and economy and diversity of trading partners has helped its business travel market weather the storm through the European Recession. Growth will continue through at an average rate of 7.5% - tremendous growth for a mature market.

Star markets in Germany include Utilities, Real Estate, Transportation and Rubber & Plastic Manufacturing. Mature sectors like Food Processing & Services and Professional & Business services will also play a key role over the next five years.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Professional & Business Services $511 $5,058 11.6% 2.7% 8.1% 5.2% 3.3% Mature Real Estate $399 $4,422 10.2% 7.5% 7.9% 8.4% 8.7% Star Social & Personal Services $253 $4,410 10.1% 4.7% 7.5% 8.1% 7.7% Star Utilities $108 $3,527 8.1% 0.7% -3.9% -0.7% 6.4% Star Banking & Finance $419 $2,325 5.3% 3.6% 3.4% 4.2% 4.6% Mature Food Processing and Services $119 $2,206 5.1% -0.7% 7.1% 4.3% 4.0% Mature Construction $386 $2,180 5.0% 3.9% 9.4% 9.0% 8.2% Star Wholesale Trade $259 $2,111 4.9% 1.5% 1.9% 4.6% 2.6% Mature Transportation Services $197 $2,101 4.8% 0.0% 4.4% 8.3% 6.5% Star Government $225 $1,959 4.5% 2.0% 1.9% 4.1% 4.4% Mature Equipment Rental & Leasing $46 $1,634 3.8% 2.5% 6.3% 5.3% 5.7% Mature Education $298 $1,193 2.7% 10.5% 9.3% 11.8% 11.3% Star Communications Services $85 $1,117 2.6% 0.2% 4.3% 6.4% 5.8% Mature Rubber & Plastic Manufacturing $36 $1,012 2.3% 2.9% 8.7% 9.0% 8.4% Emerging Hotels & Restaurants $147 $938 2.2% 2.1% 7.7% 7.7% 7.3% Emerging Computer Service & Related Activities $134 $769 1.8% 0.6% 1.0% 3.0% 1.5% Low Priority Transportation Equipment $60 $687 1.6% 2.0% 4.0% 7.3% 10.5% Emerging Printing & Publishing $69 $647 1.5% -1.0% 0.7% 1.9% 2.0% Low Priority Retail Trade $308 $634 1.5% 2.0% 4.8% 5.8% 5.2% Low Priority Paper & Paper Products $23 $530 1.2% 2.9% 8.8% 8.8% 7.7% Emerging Fabricated Metal Products $57 $508 1.2% 1.0% 5.4% 4.5% 3.7% Low Priority


United Kingdom GBTA BTI™ 2014: 119

2019: 160 The U.K.’s economy has also been quite robust despite the slowdown in Europe. Business travel spending totaled $36 billion USD in 2014, $3 billion above the previous year. We expect another $3 billion in spending this year as the U.K. eclipses its last cyclical peak of $46 billion USD. Total business travel spending is expected to grow at an average of just over 6% through 2019 when spending will reach $58 billion USD.

Finance, real estate, and business services drive the U.K. economy and resulting business travel. Together they comprise about 25% of all business travel. These sectors will continue to drive travel growth, along with construction, education & transportation.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Real Estate $425 $3,807 10.6% 6.6% 5.6% 6.6% 7.0% Star Professional & Business Services $444 $3,552 9.9% 2.8% 0.4% 0.8% 0.5% Mature Utilities $107 $2,806 7.8% 4.3% -5.1% -1.2% 4.9% Star Social & Personal Services $197 $2,771 7.7% 5.3% 4.1% 5.5% 5.8% Star Food Processing and Services $176 $2,636 7.3% 1.7% 0.8% 1.8% 3.4% Mature Transportation Services $230 $2,107 5.9% 4.3% 3.4% 7.0% 5.1% Star Government $276 $1,938 5.4% 3.6% 3.5% 0.8% 3.3% Mature Wholesale Trade $246 $1,619 4.5% 2.5% 1.2% 2.3% 0.3% Mature Construction $340 $1,555 4.3% 5.2% 2.5% 4.9% 4.6% Mature Banking & Finance $319 $1,428 4.0% 5.4% 2.0% 2.9% 2.7% Mature Equipment Rental & Leasing $40 $1,162 3.2% 3.2% 1.0% 2.4% 3.3% Mature Transportation Equipment $119 $1,093 3.0% 5.8% 4.1% 6.4% 9.5% Star Communications Services $93 $985 2.7% 4.5% 2.6% 4.7% 4.2% Mature Rubber & Plastic Manufacturing $43 $963 2.7% 4.8% 6.8% 6.6% 7.4% Star Agriculture, Hunting, Forestry, Fishing $120 $724 2.0% 2.5% 4.7% 1.9% 2.9% Low Priority Hotels & Restaurants $117 $602 1.7% 3.6% 3.4% 4.7% 4.6% Low Priority Fabricated Metal Products $79 $567 1.6% 1.3% -2.0% 3.3% 2.4% Low Priority Education $173 $559 1.6% 8.5% 9.3% 9.1% 9.0% Emerging Computer Service & Related Activities $104 $479 1.3% 0.5% -1.0% 0.0% -0.7% Low Priority Petroleum Refining $64 $450 1.3% 1.7% -3.8% -37.9% 17.9% Emerging Non-Metallic Mineral Products $32 $422 1.2% 0.1% -2.3% 0.8% 0.9% Low Priority


