1 CONFIDENTIAL FOR INTERNAL USE ONLY
Business Travel Market Metrics
A Global Analysis of Business Travel Activity
:
August...
1 IHS Global Insight / National Business Travel Association / Egencia August 2009
Table of Contents
Introduction: How Big ...
2 IHS Global Insight / National Business Travel Association / Egencia August 2009
Introduction: How Big and Influential Is...
3 IHS Global Insight / National Business Travel Association / Egencia August 2009
•The recession that began in earnest lat...
4 IHS Global Insight / National Business Travel Association / Egencia August 2009
Approach, Methodology, Data Sources, and...
5 IHS Global Insight / National Business Travel Association / Egencia August 2009
National Input/Output Accounts for 48 of...
6 IHS Global Insight / National Business Travel Association / Egencia August 2009
Minnesota, and currently managed by the ...
7 IHS Global Insight / National Business Travel Association / Egencia August 2009
Global Business Travel Analysis
One of t...
8 IHS Global Insight / National Business Travel Association / Egencia August 2009
GLOBAL SUMMARY
IHS Global Insight estima...
9 IHS Global Insight / National Business Travel Association / Egencia August 2009
Western Europe, North America (NAFTA), a...
10 IHS Global Insight / National Business Travel Association / Egencia August 2009
The top 25 business travel markets are ...
11 IHS Global Insight / National Business Travel Association / Egencia August 2009
TOP 20 GLOBAL BUSINESS TRAVEL SECTORS:
...
12 IHS Global Insight / National Business Travel Association / Egencia August 2009
make it the 5th largest industry for in...
13 IHS Global Insight / National Business Travel Association / Egencia August 2009
As mentioned, our key measure of busine...
14 IHS Global Insight / National Business Travel Association / Egencia August 2009
Keep in mind that this metric is not an...
15 IHS Global Insight / National Business Travel Association / Egencia August 2009
attending more training sessions per tr...
16 IHS Global Insight / National Business Travel Association / Egencia August 2009
other primary commodities prices since ...
17 IHS Global Insight / National Business Travel Association / Egencia August 2009
Weak growth will keep financial markets...
18 IHS Global Insight / National Business Travel Association / Egencia August 2009
process. A synchronous worldwide housin...
19 IHS Global Insight / National Business Travel Association / Egencia August 2009
20 IHS Global Insight / National Business Travel Association / Egencia August 2009
GDP Growth for Key Regions
(Annual comp...
21 IHS Global Insight / National Business Travel Association / Egencia August 2009
As mentioned earlier in the Global Busi...
22 IHS Global Insight / National Business Travel Association / Egencia August 2009
States had already experienced a declin...
23 IHS Global Insight / National Business Travel Association / Egencia August 2009
GLOBAL BUSINESS TRAVEL SPENDING GROWTH:...
24 IHS Global Insight / National Business Travel Association / Egencia August 2009
TOP 15 & BOTTOM 15 GLOBAL BUSINESS TRAV...
25 IHS Global Insight / National Business Travel Association / Egencia August 2009
The U.S. comes in at #4 on the business...
26 IHS Global Insight / National Business Travel Association / Egencia August 2009
TOP 20 GLOBAL GROWTH SECTORS THROUGH 20...
27 IHS Global Insight / National Business Travel Association / Egencia August 2009
Which sectors represent the best target...
28 IHS Global Insight / National Business Travel Association / Egencia August 2009
The Outlook for the Top 20 Global Trave...
29 IHS Global Insight / National Business Travel Association / Egencia August 2009
Australia
Economic Outlook
Inventories,...
30 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL SPENDING METRICS
AUSTRA...
31 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL WINNERS AND LOSERS
AUST...
32 IHS Global Insight / National Business Travel Association / Egencia August 2009
Austria
Economic Outlook
Economic growt...
33 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL SPENDING METRICS
AUSTRI...
34 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL WINNERS AND LOSERS
AUST...
35 IHS Global Insight / National Business Travel Association / Egencia August 2009
Belgium
Economic Outlook
Belgian GDP is...
36 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL SPENDING METRICS
BELGIU...
37 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL WINNERS AND LOSERS
BELG...
38 IHS Global Insight / National Business Travel Association / Egencia August 2009
Brazil
Economic Outlook
Brazil will com...
39 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL SPENDING METRICS
BRAZIL...
40 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL WINNERS AND LOSERS
BRAZ...
41 IHS Global Insight / National Business Travel Association / Egencia August 2009
Canada
Economic Outlook
Growth is falli...
42 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL SPENDING METRICS
CANADA...
43 IHS Global Insight / National Business Travel Association / Egencia August 2009
BUSINESS TRAVEL WINNERS AND LOSERS
CANA...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
Business Travel Market Metrics A Global Analysis of Business ...
