Global Business Travel Association (GBTA) Report predicts recovery in North Europe and continued trouble in the South during 2012, but higher levels of business travel spend across all Europe in 2013

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Global Business Travel Association (GBTA)

Report predicts recovery in North Europe and

continued trouble in the South during 2012, but

higher levels of business travel spend across

all Europe in 2013

PR Newswire

LONDON, June 12, 2012

LONDON

,

June 12, 2012

/PRNewswire/ --

The Global Business Travel Association (GBTA), the world's premier business

travel and corporate meetings organization, announces the results of its

inaugural "GBTA Business Travel Index (BTI)™ Outlook -

Western Europe

"

economic analysis, sponsored by Visa Inc.

This semi-annual series includes the GBTA BTI which provides a method for

distilling market performance and the outlook for business travel into a single

metric to be tracked over time. "GBTA BTI™ Outlook -

Western Europe

"

includes an analysis of the five most critical business travel markets in

Europe

:

Germany

, the UK,

France

,

Italy

and

Spain

.

Highlights

Growth in business travel spending ("BTS") in the three major European economies:

Germany

, the UK and

France

will be nearly flat in 2012:

UK is forecast to grow BTS by 0.7%

Germany

is forecast to grow BTS by 0.6%

French BTS is forecast to decline by 0.6%

Forecast levels of 2012 BTS in

Germany

, UK and

France

all exhibit growth in domestic

travel, but declines in international outbound spending ("IOB"):

UK domestic BTS is forecast to grow by 2.7% but IOB is forecast to fall by 2.8%

German domestic BTS is forecast to grow by 1.1% but IOB is forecast to fall by 1.4%

French domestic BTS is forecast to grow by 0.7% but IOB is forecast to fall by 2.7%

Growth levels in 2013 BTS in

Germany

, the UK and

France

will be much stronger with

both domestic BTS and IOB showing increases:

Germany

is forecast to grow overall BTS by 5.4%

France

is forecast to grow overall BTS by 5.1%

The UK is forecast to grow overall BTS by 4.0%

Southern European countries,

Spain

and

Italy

will experience even steeper declines in

BTS due to slower economic growth rates and austerity measures. 2012 is forecast to

see declines of 4.1% and 5.0% for

Spain

and

Italy

, respectively

Overall, the European economic situation will weigh heavily on countries' economic

growth levels. In 2012, GDP in

Germany

,

France

and the UK are forecast to grow by

0.5%, 0.6% and 0.7% respectively. This will be due more to the indirect impact of

Southern Europe

rather than domestic weaknesses

Sovereign debt crises in

Italy

and

Spain

will lead to 1.8% and 1.9% declines in 2012

GDP, respectively

Michael McCormick, Executive Director and COO of GBTA, commented:

"We are delighted to produce our inaugural analysis for

Western Europe

assessing likely business travel spend and economic growth levels for one of

the world's most important trading zones. We found that economic growth

across

Europe

will be constrained in 2012 with weakness in the first half giving

way to improving prospects later in the year. Increasing economic growth in

Germany

,

France

and the UK will be offset by declines in many Southern

European economies. Business travel is a leading indicator of the economy, so

we're expecting a challenging scenario over the next year."

Paul Tilstone, Managing Director of GBTA Europe, commented:

"As for business travel; all five of the countries in the report are relatively

mature and together form nearly 70% of

Europe's

business travel market. As

such, the results are highly indicative of the Continent's overall performance.

Forecasts for 2013 are very positive but 2012 shows a significant disconnect

between Northern and Southern economies and domestic and international

business travel spend."

"

Whether for business or pleasure, Visa account holders spent more than $235

billion on travel related purchases in 2011-a 14 percent increase from

2010," said Tad Fordyce, head of global commercial solutions at Visa Inc. "Our

relationship with the GBTA and our support for research such as the BTI

provides us with an opportunity to understand the key trends in the business

travel industry and ensure that the solutions we provide to financial institution

customers and their clients in the public and private sectors continue to be

best-in-class."

Germany

Spending on business travel in

Germany

totaled

$50.0 billion

in 2011, down

4.2% from its 2008 peak. Germany has a relatively strong and well-diversified

domestic economy that helps to somewhat insulate it from the regional impacts

of the sovereign debt crisis to the south. Historically, spending on German

domestic business travel comprises a large percentage of total German

business travel (79%).

