Canada’s Biz Travel Market Is Poised for Growth

This is the first of two parts on Canada’s corporate travel market.

After a mild recession-related slowdown, business travel in Canada is on the upswing.

In a survey published this summer by Deloitte and the Tourism Industry Association of Canada, 84% of business travelers said they were planning to travel as much or more this year than last, up from 80%, a 5% increase over the previous year.

International travel is expected to rebound at an even faster pace. Sixty-two percent of Canada’s business travelers said they were “as likely” or “more likely” to travel beyond North America in the coming 12 months. That’s up from 47% in 2011, according to the Deloitte study.

“Overall, the state of the travel market is steady as we go. We’re cautiously optimistic that travel levels will return to pre-recession norms,” said Annemarie Reininger, managing director of A. Reininger Consulting in Markham, Ontario.

Healthier economy
Canada’s business travel market doesn’t need nearly as big a rebound as the U.S. market to regain pre-recession levels. That’s because Canada’s economy never sank as low, in part because it didn’t undergo the same mortgage and banking crises.

“Our lending practices, from a banking standpoint, are a bit stricter and that protected us a bit. Our unemployment levels remain fairly low, and we have a strong dollar, which has been at parity with the U.S. for some time, and we’re high in natural resources, oil and gas. That continues to fuel a very healthy economy for us,” Reininger said.

“Overall, Canada did not suffer as deeply in the recession as the U.S.”

State of the market
Canada’s healthier economy translates into a corporate travel market that has remained relatively strong in recent years.

“We did have some tough economic times where travel budgets were cut back and controls instituted, but we didn’t have as much trouble as the U.S.,” said Reininger, who is Canada’s representative on the Association of Corporate Travel Executives (ACTE) board of directors.

This year, Canadian businesses are predicted to increase business travel spending by an average of 2.5% over last year, according to a survey of 54 Canadian organizations with annual travel budgets of more than $1 million.

Nearly half (49%) of respondents said they expected their company’s travel volume to increase this year, while 40% expected travel levels to remain the same, according to the “2012 Canadian Business Travel Outlook Report,” by the Association of Corporate Travel executives and the Conference Board of Canada. Only 11% predicted a decline.

Robust industries
Tanya Racz, president of GBTA Canada, also reports that the nation’s corporate travel market is healthy and growing.

“We are seeing companies report spending that has returned to levels seen before the collapse and even greater spending in some industries, like energy,” she said.

The corporate market is especially robust in Western Canada, where oil, lumber and gas companies are making huge profits, and employees are traveling globally to sell their products.

GBTA members in Ontario and Alberta reported particularly strong growth in business travel, growth that is likely related to the industries those provinces represent, Racz said.

Petroleum leads the way
In fact, according to the 2012 GBTA BTI Outlook – annual Global Report & Forecast, a handful of Canadian industries are expected to see steady growth in business travel spending in 2012 and the years ahead.

These include travel for real estate, which is predicted to grow 6.5% this year and an average of 3.8% through 2015; transportation services, with 6.9% growth for this year and 3.0% on average through 2015; petroleum refining with 12.4% this year and 1.8% through 2015, and education, with 9.2% this year and 6.4% through 2015.   

In contrast, business travel spending on food processing and services, professional, wholesale trade, agriculture and forestry, research and development and printing and publishing are expected to decrease.

Next time: Corporate travel agents in Canada discuss the state of the market, including challenges and opportunities.