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  1. 1. 1 CONFIDENTIAL FOR INTERNAL USE ONLY Business Travel Market Metrics A Global Analysis of Business Travel Activity : August 2009
  2. 2. 1 IHS Global Insight / National Business Travel Association / Egencia August 2009 Table of Contents Introduction: How Big and Influential Is the Activity We Call Business Travel?.....................................................................2 Approach, Methodology, Data Sources, and Definitions ........................................................................................................4 Global Business Travel Analysis.............................................................................................................................................7 Global Summary..................................................................................................................................................................8 Business Travel's Contribution to Industries Around the Globe........................................................................................12 Global Business Travel Outlook........................................................................................................................................15 World Economic Outlook Summary .............................................................................................................................15 The Outlook for the Top 20 Global Travel Markets ......................................................................................................28 U.S Business Travel Market..................................................................................................................................................89 U.S. Business Travel Forecast..............................................................................................................................................96 U.S. Macroeconomic Outlook............................................................................................................................................96 Business Travel Overview.................................................................................................................................................98 Business Travel under alternative scenarios...................................................................................................................105 Business Travel with oil prices of $100 per barrel...........................................................................................................107 Business Travel Survey ......................................................................................................................................................109 The Economic Impact of U.S. Business Travel...................................................................................................................116 The Top Line: Total U.S. Business Travel Industry Spending .......................................................................................117 Economic Impact of the U.S. Business Travel industry ..................................................................................................118 Value added Impact of the U.S. Business Travel industry..............................................................................................119 Income Impact of the U.S. Business Travel industry ......................................................................................................120 Employment Impact of the U.S. Business Travel industry ..............................................................................................121 Tax Impact of the U.S. Business Travel industry ............................................................................................................123 U.S. Business Traveler Profile ............................................................................................................................................124 Overview..........................................................................................................................................................................124 The Top Line: Person-Stayes and Spending .................................................................................................................125 Business Travel by Mode of Transportation....................................................................................................................127 Business Travel Spending Profile ...................................................................................................................................128 Business Travel Accommodations ..................................................................................................................................129 Who is the Typical Business Traveler? ...........................................................................................................................131
  3. 3. 2 IHS Global Insight / National Business Travel Association / Egencia August 2009 Introduction: How Big and Influential Is the Activity We Call Business Travel? Business travel is a term that encompasses many activities and purposes. It includes trips taken on behalf of sales, operations management, educational advancement, social responsibility & charitable works, and performance rewards. Moreover, the activity of business travel is viewed in different ways by different actors. Travel suppliers see it as a significant source of revenue and primary market segment. Corporate management sees it as both a principal business input and a controllable expense. Travel Buyers and Managers view it as an optimization challenge. Policymakers (should) see it as a generator of jobs, income, and tax revenue -albeit an underappreciated one. Finally, veteran business travelers view it as an important part of their daily lives. For all its definitions and purposes, the activity of business travel lacks a comprehensive and coherent description. Clearly, information and metrics concerning business travel's size & growth, economic contribution, and traveler behavior would benefit all of the actors mentioned above. Unfortunately, there is no definitive source for these metrics, one that provides a comprehensive view of both the absolute and relative size of business travel activity. The NBTA is the ideal organization to provide this critical foundation. Developing and distributing business travel measures, examining issues, and detail emerging trends are all within the stated goals of the organization and are consistent with member expectations. To aid this effort, IHS Global Insight has developed measures of the current global market for business travel, analyzed its historical trends, and created a projection through 2013. A separate and more detailed view of the US business travel market was also provided. Next, the economic contribution or impact of business travel was estimated for the U.S. Finally, a comprehensive profile of the US business traveler provides a detailed analysis of travel incidence, spending, and behavior. This report presents the results of our findings and the storylines behind them. IHS Global Insight has created a report covering the all-important demand side of the business travel market. Metrics covering business travel volume, trip behavior, spending, and costs have been combined with a complete profile of the U.S. business traveler. Clearly, supply side measures (e.g. air & hotel revenue) are an important part of the process, but it is the development of comprehensive measures of the demand side of business travel that make this research initiative unique. The report also describes business travel's place in the global economy –what drives it, which sectors participate and at what levels, and how it has changed over time. Importantly, the process by which these business travel measures have been created can be refreshed on (at least) an annual basis so that ongoing monitoring of the business travel market is possible. Consequently, this report can perhaps be envisioned as an "annual report on the state of global business travel". Travel managers, buyers, and suppliers will all benefit from the research findings. Informing marketing strategy, assisting resource allocation and prioritization, and benchmarking travel programs/policies are all potential applications of this research effort. Moreover, policymakers and citizens can both benefit from a better understanding of the size and contribution that business travel makes to job creation, income generation, and tax receipts in the U.S. Examples of highlights and implications include: •Business travel is becoming more global. Travel managers should be increasingly thinking in terms of global programs and policies. •High-growth markets (such as China, India, and the Middle East) should be a key part of strategies going forward.