France GBTA BTI™ 2014: 132

2019: 162 France ‘s economy continues to suffer from a lack of competitiveness which has taken its toll on business travel performance, which has grown 3.7% on average over the last fourteen years. Spending reached $36 B USD in 2014, marking the first year of positive growth after two consecutive years of declines. As Europe continues to recover and France takes stride to liberalize labor markets, French business travel will improve. We expect spending will grow and average of 4.5% over the next five years where it will end 2019 with $44 Billion in annual spend. Driving that growth will be sectors such as Real Estate, Utilities, Personal Services, and Transportation. Mature industries like Professional & Business Services and Food Processing will also continue to be key contributors.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $124 $3,451 11.2% 4.1% -3.8% -3.4% 4.7% Star Real Estate $288 $2,733 8.8% 5.8% 7.0% 5.3% 7.1% Star Food Processing and Services $166 $2,636 8.5% 1.6% 1.4% -0.2% 2.7% Mature Transportation Services $254 $2,492 8.1% 3.0% 3.3% 4.5% 5.3% Star Professional & Business Services $230 $1,955 6.3% 0.8% -2.5% -2.1% -0.3% Mature Social & Personal Services $120 $1,794 5.8% 3.6% 4.5% 4.0% 5.1% Star Wholesale Trade $240 $1,675 5.4% 0.4% 1.4% 0.6% -0.5% Mature Government $179 $1,334 4.3% 3.0% 2.6% -0.6% 2.4% Mature Rubber & Plastic Manufacturing $46 $1,095 3.5% 3.4% 8.9% 5.6% 6.2% Star Construction $225 $1,090 3.5% 2.2% -3.4% 1.4% 4.2% Mature Banking & Finance $204 $971 3.1% 4.1% 2.4% 1.4% 2.0% Mature Fabricated Metal Products $121 $918 3.0% 1.5% 2.2% 1.6% 2.8% Mature Hotels & Restaurants $156 $850 2.7% 2.4% 4.6% 3.9% 4.9% Star Communications Services $63 $702 2.3% 2.1% -0.8% 1.3% 2.9% Low Priority Textiles $46 $648 2.1% 1.4% 7.3% 4.7% 5.4% Emerging Paper & Paper Products $29 $578 1.9% 4.2% 7.7% 6.5% 7.4% Emerging Non-Metallic Mineral Products $37 $528 1.7% -3.0% -1.5% -0.4% 1.0% Low Priority Industrial Machinery & Equipment $133 $495 1.6% 4.8% 6.6% 6.6% 7.7% Emerging Petroleum Refining $61 $454 1.5% 2.3% -6.6% -38.1% 21.2% Emerging Retail Trade $254 $448 1.4% 1.1% 1.7% 2.2% 2.9% Low Priority Agriculture, Hunting, Forestry, Fishing $67 $428 1.4% 0.9% 0.1% 0.5% 3.0% Low Priority


Italy GBTA BTI™ 2014: 108

2019: 129 Italy remains one of the most troubled markets in the Eurozone, as debt imbalances, high rates of unemployment and low levels of private investments have all weighed heavily on the Italian economy. Spending on business travel grew in 201 for the first time since 2011. Total business travel spending growth in Italy will average a healthier 4.2% over the next five years.

Italy continues to see negative growth in many key sectors including Utilities, Food Processing, & Professional & Business Services, which will lead to declines in business travel spending in these sectors in 2015. Growth will come from sectors like Real Estate and Personal Services.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $66 $2,656 8.3% 4.1% 2.1% -4.7% 6.4% Star Food Processing and Services $102 $2,451 7.6% 2.6% 2.9% -2.9% 1.9% Mature Rubber & Plastic Manufacturing $64 $1,940 6.0% 8.7% 5.7% 2.5% 7.1% Star Transportation Services $133 $1,870 5.8% 5.7% 5.0% 1.7% 5.2% Star Petroleum Refining $173 $1,835 5.7% 7.7% 1.8% -38.0% 20.1% Star Communication Equipment $169 $1,682 5.2% 4.1% 2.1% -1.9% 5.4% Star Social & Personal Services $61 $1,482 4.6% 4.8% 3.4% 2.3% 5.7% Star Construction $178 $1,244 3.9% 3.5% 3.1% 1.2% 4.6% Mature Real Estate $90 $1,175 3.7% 2.2% 10.6% 4.9% 6.5% Star Transportation Equipment $74 $1,145 3.6% 8.6% -3.8% 0.5% 5.6% Star Government $104 $1,112 3.5% 4.2% 4.2% 0.1% 2.8% Mature Professional & Business Services $79 $1,098 3.4% 3.6% 1.8% -2.7% 0.1% Mature Banking & Finance $137 $1,086 3.4% 5.3% 4.5% 1.2% 3.2% Mature Basic Metals Manufacturing $217 $982 3.1% 12.9% 12.5% 5.3% 8.6% Star Agriculture, Hunting, Forestry, Fishing $68 $862 2.7% 4.9% 3.7% -0.5% 2.5% Mature Fabricated Metal Products $80 $804 2.5% 7.3% 6.4% -1.3% 3.8% Mature Chemicals & Chemical Products $182 $787 2.4% 7.1% 4.6% 1.1% 4.4% Mature Wholesale Trade $83 $785 2.4% 0.9% -1.5% -1.5% 0.8% Mature Electrical Machinery & Apparatus $55 $736 2.3% 8.9% 5.2% 2.8% 8.4% Emerging Industrial Machinery & Equipment $153 $726 2.3% 10.6% 8.0% 11.5% 7.2% Emerging Non-Metallic Mineral Products $34 $725 2.3% 1.8% 4.8% -1.4% 1.3% Low Priority

Grand Total $3,056 $32,116 100.0% 4.7% 3.9% -1.8% 5.4% Star

South Korea GBTA BTI™ 2014: 151

2019: 183 South Korea, currently the 7th

largest business travel market, increased its business travel spend by over $1 billion USD in 2014. We expect a decline of 1.8% in business spending in 2015, however, as private consumption slows. We expect both the Korean economy and business travel market to get back on track over the next five years and grow 5.4% on average.