Our analysis forecasts that German business travel will grow slightly in 2012

with total spending on business travel growing 0.6% to

$50.3 billion

. Slow

growth is mainly the result of the expectation for a Eurozone recession over the

first couple of quarters of 2012.

Business travel spending will increase during 2013 as the Euro Area begins to

recover and will grow an estimated 5.4% to

$52.9 billion

. Putting this slower

growth performance in perspective, it will take until the third quarter of 2013

for German business travel spending to regain its previous cyclical peak (Q3

2008).

Spending on domestic business travel in 2011 was up 4.9% and will grow an

estimated 1.1% in 2012 as regional woes will lead to firms cutting out more

discretionary business trips and moving executives into lower hotel and air

classes through the year. This trend will ease toward the end of 2012 and into

2013 with spending on domestic business travel expected to rise another 5.6%

in 2013.

IOB spending in

Germany

will decline 1.4% in 2012 as result of weakened trade

activity in the region and abroad. It is expected that this will improve in 2013,

on the assumption that the European continent can avoid an all-out banking

crisis. A rebound of 4.6% is expected in spending on international outbound

business travel.

United Kingdom

The UK has the second highest level of spending on business travel in

Western

Europe

measured at

$40.2 billion

in 2011. While the UK suffers from the same

regional problems as Continental Europe, its diversified economy and the

flexibility of having its own currency and monetary policy have led to a

relatively healthier environment for business travel.

The "GBTA BTI™ Outlook -

Western Europe

" economic analysis forecasts that

spending on business travel in the UK will advance slightly, 0.7%, in 2012. Total

spending on domestic business travel is expected to grow 2.7% in 2012, after

advancing 3.2% in 2011.

International outbound travel from the UK will fall 2.8% in 2012, as debt

troubles in

Southern Europe

will more than offset any benefit that British

business travelers will gain in purchasing power in the Eurozone from the

relative strength of the British Pound. The Olympics are set to displace some

business travel, although we expect much of it to be rescheduled later in the

year."

In 2013, we expects a full recovery in British business travel with spending

projected to advance 4.0% to

$42.1 billion

with spending on domestic business

travel gaining 5.0% and spending on international outbound business travel

gaining 2.0%.

France

French business travel spending peaked at

$36.6 billion

in 2008, before

suffering a steep decline of 10.6% due to the recession in 2009. Spending

experienced an equally strong recovery in 2010, bouncing back 9.0% to

$35.6

billion USD

. The recovery has flat lined in 2011 as the French economy

continues to suffer the same woes as those of

Germany

and the UK - a

weakened environment due to spillover effects of the sovereign debt crisis to

the south.

The expectation is that French business travel will suffer a small loss in 2012

with total spending on business travel falling 0.6% to

$36.3 billion

, a result of

the expectation for a Eurozone recession over the first couple of quarters of

2012. Business travel spending in

France

will begin to recover along with the

broader European economy in 2013 and will grow an estimated 3.3% to

$37.4

billion

. The recovery in French business travel spending will mainly be driven by

domestic travel, which is expected to expand 0.7% in 2012 followed by growth

of 5.1% in 2013. Outbound international travel from

France

is expected to fall

2.7% in 2012 and struggling to recover in 2013 with projected growth of 0.3%.

Italy

Spending on business travel in

Italy

totaled

$35.3 billion

in 2011, down 6.6%

from a peak of

$37.8 billion

in 2008. The majority of business travel spending

in

Italy

is on domestic travel, with only 9% allocated to international outbound in

2011. Domestic business travel in

Italy

is mainly centered on the more

industrialized northern part of the country.

Spending on business travel in

Italy

snapped back sharply after the Great

Recession but has since entered into another period of decline. Thus far,

austerity measures and ECB bailouts have kept the troubled economy afloat

but slow growth and high bond yields confirm that the Italian economy is a long

way from entirely escaping default.

The report predicts a number of quarters of negative economic growth that will

undoubtedly take their toll on business travel. The expectation is that Italian

business travel will fall in line with broader expectations for the Italian economy

with total spending on business travel falling 5.0% in 2012 and continue to

decline into 2013, by another 0.8% to

$33.3 billion

. Spending on domestic

business travel will fall 5.2% in 2012, followed by another 0.6% drop in 2013.

Spending on international outbound business travel will fare slightly better in

2013, falling 3.2%, but will see another drop of 1.9% in 2013.

Spain

Business travel in

Spain

totaled

$19.4 billion

in 2011, down 7.7% from a peak of

$21.0 billion

in 2008. Spain represents a small proportion of European business

travel but growth over the last decade has been nothing short of impressive.