  4. 4. 3 IHS Global Insight / National Business Travel Association / Egencia August 2009 •The recession that began in earnest late in 2008 will make for a very difficult 2009. The global recovery will begin late in 2009, however, and gather momentum in 2010 and 2011. Global business travel will decline by nearly 15% in 2009, but the next two years will bring slow and steady improvement (+1% and +4%, respectively). This is a good time to re-evaluate strategies, programs, and policies so that you are better positioned to take advantage of the coming recovery. •The rates of recovery from the current recession will vary in each country. Travel managers should leverage the market-specific projections to better prioritize market activity and resource allocation during next 18 months •There are substantial opportunities for travel management to address the 46% of business travel spend that is outside of air, hotel, and rental cars. •Industry sectors with high Travel-Spend-per-Sales-Dollar, such as real estate, government, utilities and professional services, stand to save the most from managed travel activities. •The productivity of business travel has grown dramatically over the past decade. More and better travel management methods, technology alternatives and compliments, more dense and efficient trips, and slower increases in travel costs (relative to wages and other inputs) are among the reasons. •Although business travel is becoming more productive, it is still a significant portion of company spend. On average in the U.S., business travel comprises about: o 1 cent of every sales dollar o 2.3 cents of each dollar of cost (including wages) o 5 cents of each dollar of gross operating profit •How much does business travel contribute to the U.S. economy? It is responsible for supporting over 4 million U.S. jobs, generating $188 billion in wages, and $80 billion in federal, state, and local taxes. One in 30 U.S. workers owes his/her job to business travel activity. If business travel were viewed as an industry, it would be the 13th largest in the country (Healthcare is #1). Policymakers should fully consider the repricussions of legislation or regulation that hinders business travel activity. • American business travelers are typically between the ages of 35 and 54 years old. They are married (76%), and have no children living in their households (60%). They most likely work in a managerial or professional position (35%) and make an average yearly income of $78,700. •Business travelers will usually drive to their destinations (60%). The most common destinations are Los Angeles (3.79%), New York (3.05%), San Francisco (2.77%), or Chicago (2.64%). The specific purpose of a business trip is quite broad, but is typically transient business (62%) involving sales/purchasing (11%) or group business involving seminars/training (15%). The business traveler will make a reservation (83%) to stay at a high-end or mid-level hotel (28% and 31%) usually pays with a credit card (63%). •A business traveler will spend an average of $465 during their stay, mostly on transportation (37%) and food (20%). Their trip will usually lasts three days or less (87%) when they will leave to go home to Los Angeles (5.3%), New York (3.9%), or Dallas-Fort Worth (2.4%). A typical business trip will average 343 miles one-way.
  5. 5. 4 IHS Global Insight / National Business Travel Association / Egencia August 2009 Approach, Methodology, Data Sources, and Definitions The overriding objective of this research initiative has been to create a process for developing credible estimates of the size, growth, and contribution of business travel to companies, industries, and countries around the world. Definitive and comprehensive measures simply do not exist at this time. This process must obviously produce defensible results; ones that are consistent with both the foundation data sources and any reputable aggregate or cross check measures published by other recognized sources. Once business travel measures have been generated, the intent is to return to this process periodically to monitor changes over time. The key is to build a process that is both credible and repeatable, utilizing all appropriate data. Updating the estimates of business travel activity requires re-executing this established process to reflect updates of the integral data sources. PRINCIPAL DATA SOURCES Measuring the size, growth, and contribution of business travel is neither a simple or precise task. For one, data inputs are relatively scarce, particularly outside the United States and certain Western European countries . Moreover, each data source tends to tell only a portion of the business travel story. Detailed searches have uncovered no comprehensive view of business travel volume or spending. Even in cases where travel metrics were available, they tended to cover either total travel or leisure travel only. Much of the supply-side data that we assembled during the research did not make the trip purpose distinction either. For example, revenue and/or capacity metrics from, say, hotels or airlines generally do not distinguish a business traveler from a leisure one -likewise, for rental cars and restaurants. This type of supply-side data provided many important sanity checks but was insufficient to provide specific detailed insight that was additive towards a comprehensive view of business travel activity. The second most critical data sourcing problem was the inconsistency of definitions across sources. Promising datasets that appeared to be ideal later proved to be less useful because of definitional inconsistencies surrounding industries, geography, or what constituted business travel itself. Indeed, something as simple as a different definition of a business trip sometimes thwarted attempts to use an otherwise robust data input. Obviously, the reconciliation of seemingly similar sources was paramount in compiling our final estimates. Our principal sources included: D.K. Shifflet & Associates Travel Panel – TRAVEL PERFORMANCE/MonitorSM A bespoke survey of financial management (CFOs & Controllers) at a representative sample of U.S. public and private companies. Over 500 completed interviews captured information regarding travel & entertainment (T&E spending, as well as the commitment to travel management programs, policies, and personnel. The U.S. Bureau of Economic Analysis, The U.S. Department of Commerce's Office of Travel & Tourism Industries The US Department of Transportation Smith Travel Research IPK International United Nations/World Tourism Organization (UN/WTO)