Utilities, Manufacturing and Transportation, all relatively travel-prone sectors will drive Korea’s spending expansion. Mature industries that will remain key contributors include Food Processing & Services, construction and Professional & Business Services.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Food Processing and Services $301 $4,707 14.7% 8.6% 1.9% 1.4% 2.5% Mature Social & Personal Services $252 $3,711 11.6% 13.8% 6.9% 5.3% 5.4% Star Utilities $101 $2,770 8.7% 5.2% -0.4% -3.0% 4.5% Mature Wholesale Trade $315 $2,167 6.8% 8.6% 2.0% 1.6% -0.4% Mature Transportation Services $203 $2,074 6.5% 9.3% 7.6% 4.8% 4.9% Star Government $256 $1,884 5.9% 5.9% 5.8% 5.2% 4.4% Mature Agriculture, Hunting, Forestry, Fishing $235 $1,488 4.7% 9.3% 9.3% 2.3% 3.6% Mature Rubber & Plastic Manufacturing $47 $1,093 3.4% 9.8% 2.8% 5.3% 6.3% Star Petroleum Refining $148 $1,091 3.4% 9.2% 3.1% -32.6% 19.9% Star Communications Services $99 $1,089 3.4% 5.6% 6.0% 5.0% 3.2% Mature Banking & Finance $224 $1,051 3.3% 9.7% 4.9% 1.8% 1.4% Mature Construction $188 $900 2.8% 6.6% 0.0% 3.7% 3.3% Mature Real Estate $82 $765 2.4% 6.0% 9.0% 7.2% 6.7% Star Professional & Business Services $87 $731 2.3% 4.1% 3.4% 1.2% 0.5% Low Priority Paper & Paper Products $37 $720 2.3% 8.7% 6.8% 6.1% 7.1% Emerging Non-Metallic Mineral Products $46 $647 2.0% 6.9% -0.6% -0.7% 0.3% Low Priority Hotels & Restaurants $113 $606 1.9% 12.5% 5.3% 5.3% 4.7% Emerging Chemicals & Chemical Products $150 $448 1.4% 7.4% 3.2% 5.2% 5.2% Emerging Education $131 $444 1.4% 10.2% 11.7% 9.4% 9.8% Emerging Electrical Machinery & Apparatus $36 $311 1.0% 11.4% 0.2% 3.2% 6.1% Emerging Textiles $22 $302 0.9% 6.3% -0.3% 1.1% 4.4% Low Priority


Brazil GBTA BTI™ 2014: 265

2019: 320 Brazil’s business travel spending growth has slowed significantly from the high growth years of 2005-2010. Spending reached $32 billion USD in 2014, less than $1 billion more than 2013.Spending on business travel has averaged growth of nearly 8% since 2000. While we expect growth to begin to get back on track over the next few years, spending growth will average 4.4% from 2015 – 2019 . Star industries over the next five years will include Social & Personal Services, Transportation Services and Rubber & Plastic Manufacturing. As Brazil continues to improve infrastructure, mature industries like Utilities and transportation will continue to play a key role in the growth of the Brazilian business travel sector.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Real Estate $260 $2,267 10.1% 6.6% 7.4% 7.4% 9.6% Star Government $267 $1,950 8.7% 4.4% 2.6% 3.4% 5.7% Mature Food Processing and Services $95 $1,620 7.2% 1.9% 4.7% 0.4% 3.9% Mature Social & Personal Services $141 $1,424 6.3% 5.7% 6.2% 6.2% 8.3% Star Construction $304 $1,402 6.2% 7.2% 3.3% 1.4% 7.4% Star Utilities $44 $1,360 6.0% 2.4% 0.6% -1.5% 6.7% Star Transportation Services $208 $1,245 5.5% 5.2% 6.9% 5.4% 7.4% Star Banking & Finance $200 $1,210 5.4% 5.0% 3.7% 2.5% 5.0% Mature Wholesale Trade $146 $1,086 4.8% 3.1% 3.3% 2.4% 2.4% Mature Professional & Business Services $232 $1,064 4.7% 2.9% -0.7% -0.1% 2.0% Mature Communications Services $68 $740 3.3% 4.3% 0.7% 2.5% 4.7% Mature Rubber & Plastic Manufacturing $26 $621 2.8% 3.8% 6.8% 7.0% 8.1% Star Petroleum Refining $78 $597 2.6% 5.6% -3.4% -35.8% 22.0% Star Agriculture, Hunting, Forestry, Fishing $87 $563 2.5% 4.0% -0.8% 0.0% 5.4% Mature Equipment Rental & Leasing $20 $547 2.4% 1.7% 2.8% 2.0% 4.7% Mature Paper & Paper Products $25 $524 2.3% 0.5% 6.0% 5.1% 7.3% Emerging Hotels & Restaurants $75 $437 1.9% 3.9% 5.9% 6.0% 7.1% Emerging Research & Development Services $7 $436 1.9% 3.2% -0.3% 0.3% 2.5% Low Priority Wood & Wood Products $27 $401 1.8% 1.2% 11.8% 10.3% 9.0% Emerging Education $115 $368 1.6% 9.1% 7.7% 9.7% 11.3% Emerging Retail Trade $150 $323 1.4% 4.6% 4.8% 4.6% 4.7% Low Priority

