Europe’s Biz Travel Is Recovering, But Unevenly

New data shows modest increases in business travel for 2013 and 2014 across most of Western Europe, especially in Germany and the U.K. The upturn in business travel suggests that most, but not all, European economies are moving toward positive growth.

“This has been a very difficult period for Europe,” said Catherine McGavock, regional director-Europe for the Global Business Travel Association. “We are talking about modest growth, not a recovery that surges off the charts. The key thing to remeber is that this is a very modest improvement and given the precarious nature of the situation things can change very quickly.”

The positive forecast is part of the latest GBTA BTI Outlook Western Europe.

Positive outlook
Projections call for an increase in business travel spending for Germany and the U.K. this year, but continuing declines in travel for Spain and Italy.

In 2014, all five top business travel markets in Europe, Germany, U.K, France, Italy and Spain, are expected to show growth in travel spend. These five countries account for nearly 70% of the total European business travel spend, according to GBTA.

Business travel spending for the five bellwether countries should hit $184.8 billion this year, up from $177.7 billion in 2012. The last high for European business travel spending was $181.4 billion in 2011.

Strongest in Germany, U.K.
“There are signs of recovery in Germany and the U.K., with both expected to experience growth in business travel spending this year,” McGavock said. “We believe this is the beginning of a wider trend in the region and expect growth in business travel spending to accelerate in 2014 to the levels we saw before the Eurozone crisis.”

The good news: Germany will see a 5% increase in business travel this year, with the U.K. coming in second with a 1.9% increase.

The bad news: Spain continues to lead Europe’s economic laggards with a 6.2% decline in business travel spending expected this year. Italy is second worst, with a 2.9% decline expected for 2013. The two weak economies will drag France down to -1.4% for this year.

Impact of export demand
The reasons: Most European business travel and economic activity are driven by exports. And while exports are starting to grow, overall demand is still weak due to continuing economic problems across Europe and around the globe.

The two countries with positive numbers, German and the U.K., are growing largely based on increases in domestic travel and domestic business demand.

In Germany, for example, domestic business travel is expected to grow by 5.7% this year compared to just 2% for international business travel.

The two weakest markets, Spain and Italy, remain in the doldrums with high unemployment and weak economic demand. Continuing weakness in these two countries is holding France back, a domino effect that is magnifying continuing structural problems in France.

Stronger recovery in 2014
GBTA forecasts growth in business travel for all five countries for 2014 as exports recover and drive more international business travel. Domestic business travel growth will continue to outpace international travel growth for Europe’s two strongest economies, Germany and the U.K.

In the U.K., for example, international business travel increases will more than double from 1.9% growth this year to 4% growth in 2014. But while domestic business travel will advance only slightly, its expected growth in 2014 is 4.4%, still outpacing international.

Domestic growth
The situation will be reversed for weaker economies with domestic travel growing faster than international travel. In Spain, 2014 international business travel will remain flat, while domestic business travel will grow by 2.2%. That recovery follows 2013 declines of 5.4% in international business travel and 9.4% in domestic business travel.

Italy will show a similar pattern. GBTA projects 2014 growth of 1.9% in international business travel and 1.4% in domestic business travel. Those increases follow 2013 declines of 2.8% for domestic business travel and 3.8% for international business travel.

France is expected to show strong growth in both international and domestic business travel for 2014, up 3.3% on the international side and 5.4% on the domestic side.

This year, France is expected to experience flat domestic business travel spending and a 4.6% decline in international business travel.

Other international markets to watch for growth are Russia and China, McGavock said.