  6. 6. 5 IHS Global Insight / National Business Travel Association / Egencia August 2009 National Input/Output Accounts for 48 of the 72 countries analyzed in the study (source: typically Ministry of Commerce or Statistics) Various international government sources, including Ministries of Transportation, Tourism, and Commerce IHS Global Insight's US and International data, modeling assets, and industry expertise. METHODOLOGY & APPROACH IHS Global Insight assembled an extensive data repository from which to build estimates of global business travel activity. The inventory of sources included many of the private and public datasets that are commonly used to describe economic and travel industry performance in many contexts. Moreover, a comprehensive literature search provided a list of related research efforts that helped guide the final development of our methodology in each phase of the project. Each phase began with an effort to understand and reconcile the differences between and among the pertinent data sources. The development of our global database of business travel spending by country (72) and industry (48) required that we build a "sources and uses" view of the industries that both buy and sell travel services. That is, IHS Global Insight put together a four-dimensional sectoral matrix of travel suppliers/sellers (rows) and travel buyers (columns), the 3rd and 4th dimensions being time (1998-2008) and country. The values within each cell describe the sales of a seller's services (e.g. Hotels) to each buying industry (e.g. Utilities). For example, Airlines constitute one of the critical seller rows. Across the Airline row, each one of the 48 buying industries total purchases of airline tickets is compiled. The data used to populate the cells in this matrix came from the National Input/Output Accounts from 48 of the 72 countries covered in the study. Generally, this data is part of the National Income Accounting framework of each country, typically managed by the Ministry of Commerce or Statistics. Because of effort and expense, most of the countries perform the integral survey and compilation efforts necessary to build these matrixes on an infrequent (usually every 2-5 years) basis. IHS Global Insight's World Industry Group executes an ongoing proprietary process to estimate the values of the matrix for the interim years. For the 24 countries that lacked published input/output matrices, IHS Global Insight assigned a matrix from a country with a similar physical, location, and industrial make-up. These seller-dominant matrixes were then transposed to produce estimates of the amount that each buying sector (e.g. business services) purchases from each travel supply sectors (airlines, hotels, rental cars, restaurants, retail, entertainment, etc.) as a percentage of that buying sector's total annual sales. Adding each supplier sector together, IHS Global Insight created an overall business travel "purchase coefficient" for each buying sector. These purchase coefficients were then tracked over the period 1998-2008. The derivation of IHS Global Insight's initial estimates of business travel spending required that we apply the business travel purchase matrixes to published levels of total sales for each (buying) sector in each country. The total sales database is a key asset of IHS Global Insight's World Industry Service. The World Industry Service also routinely forecasts total sales by sector and country, a critical component to our business travel spending projections. The final estimates of business travel spending by country and sector required that IHS Global Insight fold in other data inputs covering total travel volume and spending in each country, where available. Countries such as the US, UK, Germany and others were compared and adjusted according to sources such as the UN/WTO, DK Shifflet & Associates, WTTC, and IPK International. Moreover, the Ministries of Tourism for some of the countries provide estimates of overall travel, sometimes separated into leisure and business purposes. Where available and definitionally consistent, these were used as important cross-checks. In the U.S. Economic Impact of Business Travel section of the study, IHS Global Insight turned to our repository of economic models and data for assistance in translating the contribution of business travel spending to businesses, households, and governments. The spending streams created by domestic and outbound international business trips were traced through the US economy and their downstream economic contributions to job creation, income generation, and tax receipts were derived. Our model repository included the IMPLAN model, developed at the University of
  7. 7. 6 IHS Global Insight / National Business Travel Association / Egencia August 2009 Minnesota, and currently managed by the MIG Group. The IMPLAN model has fast become the defacto standard for U.S. economic impact assessment among analysts, academia, and policy consultants. IHS Global Insight uses IMPLAN extensively in its economic impact work on behalf of tourism destinations around the country. DEFINITIONS The resulting global travel database, forecasts, and report created from this research effort can be used to inform many strategic and tactical decisions. Users among the travel manager, buyer, and supplier community should, however, be sure of what the estimates do and do not include, particularly when comparing the findings to other external or internal measures. In fact, during initial presentations of the results, IHS Global Insight fielded a similar set of definitional questions that we thought deserved mention in this report. The first definition is that of business travel itself. Our objective was to be as comprehensive as possible resulting in the inclusion of all kinds of business trips and trip spending, including: Trips booked within and outside managed travel programs Daytrips and overnight trips Domestic and outbound international trips Trips on behalf of sales, operations, training, convention/meeting, maintenance/repair, incentive, and customer service Trip spending includes all categories -air, hotel, rental car, other ground transportation, personal vehicles, food & beverage, entertainment, and miscellaneous expenses. Another important definitional note revolves around the use of U.S. dollars to represent business travel spending. Comparison across countries required that local currencies be converted to US dollars using prevailing exchange rates from IHS Global Insight's FOREX database. Moreover, all dollar values are expressed in current or nominal terms. This means the effects of inflation are included in both the estimates of industry sales and business travel spending.