Grand Total $3,388 $22,536 100.0% 3.8% 3.8% 2.3% 6.6% Star

Canada GBTA BTI™ 2014: 144

2019: 190 Canada’s economy has struggled over the past couple of years, but began to turn around in 2014. Oil producing provinces are likely to continue to struggle in 2015 but key business travel Provinces like Ontario & Quebec are witnessing a healthy economic uptick. We expect this will drive 2.3% growth in business travel spending 2015 and an average of 6.6% growth over the next five years. Canada’s business travel growth stars will include Real Estate, Personal Services, Construction and Transportation. Mature Sectors like Professional & Business Services, Banking & Finance and Food Processing will also remain key contributors to Canadian business travel over the next five years.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Agriculture, Hunting, Forestry, Fishing $430 $2,952 11.2% 8.3% 6.1% 9.4% 6.9% Mature Food Processing and Services $155 $2,632 10.0% 9.4% 8.9% 7.4% 8.2% Mature Utilities $84 $2,514 9.5% 8.0% 12.0% 6.0% 11.3% Mature Construction $422 $2,189 8.3% 13.4% 9.3% 14.7% 11.9% Star Petroleum Refining $188 $1,502 5.7% 16.8% 1.7% -32.7% 26.1% Star Wholesale Trade $192 $1,437 5.4% 9.3% 10.2% 12.9% 8.6% Mature Transportation Services $139 $1,379 5.2% 6.2% 11.2% 15.1% 12.7% Star Government $165 $1,318 5.0% 9.3% 12.8% 16.2% 12.2% Star Real Estate $111 $1,130 4.3% 15.3% 19.2% 20.1% 15.5% Star Textiles $64 $973 3.7% 12.4% 9.9% 11.9% 11.4% Mature Rubber & Plastic Manufacturing $33 $837 3.2% 15.4% 9.8% 15.1% 13.1% Star Professional & Business Services $89 $805 3.0% 11.2% 9.4% 11.8% 7.9% Mature Banking & Finance $145 $736 2.8% 10.8% 13.6% 14.5% 10.4% Mature Social & Personal Services $46 $730 2.8% 8.9% 13.4% 16.8% 14.0% Star Non-Metallic Mineral Products $35 $526 2.0% 8.8% 7.5% 9.5% 7.6% Low Priority Equipment Rental & Leasing $13 $421 1.6% 11.8% 11.5% 12.8% 10.2% Low Priority Basic Metals Manufacturing $147 $419 1.6% 18.4% 15.5% 22.5% 14.3% Emerging Chemicals & Chemical Products $122 $395 1.5% 9.6% 6.7% 10.3% 9.8% Low Priority Transportation Equipment $35 $367 1.4% 11.5% 13.3% 8.9% 13.1% Emerging Electrical Machinery & Apparatus $38 $352 1.3% 17.1% 19.4% 26.6% 18.2% Emerging Research & Development Services $37 $337 1.3% 11.7% 8.7% 11.4% 7.7% Low Priority


India GBTA BTI™ 2014: 289

2019: 492 With a rapidly growing economy, multiple business centers, and improving infrastructure, growth in business travel spending has been remarkable and continues to pick steam. Business travel spending reached $29 billion USD in 2014, a threefold increase in Economic growth has picked up the pace over the last year and business travel is following suit. Total business travel spending is expected to grow by nearly 12% per year through 2019, outpacing the 10% average annual growth achieved since 2000. Star business travel markets will include Construction, Real Estate, Transportation and Government but mature market like Agriculture, Food Processing & Services and Utilities will remain key contributors.




July 2015

Australia GBTA BTI™ 2014: 158

2019: 194 Australia’s economy slowed in 2013 and witnessed little growth in 2014. This flat growth translated into slowing growth in business travel spending which advance only 1.3%, year-over-year in 2014. We expect growth to pick up significantly in 2015 with business travel spending set to advance by 5.7% over 2014 levels. Average business travel spending growth over the next five years is projected at 3.9%. Star business travel sectors in Australia over the next five years will include Real Estate, Transportation & Utilities and key mature contributors will include Banking & Finance and Professional & Business Services.



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Real Estate $184 $1,883 9.2% 6.7% 5.2% 9.7% 6.6% Star Banking & Finance $159 $1,752 8.6% 10.9% 3.9% 7.3% 2.8% Mature Transportation Services $124 $1,668 8.2% 7.8% -0.6% 9.2% 5.3% Star Utilities $36 $1,630 8.0% 5.1% -2.0% 0.9% 4.3% Star Construction $211 $1,333 6.5% 9.6% 5.2% 6.5% 4.1% Star Professional & Business Services $136 $1,223 6.0% 3.0% -5.8% 1.4% -1.1% Mature Government $103 $1,207 5.9% 6.9% 1.9% 7.2% 3.6% Star Food Processing and Services $63 $1,053 5.1% 0.2% 0.3% 4.4% 2.8% Mature Social & Personal Services $67 $1,039 5.1% 6.2% 3.7% 9.2% 5.3% Star Communications Services $59 $1,030 5.0% 6.6% 1.5% 8.5% 3.6% Star Equipment Rental & Leasing $24 $788 3.9% 5.1% 3.7% 5.0% 3.2% Star Wholesale Trade $86 $717 3.5% 3.4% -1.9% 5.1% -0.4% Mature Agriculture, Hunting, Forestry, Fishing $75 $692 3.4% 5.0% 4.1% 5.6% 3.0% Star Research & Development Services $53 $504 2.5% 3.3% -6.7% 1.9% -0.7% Mature Non-Metallic Mineral Products $15 $460 2.2% 6.2% 1.3% 3.8% -0.7% Low Priority Hotels & Restaurants $36 $410 2.0% 7.8% 7.1% 9.8% 5.2% Emerging Education $97 $389 1.9% 9.2% 8.8% 12.8% 8.9% Emerging Petroleum Refining $26 $345 1.7% 13.7% -6.3% -35.2% 23.8% Emerging Fabricated Metal Products $36 $257 1.3% 3.3% -1.3% 2.9% 0.5% Low Priority Printing & Publishing $19 $243 1.2% 2.1% -3.7% 2.8% -0.1% Low Priority Rubber & Plastic Manufacturing $7 $227 1.1% 3.3% 0.7% 8.8% 5.1% Emerging