Liberalizing its economy since the beginning of the century contributed to a

more economically diverse and globally oriented economy - one more in line

with its developed neighbors.

However, the Spanish economy has been one of the most challenged. As Spain

has recovered from the Global Recession in 2009, its overheated real estate

market has begun to correct itself after years of steep price increases,

unemployment has soared to nearly 25%, Spanish inflation is the highest on the

European continent, and, not surprisingly, government bond yields continue to

rise. Recent data have shown that the Spanish economy fell back into

recession in 2012 Q1.

It is expected that spending on Spanish business travel will decrease by 4.1% in

2012, falling to

$18.6 billion

. Trip volume, as well as the amount spent per

business trip, is expected to fall, as Spanish travelers will be pushed into more

economical air and hotel classes.

Total domestic business travel spending in

Spain

will drop by 4.1% in 2012 followed by a slight gain of 1.9% in 2013.

International outbound business travel from

Spain

will fall at an even greater

rate than domestic, 4.3% in 2012 and 1.1% in 2013.

GBTA BTI™

The "GBTA BTI™ Outlook -

Western Europe

," includes the GBTA Business Travel

Index™ (GBTA BTI™) for each of the five countries reviewed. The GBTA BTI™

provides a way to distill market performance and the outlook for business

travel into a single metric that can be tracked over time. The GBTA BTI™ in

each country has been derived from total business travel spending and an

index base year of 2005 was chosen for consistency with GBTA BTI™ in other

countries. Specifically, the GBTA BTI™ in each country is set equal to 100 in

2005 Q2.

The Great Recession hit German business travel hard in 2009 Q1, as the GBTA

BTI™ in

Germany

plummeted to 110, only 10% above the index quarter of 2005

Q2. The drop comes after the GBTA BTI™ in

Germany

peaked at 136 in the

third quarter of 2008. The 2011 Q4 GBTA BTI™ in

Germany

came in at 128,

four points down from its Q3 value of 132. This reflects the deteriorating

economic environment on the European continent. GBTA's expectation is for

two more periods of declines in the level of the GBTA BTI™ in

Germany

before

finally seeing a bit of growth towards the end of the year.

The GBTA BTI™ in

Germany

will continue on its slow growth pattern through the forecast horizon

where it will finally eclipse its former peak of 136.

The GBTA BTI™ in the UK began to recover from the Great Recession, with a

seven-point jump to 108 in 2010 Q1. Since then the recovery has been slow

and steady with GBTA BTI™ in the UK taking a two-step-forward, one-step-back

approach as it has gained roughly a half a point per quarter over the last two

years. The 2011 Q4 GBTA BTI™ in the UK came in at 112, showing no growth

from 2011 Q3. GBTA expects the GBTA BTI™ in the UK to drop to 111 in 2012

Q1 and stay there before getting a push from the Summer Olympics in Q3. We

expect growth in the GBTA BTI™ in the UK to really pick up steam in 2013 -

ending at 117 in Q4 as the European economy stabilizes.

The GBTA BTI™ in

France

saw a strong snapback from the Great Recession.

The 2011 Q4 GBTA BTI™ in

France

came in at 134, where it has been for the

last three quarters. This stagnation reflects the uncertain economic

environment in

Europe

. GBTA expects the GBTA BTI™ in

France

to continue to

stagnate through 2012, before finally picking up some steam through 2013

when it will eclipse its former peak of 136.

The GBTA BTI™ in

Spain

experienced robust growth leading up to its peak of

148 in 2008 Q3 - nearly 50% above its 2005 Q2 base value before plummeting

to a low of 124 in 2009 Q3. The 2011 Q4 GBTA BTI™ in

Spain

came in at 131,

three points down from its Q3 value of 134, again reflecting an unstable

economic environment in

Spain

. GBTA expects that GBTA BTI™ in

Spain

will

continue to decline through 2012 before finally seeing some growth in 2013.

GBTA expects the GBTA BTI™ in

Spain

to reach 133 by the end of our forecast

horizon, two points higher than its current value.

The GBTA BTI™ in

Italy

has struggled to grow since early 2010 as economic

uncertainty has taken its toll on Italian business travel. The 2011 Q4 GBTA BTI™

in

Italy

came in at 120, three points down from its Q3 value of 123. Our

expectation is for three more periods of declines in the level of the GBTA BTI™

in

Italy

before it finally levels off at a value of 116 and remains there for the

remainder of the forecast period.