  8. 8. 7 IHS Global Insight / National Business Travel Association / Egencia August 2009 Global Business Travel Analysis One of the principal outcomes of this research effort is a credible, comprehensive, and repeatable set of measures describing business travel activity –by industry, by country, by job function and over time. Where feasible, metrics such as business trip volume and spending have been consistently developed across market segments in order to arrive at a dataset that can be used to support any number of strategic, tactical, and policy decisions. The nature and detail of the business travel metrics contained in this report and its accompanying database are largely dictated by available data from both secondary and primary sources. Supplier-based information from airlines, hotels, and rental car companies has been reconciled with demand-side sources from governments, traveler research panels, and travel management companies in an effort to create the most comprehensive view of business travel. This section of the report will present our finds regarding the size and growth of global business travel. We will first summarize the global picture, with U.S. business travel being described in a separate section of the report. This section will provide business travel measures for seventy-one (71) other countries around the world. What factors determine the size and growth of business travel activity? There are eight distinguishing characteristics that influence the level and rate of growth of business travel in our analysis: Size of the economy –the level of business activity is paramount of course, as is its growth trajectory. Land mass, population, and business dispersion of the country –larger countries with widely dispersed populations require more travel to facilitate economic and business development Industry mix of the economy –countries whose economies are dominated by sectors that are more travel-intense will rise in the rankings Productivity of business travel –business travel is a material/service input to virtually every industry. Whether business travel's role in business success is rising or falling over time is a function of its factor productivity and the availability of substitutes. In countries with well-developed network infrastructure, for example, high-quality video conferencing alternatives can incrementally reduce the amount of business travel. On the other side, better transportation infrastructure can reduce the cost of a trip, perhaps promoting more and/or longer trips. Degree of export dominance –countries with large trade sectors (China, Germany, Japan, Indonesia) will tend to engage in more international business travel. On a per-trip basis, spending will tend to be higher in these economies. Trip volume will tend to be lower, however. In countries where economic activity is more dependent upon consumption (U.S., India, U.K.), domestic business travel will dominate. Physical location –proximity to markets and supply chain. Countries that are far from their markets will by definition require more business travel to in order for businesses to succeed Infrastructure development –this factor speaks to the ability to travel. Is the transportation and hospitality infrastructure sufficient for business travel to flourish? Environmental, tax, security, and regulatory policy –does the government help or hinder business travel? Policies aimed at improving security, reducing fiscal deficits, or regulating land use -depending upon how they are structured- can incrementally damage or promote business travel.
  9. 9. 8 IHS Global Insight / National Business Travel Association / Egencia August 2009 GLOBAL SUMMARY IHS Global Insight estimates that total business travel spending across the globe reached $929 billion in 2008. This represents growth of over 3% versus 2007, much of it coming from countries other than the United States. The definition of business travel in this case includes both domestic and outbound international trips. North America, Western Europe, and Asia dominate global business travel activity, with each representing about 30% of total in 2008. Asia, Emerging Europe, and Middle East & Africa have led the way with respect to the rate of growth since 1998, however. The lion's share of this nearly $900+ billion dollars does take place within the U.S., however. At $261 billion, the U.S. comprises about 28% of all business travel. Given its size and torrid growth, China is the second largest business travel market at $93.8 billion in 2008. Growth around the world has been anything but uniform. While the U.S. dominates in terms of spending levels, growth has been more robust in Asia, Latin America, the Middle East, and Eastern Europe. This is largely a reflection of rapid economic growth in these regions, as well as the tendency for business travel to be used more intensively in earlier stages of company/industry development. Many of these counties also lack the infrastructure sufficient to promote non-travel alternatives to business communication needs.
  10. 10. 9 IHS Global Insight / National Business Travel Association / Egencia August 2009 Western Europe, North America (NAFTA), and Asia-Pacific are all about the same size with respect to the level of business travel spending in 2008. Together, they account for nearly 90% of global activity. The remaining 10% takes place in Latin America, Emerging Europe, and the Middle East & Africa (MEA). Growth in business travel spending over the past decade paints a slightly different picture. North America and Western Europe have been the growth laggards, while Asia, Emerging Europe, and MEA have led the way. IHS Global Insight estimates that worldwide business travel spending activity has increased by over 35% since 1998. Some of this growth is due to inflation (all estimates are in current US dollars), but most represents real increases in the volume and dispersion of business travel activity around the world. Among the top 25 markets, Russia has been the fastest growing over the past decade (1998-2008), registering compound annual growth of about 16% per year. This is more than eight times the rate of U.S. growth (1.9%) during that same period. Indonesia (15%) and China (14%) also registered double digit growth per year over that period. Turkey (9.2%), India (8.8%) and South Korea (8.4%) are also notable in terms of business travel spending expansion. Meanwhile, World growth in business travel spending (measured in nominal dollars) over the last decade achieved 4.6% per year. While many countries grew more quickly than the U.S, all started from a much smaller base. China, the number two business travel market, is only about 1/3 the size of the U.S. at present. Japan, at $78 billion in 2008, is the third largest market, yet only 30% as large as the U.S. Italy floats to the top of the rankings on the strength of its export and domestic economic performance over the past decade. Moreover, Italy's current industrial mix favors industry's that are relatively more travel intense. The market with the fastest rate of growth during the last decade was Zimbabwe, at 35% per year. This performance is impressive, but total business travel spending in that country was only $3.2 billion in 2008. Another way to analyze growth is to focus upon the change in the level of business travel spending between 1998 and 2008. In the U.S., for example, annual business travel spending was $44 billion higher in 2008 than it was in 1998. China expanded by nearly $70 billion and Russia grew by only $15 billion during the same period. Zimbabwe grew to $3.2 billion from virtually zero during the past decade.