Grand Total $2,292 $20,453 100.0% 5.6% 1.3% 5.7% 3.9% Star




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $157 $3,643 17.4% 11.4% -8.2% -4.4% 4.8% Star Food Processing and Services $147 $1,949 9.3% 11.2% -6.3% 0.1% 2.2% Mature Transportation Services $223 $1,716 8.2% 17.6% -7.6% 0.9% 4.4% Mature Wholesale Trade $273 $1,588 7.6% 10.2% -11.5% 2.7% -0.8% Mature Government $200 $1,242 5.9% 12.9% -6.8% 3.7% 4.0% Mature Petroleum Refining $194 $1,206 5.8% 27.6% -5.0% -38.7% 18.8% Star Real Estate $138 $1,094 5.2% 15.7% -2.5% 4.5% 7.6% Star Construction $234 $944 4.5% 13.0% -7.3% -7.5% 3.7% Mature Agriculture, Hunting, Forestry, Fishing $129 $691 3.3% 8.2% -2.8% 3.9% 3.9% Mature Communications Services $66 $616 2.9% 6.5% -8.3% 0.6% 2.7% Mature Professional & Business Services $85 $600 2.9% 9.5% -8.3% -2.5% 0.1% Mature Equipment Rental & Leasing $21 $531 2.5% 14.3% -10.5% -1.1% 2.3% Mature Social & Personal Services $42 $522 2.5% 18.5% -7.1% 1.6% 4.4% Mature Banking & Finance $128 $508 2.4% 22.5% -5.6% 0.7% 3.0% Mature Transportation Equipment $54 $436 2.1% 17.0% 4.4% -13.8% 6.4% Emerging Rubber & Plastic Manufacturing $21 $419 2.0% 19.6% -1.1% 6.2% 6.1% Emerging Non-Metallic Mineral Products $33 $391 1.9% 10.5% -6.2% -7.1% 0.5% Low Priority Retail Trade $215 $317 1.5% 10.2% -4.9% 4.1% 2.3% Low Priority Research & Development Services $42 $296 1.4% 11.3% -9.0% -2.0% 0.5% Low Priority Paper & Paper Products $16 $262 1.3% 12.6% 0.6% 0.8% 8.1% Emerging Education $76 $219 1.0% 17.2% -1.3% 6.1% 8.3% Emerging

Grand Total $3,305 $20,909 100.0% 12.7% -6.7% -2.7% 4.4% Mature

Russia GBTA BTI™ 2014: 232

2019: 269 Russia’s economy had been struggling even before the Ukrainian crisis but has taken a nose dive since, driven by battered energy prices and sanctions from the West. Business travel spending fell nearly 7% in 2014 to just under $21 billion USD and we expect another 2.7% decline in spending this year. Russia’s business travel market has grown a tremendous 12.7% per year on average since 2000 but is set to grow only 4.4% over the next five years. Star business travel markets will include Petroleum Refining as energy markets recover but also Utilities and Real Estate. Key mature contributors will include Transportation, Wholesale Trade and Government.




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $78 $1,935 10.8% 6.6% 2.2% 3.5% 6.2% Star Food Processing and Services $136 $1,924 10.7% 3.7% 7.3% 5.1% 3.8% Mature Transportation Services $175 $1,611 9.0% 7.0% 10.1% 12.1% 6.0% Star Real Estate $160 $1,352 7.5% 7.7% 10.2% 12.5% 8.3% Star Social & Personal Services $95 $1,264 7.0% 5.7% 8.2% 11.0% 7.2% Star Professional & Business Services $150 $1,140 6.3% 4.5% 4.6% 6.8% 2.0% Mature Hotels & Restaurants $204 $995 5.5% 6.4% 9.6% 11.0% 6.6% Star Construction $220 $951 5.3% 3.4% 5.1% 8.2% 6.5% Star Government $136 $904 5.0% 6.3% 5.8% 6.6% 4.2% Mature Wholesale Trade $107 $665 3.7% 4.1% 5.7% 7.5% 1.8% Mature Banking & Finance $134 $566 3.1% 7.2% 3.4% 6.2% 2.9% Mature Communications Services $49 $487 2.7% 4.1% 3.7% 8.2% 4.5% Mature Rubber & Plastic Manufacturing $23 $486 2.7% 5.6% 13.0% 13.9% 8.0% Star Agriculture, Hunting, Forestry, Fishing $71 $405 2.3% 3.1% 8.2% 5.6% 3.9% Low Priority Petroleum Refining $58 $386 2.1% 5.8% 3.0% -33.5% 19.1% Emerging Paper & Paper Products $17 $306 1.7% 5.9% 8.1% 11.0% 7.9% Emerging Non-Metallic Mineral Products $21 $263 1.5% -2.7% 6.4% 6.4% 2.7% Low Priority Education $80 $247 1.4% 10.1% 11.7% 16.5% 12.1% Emerging Fabricated Metal Products $35 $237 1.3% 0.4% 0.8% 8.4% 4.1% Low Priority Equipment Rental & Leasing $9 $233 1.3% 0.3% 5.1% 8.1% 4.0% Low Priority Retail Trade $129 $204 1.1% 3.8% 7.3% 8.9% 4.5% Low Priority


Spain GBTA BTI™ 2014: 124

2019: 167 Spanish business travels suffered tremendous losses between 2010 and 2013, falling from annual spend of nearly $20 billion USD to just under $18B. The Spanish economy, however, has gained significant momentum over the past year and business travel is following suit. In fact spending rose 6.8% last year over 2013 levels and is poised to gain another 7.7% this year.

Virtually every Spanish sector has witnessed declines over the 2010 – 2013 period. Leading the charge back will be Real Estate, which took a significant hit during the European Recession, as well as Utilities, Transportation, Food Processing and Professional & Business Services.