Key Metrics

Economic Driver

France

Germany

Italy

2010 2011 2012 2013

2010 2011 2012 2013

2010 2011 2012 2013

Real GDP

% Y/Y

1.4

1.7

0.5

1.0

3.6

3.1

0.7

1.7

1.8

0.4 -1.9 -0.3

Consumer Inflation % Y/Y

1.7

2.3

2.0

1.6

1.2

2.5

1.9

1.8

1.6

2.9

2.5

1.8

Imports

% Y/Y

8.3

4.8 -1.3

1.0

11.7

7.4

2.4

3.1

12.7

0.4 -4.5 -1.1

Exports

% Y/Y

9.3

5.0

1.2

2.1

13.7

8.3

1.8

3.8

11.6

5.6

1.0

1.3

Unemployment Rate

%

9.8

9.7

9.9 10.1

7.1

6.0

5.6

5.5

8.4

8.4

9.5

9.7

Employment

Mils Persons 25.6 25.7 25.7 25.8

40.5 41.0 41.2 41.2

22.9 23.0 22.7 22.7

Fiscal Balance

% GDP -4.6 -3.4 -2.5 -1.9

-2.2 -1.0 -0.6 -0.5

-3.3 -2.9 -0.4

0.6

Current Account

Balance

% GDP -1.7 -2.2 -1.9 -1.5

6.1

5.7

5.2

4.9

-3.5 -3.2 -2.2 -1.5

Economic Driver

Spain

United Kingdom

2010 2011 2012 2013

2010 2011 2012 2013

Real GDP

% Y/Y

-0.1

0.7 -1.8 -0.1

2.1

0.7

0.6

2.0

Consumer Inflation

% Y/Y

2.0

3.1

1.9

1.6

3.3

4.5

2.4

2.0

Imports

% Y/Y

8.9 -0.1 -4.1

2.9

8.6

1.2

1.5

2.6

Exports

% Y/Y

13.5

9.0

2.1

4.1

7.4

4.6

1.4

4.4

Unemployment Rate

%

20.1 21.6 24.2 23.9

7.9

8.0

8.3

8.2

Employment

Mils Persons 18.7 18.4 17.8 17.8

29.0 29.2 29.1 29.4

Fiscal Balance

% GDP

-7.3 -6.5 -3.4 -3.1

-7.8 -6.3 -5.1 -3.8

Current Account Balance % GDP

-4.6 -3.7 -2.1 -1.7

-3.3 -1.9 -1.7 -1.1

About the GBTA BTI™ Outlook -

Western Europe

The GBTA BTI™ Outlook projects aggregate business travel trends over the

next eight quarters. The report tracks business travel spending in total and by

domestic and outbound segments. It relates unfolding economic events at

home and abroad to their resulting impacts on

Europe's

business travel market.

GBTA BTI™ Outlook -Western Europe - Spring 2012

is the inaugural report in

the semiannual series. Releases are planned for April and October.

The GBTA BTI™ Outlook uses an econometric model to better inform the

forecast process. The model explicitly relates measures of business travel

spending, uniquely sourced from other GBTA Foundation research, to key

economic and market drivers of business travel including: Gross Domestic

Product (GDP) and its components; employment and unemployment; measures

of business and consumer confidence; international trade, foreign direct

investment and exchange rates; commodity and oil prices; inflation measures;

productivity rates for business travel; International Air Transport Association

(IATA) Passenger and Revenue Performance and Smith Travel Research (STR)

Global Hotel Performance.

The GBTA BTI™ Outlook -

Western Europe

is free of charge to all GBTA

Members by clicking here. Non-members may purchase the report through the

GBTA Foundation by emailing [e-mail].

About the GBTA Foundation

The GBTA Foundation is the education and research foundation of the Global

Business Travel Association (GBTA), the world's premier business travel and

corporate meetings organization.

Collectively, GBTA's 5,000-plus members manage over

$340 billion

of global

business travel and meetings expenditures annually. GBTA provides its network

of 17,000 business and government travel and meetings managers, as well as

travel service providers, with networking events, news, education &

professional development, research, and advocacy. The foundation was

established in 1997 to support GBTA's members and the industry as a whole. As

the leading education and research foundation in the business travel industry,

the GBTA Foundation seeks to fund initiatives to advance the business travel

profession. The GBTA Foundation is a nonprofit organization. For more

information, see gbta.org and gbtafoundation.org