  11. 11. 10 IHS Global Insight / National Business Travel Association / Egencia August 2009 The top 25 business travel markets are shown in the table below, along with their 1998-2008 growth performance. TOP 25 GLOBALBUSINESS TRAVEL MARKETS Based on Domestic and Outbound International (in millions of current U.S. $$) IHS Global Insight also examined business travel spending by industry around the world. The table below identifies the largest and most travel-dependent sectors. The level and growth of business travel spending is contrasted with organic global industry sales. Sector growth in business travel spending is dependent upon both the organic growth of the industry as well as the intensity and productivity of travel as a critical input.
  12. 12. 11 IHS Global Insight / National Business Travel Association / Egencia August 2009 TOP 20 GLOBAL BUSINESS TRAVEL SECTORS: 2008 Business Travel Spending $$ The Utilities, Food Processing & Services, Real Estate, and Government sectors float to the top of the rankings primarily due to their sheer size across the globe. Utilities, Food Processing, and Real Estate do engage in significant business travel in relative terms as well. For example, Utilities have a very large service & repair component at both the retail and generation levels, ones that require significant investments in business travel. Many employees of these organizations travel almost every day. Virtually every country has a well-established presence in these basic sectors. For many developing economies, these sectors are the primary benefactors of critical infrastructure investment. With the exception of Utilities, their usage of business travel per dollar of industry sales or per industry employee is generally not as large as, say, the Banking & Financial sector or Professional & Business services, yet the size of these industries, as demonstrated in the column entitled, "Industry Sales 2008", adds up to significant levels of business travel spending. Turning to subject of growth in business travel spending over the last decade, Oil Refining, Education, Chemicals, and Social & Personal Services lead the list. In part due to organic growth around the world, in part due to rapid economic expansion in developing countries, and in part due to increasing usage of business travel, these industries have led the way. Note that the Top 25 sectors account for nearly 92% of all global business travel. The remaining industries are either relatively small (e.g. Textile Manufacturing), less intense users of business travel (e.g. Mining, Retail Trade), or both (e.g. Apparel, Wood Products). The last column in the table counts the dollar increase in business travel spending over the decade 1998 to 2008. Here again, the larger business travel sectors tend to dominate the list. Business travel spending in the Food Processing & Services had a relatively sluggish growth rate over the decade, but its size and global dispersion $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Utilities Food P rocessing and Services RealEstate Social& PersonalServices Professional& Business Services G overnm ent Transportation Services W holesale Trade Construction C om m unications Services Banking & Finance Equipm entRental& Leasing Agriculture,H unting,Forestry,Fishing Petroleum Refining Rubber& Plastic M anufacturing Research & Developm entServices Non-M etallicM ineralProducts H otels& Restaurants Fabricated M etalProducts Paper& PaperProducts inMillionsofCurrentUS$
  13. 13. 12 IHS Global Insight / National Business Travel Association / Egencia August 2009 make it the 5th largest industry for increasing the level of business travel spending, roughly adding $1.8 billion per year during 1998-2008. TOP 25 GLOBAL BUSINESS TRAVEL SECTORS: Ranked on 2008 Business Travel Spending $$ BUSINESS TRAVEL'S CONTRIBUTION TO INDUSTRIES AROUND THE GLOBE One of the most important conceptual and numeric building blocks of this research effort is the estimations of the contribution of business travel spending to top-line revenues of industries. This metric essentially captures each industry's travel intensity. The need for business travel as a material/service input varies across both industries and countries. An understanding of the level of business travel spending per dollar of revenue puts the need for business travel in perspective relative to both sales and other critical inputs such as labor costs, other materials and services expenses, even equipment and structures investment. The global business travel database that has been built in support of this research effort includes metrics for both industry performance (sales by sector) and business travel utilization for each country. The level of business travel spend per dollar of revenue is also an essential data concept. We have not only worked to derive a current value for this key measure, but have also sought to track its change over time. Increases or decreases over the past decade essentially address changes in the "productivity" of business travel in the production recipe of each industry sector.