July 2015

Netherlands GBTA BTI™ 2014: 125

2019: 158 Total business travel spending in the Netherlands fell 1.7% in 2014 to $17.8 billion USD. High levels of unemployment, a battered housing market and depressed export performance all contributed to a weaker environment for business travel over the last few years. We are starting to see improvement in economic fundamentals which should lead to 2.1% growth in business travel spending this year and an average of 5.6% growth over the next five years. Star markets like Real Estate, which has been battered over the last five years, as will Social & Personal Services and Utilities will lead the charge in business travel spending over the next five years. Mature business travel sectors like Business Services & Food Processing will also play a crucial role.



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Utilities $47 $1,892 10.6% 4.3% -6.8% -2.4% 6.3% Star Food Processing and Services $86 $1,836 10.3% 1.9% -6.6% 1.6% 4.0% Mature Professional & Business Services $128 $1,642 9.2% 1.5% -1.5% 1.1% 1.8% Mature Real Estate $93 $1,328 7.5% 6.1% 5.3% 7.5% 9.3% Star Social & Personal Services $49 $1,133 6.4% 4.5% 1.0% 5.7% 7.0% Star Government $92 $1,100 6.2% 4.4% -1.6% 2.8% 5.1% Mature Transportation Services $71 $1,018 5.7% 3.3% -0.9% 5.5% 6.2% Star Wholesale Trade $102 $1,001 5.6% 1.7% -2.2% 1.8% 1.7% Mature Banking & Finance $110 $737 4.1% 4.1% -4.0% 0.9% 3.3% Mature Construction $99 $662 3.7% 2.2% 1.4% 5.5% 6.0% Mature Equipment Rental & Leasing $11 $534 3.0% 1.3% -2.4% 3.1% 3.9% Mature Communications Services $28 $514 2.9% 2.9% -1.1% 4.6% 5.2% Mature Petroleum Refining $53 $483 2.7% 4.7% -8.6% -34.9% 19.0% Star Agriculture, Hunting, Forestry, Fishing $43 $466 2.6% 4.5% 3.7% 2.5% 5.2% Mature Rubber & Plastic Manufacturing $10 $357 2.0% 5.8% 4.7% 7.9% 8.0% Emerging Chemicals & Chemical Products $82 $324 1.8% 5.0% -0.9% 5.0% 6.1% Emerging Fabricated Metal Products $26 $293 1.6% 2.6% -0.6% 3.9% 4.1% Low Priority Education $45 $245 1.4% 9.2% 3.9% 9.2% 10.5% Emerging Paper & Paper Products $8 $222 1.2% 3.9% 2.9% 7.4% 8.3% Emerging Printing & Publishing $17 $222 1.2% 0.0% -1.9% 1.5% 2.3% Low Priority Hotels & Restaurants $25 $203 1.1% 2.0% 1.8% 4.7% 6.0% Low Priority

Grand Total $1,567 $17,807 100.0% 3.1% -1.7% 2.1% 5.6% Mature




July 2015



2014 BTS (mn US$)

% of Total

2000-2014 CAGR

2014 %ch

2015 %ch

2015-2019 CAGR

Industry Status

Food Processing and Services $163 $1,141 15.4% 1.5% 2.9% 8.0% 5.8% Mature Wholesale Trade $246 $825 11.1% 8.2% 3.8% 9.0% 3.8% Mature Transportation Services $133 $589 7.9% 3.2% 6.2% 12.0% 8.5% Star Utilities $38 $511 6.9% 4.3% 2.5% 5.1% 8.8% Star Real Estate $152 $510 6.9% 5.2% 6.8% 13.2% 11.1% Star Professional & Business Services $89 $353 4.8% 0.8% 1.0% 6.8% 3.4% Mature Construction $170 $347 4.7% 3.0% 5.9% 10.7% 7.9% Mature Agriculture, Hunting, Forestry, Fishing $64 $272 3.7% 4.0% 5.5% 9.4% 6.3% Mature Communications Services $44 $268 3.6% 8.8% 4.5% 11.9% 7.3% Mature Government $77 $234 3.1% 2.8% 3.8% 9.0% 6.9% Mature Rubber & Plastic Manufacturing $23 $210 2.8% 5.0% 7.3% 14.8% 11.0% Star Petroleum Refining $93 $204 2.7% 9.4% 3.1% -7.9% 13.3% Star Banking & Finance $70 $191 2.6% 9.6% 4.1% 10.8% 6.9% Mature Communication Equipment $47 $181 2.4% 1.5% 5.6% 11.8% 8.9% Star Social & Personal Services $33 $156 2.1% 5.2% 5.4% 11.9% 8.6% Emerging Non-Metallic Mineral Products $20 $141 1.9% -1.5% 1.8% 8.1% 4.6% Low

Paper & Paper Products $14 $132 1.8% 5.3% 9.5% 15.2% 10.6% Emerging Equipment Rental & Leasing $7 $128 1.7% 7.3% 3.1% 10.9% 6.5% Low

Electrical Machinery & Apparatus $18 $121 1.6% 5.1% 9.2% 14.4% 12.0% Emerging Hotels & Restaurants $40 $117 1.6% -1.6% 5.7% 12.0% 8.5% Emerging Education $59 $103 1.4% 6.9% 9.6% 16.0% 12.8% Emerging


Mexico GBTA BTI™ 2013: 144

2018: 205 The Mexican economy has been gaining steam over the last couple years as domestic prospect improve along with U.S. import demand driven by weaker currency and an improving U.S. economy. Business travel spending grew by 4.6% last year and is set to grow another 9.8% this year. Over the next five years, we expect growth in business travel spending to average 7.7%, well above the 3.2% average rate of growth since 2014. Star business travel industries in Mexico will include Real Estate, Transportation and Utilities while mature contributors will include Wholesale Trade, Food Processing & Services and Professional & Business Services.




