Financial impact of global travel decline expected to be 10x the Great Recession and 9/11
The Global Business Travel Association (GBTA) released its annual BTI™ Outlook, a detailed analysis of business travel in 2020, with projections for 2021 and beyond. The BTI Outlook, now in its 12th year, is an exhaustive study of business travel spending and growth covering 75 countries across 48 industries.
The true global financial impact of COVID-19 began in Q2 2020, resulting in an expected 68% decline (to $738 billion USD) from April 1, 2020 to the end of the year. Because of the relatively strong (pre-COVID) first quarter of 2020, global spending on business travel is expected to show a 52% decrease for all of 2020 (to $694 billion USD), down from $1.4 trillion USD in 2019.
Key findings of GBTA’s BTI Outlook include an analysis of 2020 challenges for the business travel industry as well as a recovery forecast.
2020 Losses and Challenges:
Forecast on Business Travel Recovery:
- Global GDP is expected to have declined -4.4% in 2020, an unprecedented decline when compared to the -0.5% decline experienced during the Great Recession of 2008.
- Global trade is expected to contract by almost 11%, due to lockdowns that temporarily froze the movement of people and goods and forced a review of supply chain networks, resulting in many countries looking to source locally.
- Job losses in the business travel industry have been extensive. The loss in global work hours during 2020 compared to the end of 2019 was equivalent to 400 million full-time jobs in the hotel, airline, airport, ground transportation, restaurant and other service provider segments.
- Coming into 2020, business travel had grown for 10 consecutive years, with an average growth rate of 5.1% per year.
- The impact of COVID-19 on business travel has varied by region.
- The magnitude of these losses and their impact on travel suppliers is unprecedented: the 2020 business travel spending losses are expected to be 10 times larger than the impact of either 9/11 or the Great Recession of 2008.
- Understandably, organizations with more exposure to sectors at the epicenter of the crisis are expected to face more volatility moving forward, including leisure and hospitality, ground transportation, retail, food services and energy.
- A 21% increase in business travel spending is projected in 2021. Most of this gain is expected to come at the end of 2021 as vaccinations increase globally and consumer confidence returns.
- In 2022, the BTI Outlook forecasts further acceleration in business travel, including a significant pick-up in group meeting activity and international business travel.
- While annual business travel spending growth is expected to slow somewhat in 2023, it is projected to remain well above historical average rates of growth of 4.6%. By the end of 2024, annual business travel spending is projected to reach approximately $1.4 trillion, nearly equaling the 2019 pre-pandemic revenue peak of $1.43 trillion.
- A full recovery to pre-pandemic levels is expected by 2025.
“The pandemic has been devastating for business travel and it’s clear our industry will take some time to recover given the challenges we’re facing on multiple fronts,” said Dave Hilfman, interim executive director of GBTA. “Economic recovery is already underway, although very uneven across countries and sectors.” Added Hilfman, “the continued rollout of the vaccine will be central to recovery globally, as will decisions the new Biden Administration makes regarding global trade and border and quarantine policies. GBTA will continue to work on restoring consumer confidence so travel can come back safely.”
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