  14. 14. 13 IHS Global Insight / National Business Travel Association / Egencia August 2009 As mentioned, our key measure of business travel intensity varies across industries and countries. For any one sector, the degree of business travel required to support a measured level of revenue is a function of the unique operating framework of that sector, as well as the physical, regulatory, and cultural attributes of each country. The chart shows the distribution of travel-spend-per-revenue dollar across the 72 countries examined in the study for the sector, Professional & Business Services. We chose this industry as an example because it is anecdotally understood to be among the most travel-intense of the 48 sectors included in our research. With a global average of 1.1¢ per dollar of revenue, the chart shows the dispersion of the 72 countries around the global average. It should be noted that for some of the countries, IHS Global Insight was unable to find a defensible source for this critical metric. Generally, they were smaller or developing countries (e.g. Bangladesh, Jordan, Costa Rica, etc.) that lack detailed economic and business data of all kinds. In those cases, we imposed the global average –hence the many countries that appear on the global average line. Note the above-average travel intensity of some of the Western European countries, registering in the 1.5¢-1.6¢ per revenue dollar range. This is a significant difference over some of the developing countries such as Mexico or the Ukraine, showing rates in the half-cent per revenue dollar range. Western Europe boasts a large and well-developed Professional & Business Services sector that must engage in a great deal of business travel in order to support its relatively large level of sector revenue. The opposite is true of countries such as Mexico or Greece, where the industry is in an earlier stage of development. Next, we take a deeper dive into a specific country showing the differences in travel intensity across domestic industries. Using the United Kingdom as an example, many of the key sectors have been highlighted in the bar chart. Measures of business travel intensity range from a high of 3.7¢ per revenue dollar for Equipment Leasing to a low of Mining with fractions of a penny per revenue dollar. The U.K. all-industry average is about 0.9¢ per revenue dollar. Source: IHS Global Insight, OECD, UN/WTO, various Ministries of Commerce, Statistics, & Tourism
  15. 15. 14 IHS Global Insight / National Business Travel Association / Egencia August 2009 Keep in mind that this metric is not an indicator of the size of business travel spending. Rubber & Plastics, for example, may show relatively high travel intensity, but the industry is a small player in the U.K. economy. The opposite is true of sectors such as Education or Government. Keeping with the U.K. example, we can also illustrate the notion of travel intensity over time. As previously mentioned, upward or downward trends in travel spend-per-revenue-dollar speak to the changing productivity of business travel as a key production input. Examining the change in business travel's intensity in the Professional & Business Services industry, we note that travel intensity is trending down over the last decade. Travel is becoming a smaller portion of the industry's total cost. Said differently, business travel's productivity is on the rise. There are many possible reasons for the increase in travel productivity: A reduction in travel prices relative to the price of other inputs and of wages A rise in the length of stay of business trips, where business travelers are seeing more sales prospects, conducting more meetings, or Source: HIS Global Insight, OECD, UN/WTO
  16. 16. 15 IHS Global Insight / National Business Travel Association / Egencia August 2009 attending more training sessions per trip. Increased usage of business travel alternatives such as conference calls, Webcasts, and video conferencing. Improvements in both the usage and quality of travel management. Through cost reductions and productivity improvements, travel management has added to the efficiency and contribution made by business travel. A gradual change in the structure of the industry where, for example, companies begin to locate closer to their markets and/or supply chains. IHS Global Insight has forecasted future changes in travel intensity for each industry. Using a combination of a number of secular and cyclical factors, we have generally continued the trends observed over the past decade across industries and countries. This was an important building block for the business travel spending projections presented in the next section. GLOBAL BUSINESS TRAVEL OUTLOOK The next section will cover the IHS Global Insight forecast for global business travel. Our view of the medium-term future of travel (2009-2013) is driven primarily by two fundamental factors: (1) our expectations for global macroeconomic performance and (2) the underlying contribution that business travel makes to each industry in each country. To establish our macroeconomic expectations through 2013, we have turned to IHS Global Insight's Country Intelligence Group's data, economic models, and country experts. This unit of IHS Global Insight monitors economic activity in over 200 countries and provides clients with daily analysis, ongoing risk assessments, and monthly forecasts. Our view of the contribution of business travel to each country-sector combination has been established by analyzing trends in the business travel "purchasing" behavior of 48 sectors across 72 countries. Analyzing trends in the level of business travel spending per dollar of industry sales (or per employee) over time, IHS Global Insight was able to extend these factors out to 2013. The combination of the forecast of industry sales (macroeconomic environment) and the trend in business travel spending per dollar of sales (business travel intensity & productivity) was used to generate our projections. We begin with a summary explanation of the global macroeconomic environment covering the current recession, the coming recovery, and growth prospects through 2013. World Economic Outlook Summary The global economy ran into a brick wall at the end of 2008. The advanced economies' strong downshift during 2008 has set up the global economy for its worst recession since World War II. The world economy's expansion has been going through a rough patch since mid-2007, when the lagged cumulative effect of monetary tightening around the world during the preceding several years finally dented the global housing boom, triggering a growing credit tightening and then outright crunch in advanced economies. World GDP growth has decelerated markedly, from a robust annualized growth rate of 4.7% in the second quarter of 2007 to a dismal contraction of 0.1% in the third quarter of 2008—which already was far below the global economy's long- term annual trend rate of 3.4%. Moreover, we estimate world GDP contracted 6.0% in the fourth quarter and expect a further major contraction of similar magnitude in the first quarter of 2009. Economic conditions have deteriorated severely since mid-September because of an intensification of financial market turbulence and an unprecedented credit crunch in the global banking system. Although the sharp retreat of oil and