July 2015

Appendix I: Summary of Spending Growth By Country

Business Travel Spend (Annual Growth 2014)


Business Travel Spend (CAGR 2000 - 2014)


United Kingdom 5.4% 5.8% 2.4% 6.1% Switzerland -0.2% -5.6% 4.4% 3.4% Sweden 2.6% 5.8% 3.5% 7.1% Spain 6.8% 7.7% 4.7% 5.8% Portugal -0.4% 2.5% 2.7% 6.5% Norway 3.2% -0.3% 5.6% 6.2% Netherlands -1.7% 2.1% 3.1% 5.6% Italy 1.3% 1.0% 2.4% 4.2% Ireland 3.7% 5.1% 3.9% 8.4% Greece -4.2% 0.1% 2.0% 6.1% Germany 7.7% 10.1% 4.1% 7.5% France 2.0% 3.0% 3.7% 4.5% Finland -0.1% 3.2% 4.1% 6.6% Denmark -0.2% 3.5% 3.6% 6.9% Belgium -1.1% 2.5% 3.4% 5.0% Austria -1.7% 2.9% 4.7% 5.4% Western Europe Total 3.3% 4.8% 3.5% 5.9% United States 5.4% 4.9% 1.4% 3.6% Mexico 4.6% 9.8% 3.2% 7.7% Canada 3.8% 2.3% 3.8% 6.6% North America Total 5.3% 4.9% 1.6% 3.9% Zimbabwe 6.6% 15.9% 0.9% 13.1% Tunisia 6.0% 5.6% 4.8% 8.9% South Africa 7.4% 6.9% 6.2% 4.2% Senegal 2.1% -2.1% 7.4% 9.2% Saudi Arabia 1.8% -3.4% 4.4% 9.4% Qatar 6.8% -1.1% 17.9% 9.8% Nigeria 8.6% 13.8% 12.6% 7.6% Morocco 1.7% 1.5% 4.9% 8.3% Kuwait -3.4% -11.6% 10.4% 12.4% Kenya 10.1% 12.0% 7.5% 12.8% Jordan 4.1% -0.3% 8.1% 4.6% Israel 1.0% 3.3% 4.1% 6.4% Iran -1.7% -0.4% 9.9% 6.0% Emirates (UAE) 2.3% -1.9% 8.2% 6.7% Egypt 2.5% 2.0% 2.1% 7.9% Cameroon 4.6% -3.7% 5.9% 12.2% Bahrain 2.8% -7.7% 9.9% 7.3% Middle East & Africa Total 3.4% 2.0% 6.4% 7.5% Venezuela -9.9% -11.5% 4.4% 8.8% Uruguay 10.4% 4.6% 5.9% 5.5% Peru 5.5% 4.7% 8.3% 5.4% Panama 8.8% 11.3% 6.7% 6.2% Jamaica 8.2% 5.5% 2.2% 3.2% Honduras 5.4% 6.7% 4.4% 2.9% Ecuador 3.1% 4.0% 5.1% 5.7%




July 2015





Costa Rica 8.2% 2.4% 7.3% 3.7% Colombia 5.4% 12.0% 7.7% 11.1% Chile 5.9% 2.6% 7.1% 6.5% Brazil 3.7% 1.8% 7.9% 4.4% Bolivia 7.4% 1.5% 5.3% 4.2% Argentina -3.8% 11.6% 0.3% 11.0% Latin America Total 3.1% 2.8% 6.8% 5.9% Ukraine -12.3% -8.2% 9.5% 9.2% Turkey 13.1% 9.1% 7.4% 8.4% Slovak Republic -3.5% 3.9% 8.6% 8.0% Russia -6.7% -2.7% 12.7% 4.4% Romania 1.1% 6.9% 10.1% 11.3% Poland 1.1% 2.0% 7.1% 10.3% Hungary 2.2% 4.3% 5.1% 7.6% Czech Republic 2.7% 2.6% 6.8% 10.6% Bulgaria -2.0% 3.5% 7.7% 10.0% Emerging Europe Total 0.3% 2.3% 9.2% 7.5% Vietnam 5.8% 6.9% 11.7% 8.9% Thailand 3.0% 3.3% 6.4% 4.2% Taiwan 3.1% 2.7% 2.2% 5.6% Sri Lanka 8.3% 7.9% 9.4% 7.5% South Korea 3.9% -1.8% 4.7% 5.4% Singapore -0.4% 0.0% 5.1% 7.4% Philippines 6.4% 6.8% 6.8% 8.0% Pakistan 9.9% 6.1% 5.8% 3.3% New Zealand 2.5% 3.5% 5.9% 1.4% Malaysia 6.3% 4.7% 6.8% 7.2% Japan 1.1% 1.0% -1.4% 2.6% Indonesia 12.3% 9.9% 11.0% 11.1% India 9.7% 9.8% 10.1% 11.5% Hong Kong 2.4% 3.6% 1.7% 3.9% China 16.6% 14.2% 16.2% 8.9% Bangladesh 10.8% 9.2% 6.3% 6.7% Australia 1.3% 5.7% 5.6% 3.9% Asia Pacific Total 10.9% 9.7% 7.7% 7.7% Grand Total 6.5% 6.5% 4.5% 6.3%




July 2015

Appendix II: Approach, Methodology, Data Sources, and Definitions The overriding objective of this research initiative has been to create a process for developing credible estimates of the size, growth, and contribution of business travel to companies, industries, and countries around the world. This analysis was first completed in 2009, yielding a first-ever definitive and comprehensive measure of its kind. This process must obviously produce defensible results; ones that are consistent with both the foundation data sources and any reputable aggregate or cross check measures published by other recognized sources.

