Companies Vote Against Business Travel In Q3
Joe Cortez October 24, 2016
Lower corporate profits and global uncertainties point to reduction in business travel demand.
A new projection by the Global Business Travel Association (GBTA) claims corporate travelers are waiting for the election results before reinvesting in business travel once again. In their latest GBTA BTI report for the third quarter, the trade organization predicts business travel will increase by only one percent, while total spending will decrease by almost the same amount. Looking forward to the next year, business is expected to pick up by 3.8 percent on price inflation alone.
The timing, which coincides with the presidential election, is driven by lower corporate profits over the first six months of 2016. According to analysis by GBTA, corporate profits slid for the fifth consecutive quarter at the close of the second quarter of 2016, resulting in more expense controls and less travel being approved.
Tighter balance sheets are not the only reason business travelers are on the road less often. A stronger U.S. currency, combined with weaknesses among trade partners, is resulting in poorer export performance. When paired with weaker management confidence, companies are more reluctant to spend money on business travel.
“Businesses are hiring and paying better wages, but business travel spending is stalled – something we rarely see happen,” Michael W. McCormick, executive director and COO of GBTA, said in a press release. “The ongoing global uncertainty and added heartburn from a presidential election unlike any we have ever seen are causing many businesses to stay in a holding pattern, taking an extremely cautious wait-and-see approach bordering on paranoia.”
However, good news could be on the horizon for corporate road warriors. In 2017, business travel is expected to increase by 2.8 percent, while international outbound business travel is expected to climb by a combined total of 1.2 percent by the end of next year.
[Photo: Rob Lovitt]
The report is missing the elephant in the room -- the hassle & time wasted by post-9/11 air travel. The extra 2-3 hours it takes is a deal-breaker for us. Back in the pre-hysteria days, there used to be a ton of intra-state flights in Florida. Not anymore. It makes no sense to wait in a TSA line for an hour for a ~30-40 minute flight, then have to do the same on the reverse. Where we used to make many same-day trips, we've stopped and resorted to driving, or just not going at all. Time is money and the TSA & airlines need to realise that.
This trend has been hurting me for a while. I'm at my best when actually with my customer. My preparedness to stay with my customer, as long as it takes, used to be seen as a strength. Now it's seen as a weakness and an unwanted expense. Increasingly I find I'm expected to work with my customer remotely.
The views on whether in-person meetings are worth the cost or not seems to swing back and forth as a business fad. I used to think no, but have come around through experience to say that it is often more important than you think (especially where dealing with people from different cultures).