Germany continues to lead the charge among major business travel markets in Europe.
The eurozone’s population and institutions may have been surprised by the outcome of the June Brexit referendum, but the economy has barely missed a beat as markets have snapped back after an initial slide, according to the GBTA BTI™ Outlook – Western Europe report, conducted by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA). Consumers are consuming and businesses are hiring, investing and traveling for now. While spending has been somewhat resilient, measures of near-term investment intensions plunged in the third quarter of this year, suggesting coming weakness.
Brexit’s potential for delaying short-term economic decisions and its long term impact on trade, jobs, immigration and investment will create challenges for business travel across Europe in the years to come. The specific effects on business travel that GBTA foresees include:
- Uncertainty: new waves of uncertainty may develop following the actual delivery of Article 50 as trade and immigration negotiations begin in earnest.
- Travel pricing: the end of open skies for European air carriers may result in fewer flights and higher fares and reinstituting mobile roaming charges could expose road warriors to rising voice and data communication costs.
- Travel friction: the debate over immigration could lead to extreme new UK visa requirements, which would likely be reciprocated across the EU. Coupled with rising security concerns in a new separated world, business travelers may face more difficulty and scrutiny moving throughout the EU.
- Access: the free movement of people and money throughout the EU brought many advantages for business travel. Going forward airlines may have to renegotiate routes and gates with both the UK and the EU potentially resulting in fewer flights and higher fares, processing and acceptance of credit cards becomes more complicated and the end of the European Health Insurance Card for UK business travelers could muddle health coverage during trips.
- Location decisions: establishing restrictions on the right for EU citizens to work in any member state will have profound longer-term impacts on business travel levels and patterns.
The GBTA BTI™ Outlook – Western Europe report looks at the five largest business travel markets in Europe: Germany, the United Kingdom, France, Italy and Spain that together make up 70% of Western Europe’s business travel market, and serve as a strong indicator for the European business travel market more broadly. Western Europe’s business travel spending is projected to increase to $210.7 billion USD in 2016 and top out at $220.6 billion USD in 2017, 6.0% and 4.7% growth respectively – very positive numbers, but slightly lower than predictions in GBTA’s previous forecast.
“While trips and spending have been bounded by slower European and global economic growth, Brexit’s influence has been negligible thus far,” said Catherine McGavock, GBTA’s Regional Vice President – EMEA. “Businesses and business travelers continue to show their resilience and ability to adapt as Europe has faced an array of challenges recently, but business travel remains strong.”
Germany’s economy remains one of the strongest in all of Western Europe fueled by a robust labor market, low interest rates, rock-bottom energy prices and strong demand for exports. GBTA projects Germany to continue to lead the growth in business travel spending from 2015-2017, with a 7.5% compound annual growth rate increase, followed by Spain (6.5%), the United Kingdom (4.7%), France (4.2%), and Italy (2.6%).