This second measure (growth) is critical and gives us an important look at the changes to business travel over time. A continual updating of the analysis will help us to understand how macroeconomic events, economic development, and other factors affect business travel. The key is to build a process that is both credible and repeatable, utilizing all appropriate data. Updating the estimates of business travel activity requires re-executing this established process to reflect updates of the integral data sources.

Principal Data Sources Measuring the size, growth, and contribution of business travel is neither a simple nor precise task. For one, data inputs are relatively scarce, particularly outside the United States and certain Western European countries. Moreover, each data source tends to tell only a portion of the business travel story. Detailed searches have uncovered no comprehensive view of business travel volume or spending. Even in cases where travel metrics were available, they tended to cover either total travel or leisure travel only.

Much of the supply-side data that we assembled during the research did not make the trip purpose distinction either. For example, revenue and/or capacity metrics from, say, hotels or airlines generally do not distinguish a business traveler from a leisure one -likewise, for rental cars and restaurants. This type of supply-side data provided many important sanity checks but was insufficient to provide specific detailed insight that was additive towards a comprehensive view of business travel activity.

The second most critical data sourcing problem was the inconsistency of definitions across sources. Promising datasets that appeared to be ideal later proved to be less useful because of definitional inconsistencies surrounding industries, geography, or what constituted business travel itself. Indeed, something as simple as a different definition of a business trip sometimes thwarted attempts to use an otherwise robust data input. Obvi-ously, the reconciliation of seemingly similar sources was paramount in compiling our final estimates.

Principal sources included:

• D.K. Shifflet & Associates Travel Panel – TRAVEL PERFORMANCE/Monitor • A 2009 bespoke survey of financial management (CFOs & Controllers) from a

representative sample of U.S. public and private companies. Over 500 completed interviews captured information regarding travel & entertainment (T&E spending,

SM




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as well as the commitment to travel management programs, policies, and personnel).

• The U.S. Bureau of Economic Analysis • International Air Transport Association (IATA) • The U.S. Department of Commerce’s National Travel & Tourism (OTTI) • The US Department of Transportation –BTS Statistics • STR Global • German National Tourist Board • IPK International • Boeing (BCA) • United Nations/World Tourism Organization (UNWTO) • National Input/Output Accounts for 48 of the 75 countries analyzed in the study

(source: typically Ministry of Commerce or Statistics) • Various international government sources, including Ministries of Transportation,

Tourism, & Commerce • IHS Global Insight’s Global Macroeconomic data, analysis and forecasts • Rockport Analytics travel industry expertise

Methodology & Approach We have assembled an extensive data repository from which to build estimates of global business travel activity. The inventory of sources included many of the private and public datasets that are commonly used to describe economic and travel industry performance in many contexts. Moreover, a comprehensive literature search provided a list of related research efforts that helped guide the final development of our methodology in each phase of the project. Each phase began with an effort to understand and reconcile the differences between and among the pertinent data sources.

The development of our global database of business travel spending by country (75) and industry (48) required that we build a “sources and uses” view of the industries that both buy and sell travel services. That is, Rockport put together a four-dimensional sectoral matrix of travel suppliers/sellers (rows) and travel buyers (columns), the 3rd and 4th dimensions being time (1998-2014) and country. The values within each cell describe the sales of a seller’s services (e.g. Hotels) to each buying industry (e.g. Utilities). For example, Airlines constitute one of the critical seller rows. Across the Airline row, each one of the 48 buying industries total purchases of airline tickets is compiled.

The derivation of our initial estimates of business travel spending required that we apply the business travel purchase matrixes to published levels of total sales for each (buying) sector in each country. The total sales database was once again sourced from IHS Global Insight.

The final estimates of business travel spending by country and sector required that Rockport fold in other data inputs covering total travel volume and spending in each country, where available. Countries such as the US, UK, Germany and others were compared and adjusted according to sources such as the UNWTO, DK Shifflet & Associates, WTTC, and IPK International. Moreover, the Ministries of Tourism for some




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of the countries provide estimates of overall travel, sometimes separated into leisure and business purposes. Where available and consistent, these sources were used as critical cross-checks.

Business travel spending projections (2015-2019) were created using a three-step approach. First, the business travel purchase coefficients for each sector/country pair were forecasted from 2011 using a time series approach that considers trends in travel intensity, productivity, and the impact of business cycles. Next, a projection of industry sales in each country was sourced from IHS Global Insight. Combining these two inputs resulted in an initial forecast of business travel spending. The final step required reconciliation with other forecasts of business travel activity from sources such as IATA, Smith Travel, Boeing, UNWTO, American Express, IPK International, and others. Changes in the initial forecasts were made where Rockport deemed appropriate, all towards a final set of reconciled projections.

Definitions The resulting global travel database, forecasts, and report created from this research effort can be used to inform many strategic and tactical decisions. Users among the travel manager, buyer, and supplier community should, however, be certain to consider what the estimates do and do not include, particularly when comparing the findings to other external or internal measures.

The first definition is that of business travel itself. Our objective was to be as comprehensive as possible, resulting in the inclusion of all kinds of business trips and trip spending, including:

Trips booked within and outside managed travel programs

• Daytrips and overnight trips • Domestic and outbound international trips (an “origin” perspective of business

travel) • Trips on behalf of sales, operations, training, convention/meeting,

maintenance/repair, incentive, and customer service • Trip spending included all categories -air, hotel, rental car, other ground

transportation, personal vehicles, food & beverage, entertainment, and miscellaneous expenses.

Another important definitional note revolves around the use of U.S. dollars to represent business travel spending. Comparison across countries required that local currencies be converted to US dollars using prevailing exchange rates. Moreover, all dollar values are expressed in current or nominal terms. This means the effects of inflation are included in both the estimates of industry sales and business travel spending.

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