  17. 17. 16 IHS Global Insight / National Business Travel Association / Egencia August 2009 other primary commodities prices since last July is providing timely relief for both consumers and businesses, the price levels are likely to remain elevated compared with their long-term historical averages. Moreover, the odds are that the global economy will continue to face major headwinds for some months as a result of the declines in global property markets and the tightening of lending standards by beleaguered financial institutions. International trade is no longer supporting world growth. Until recently, international trade had been a key pillar of support for the global economy in general and raw-material-exporting economies and countries with undervalued currencies in particular. With nearly two-thirds of the world economy now in the midst of a major contraction, though, foreign trade has now become a drag for the global growth. IHS Global Insight expects world nominal merchandise exports to contract more than 23% in 2009. World trade could stabilize before the end of this year, but it is unlikely to make a full recovery to its normal pace of double global GDP growth before 2011. The worst of the downturn is behind us. The global economy's recession, which intensified at an alarming pace in September 2008, has been moderating since March and appears to be nearing its end. Recent data releases are no longer as depressing as they were earlier this year, and there are increasing signs for at least a modest recovery during the second half of this year. Financial-market indicators, in particular, have been showing increasing signs of stabilisation for several months as credit conditions have started to loosen up and corporate bond spreads have narrowed, which are providing badly needed financial relief for beleaguered businesses. Our latest bottom-up global economic forecast-which was started in late May and published in mid-June-resulted in a world GDP growth projection of -2.6% for 2009, which represents the world economy's most severe annual contraction in more than 60 years. To be sure, the world economy is still in a highly fragile state, with most investors still avoiding risky assets and market consensus anticipating a "great recession" for 2009. The downturn has been particularly acute in the case of industries, as aggregate global output is projected to decline by more than 10% during 2009. Latest national- account reports confirm that world GDP growth declined sharply for the second consecutive quarter in the first quarter of 2009. Nevertheless, recent high-frequency data releases suggest that the rate of contraction has diminished in the second quarter, and there is now a good chance that we may see a modest rise in global GDP in the third quarter. The economies of Greater China and the United States are likely to lead the recovery among emerging markets and advanced economies, respectively, because of their diverse base, dynamic structure, and more flexible and competitive markets relative to their peers. Given the unsettled condition of global credit markets, the world economy's deleveraging is likely to continue through late 2009. The severity of the financial market turmoil has already devastated the U.S. investment banking sector, severely depressed asset prices worldwide, and caught policymakers flatfooted. The global credit system has become highly dysfunctional. The entire subprime mortgage market remains effectively shut down, and more broadly, the structured credit markets are still in seizure. The volume of both outstanding asset-backed commercial paper and leveraged buy-out activity has fallen off dramatically. The number of initial public offerings (IPOs) has collapsed to near zero since the second quarter. Financial firms, which have been forced to write down trillions of dollars in bad debt since the second quarter of 2007, are finding it increasingly difficult to raise capital—in part because of the sharp drop in their share prices during the past two years and in part because their credit ratings have nosedived sharply. The strain on the financial system has engulfed the corporate sector, as reflected in rising corporate bond spreads, particularly in the high- yield segment. World growth will not get above trend until the advanced economies' housing markets stabilize. The advanced economies are now in a very fragile state, as they have been dragged down by a protracted housing downturn and deleveraging in financial markets. Because of the huge share of these countries in the global economy, world quarterly GDP growth is now in the midst of a major contraction. IHS Global Insight now expects the downturn to engulf all economies, including emerging markets and less-developed countries, given their dependence on exporting to advanced economies.
  18. 18. 17 IHS Global Insight / National Business Travel Association / Egencia August 2009 Weak growth will keep financial markets volatile. The global financial system has already seen its capital base damaged by the U.S.-led housing and mortgage crisis, and the credibility of its institutions has come under question as a result of inadequate transparency and imprudent investment decisions. The deteriorating global economic outlook and uncertainties on the extent of damage to financial institutions' balance sheets will keep lending activity subdued, risky assets out of favor, and investors skittish for at least the next several months. The resulting deleveraging and disintermediation have already depressed global economic activity. High oil prices represent another major risk for the global economy's growth prospects. During the past seven years, periodic spikes in global oil prices sapped economic recovery by dampening consumer confidence and discouraging businesses from adopting aggressive expansion plans. High oil prices were particularly harmful to energy- intensive sectors, such as transportation and some industrial-material-processing industries. The responsibility of oil prices for the global economy's momentum losses should not be exaggerated, though. Although oil prices undoubtedly shaved several tenths of a percentage point from the global economy's aggregate growth since 2004, their impact was far less severe compared with previous oil crises—particularly those of the 1970s and 1980s. Indeed, rising oil prices had relatively modest adverse effects on overall inflation during the last business cycle because of the global economy's lower oil intensity and lingering output gaps in many sectors, which greatly diminished the impact of high oil prices on core inflation. We take a specific look at the impact of oil prices on business travel in the U.S. Business Travel Forecast section of this report. With oil prices having retreated by more than 60% during the second half of 2008, central banks have had substantial latitude for easing their monetary policies as much as they want. Nevertheless, some financial-market analysts continue to believe that oil remains in a long-term bull market and expect global crude prices to resume their upward advance. The advanced economies' inflation upsurge is over. High oil and raw-material prices led to spikes in headline inflation throughout the world during 2007 and the first half of 2008, but core inflation rates remained relatively low, particularly among advanced economies and dynamic Asian economies. In any case, since mid-2008, the ongoing world growth deceleration, along with powerful deflationary pressures from the housing downturn, has weakened labor markets; constrained unit labor cost growth, and exerted downward pressure on the prices of housing and energy and other industrial raw materials. These developments have contained inflationary pressures and eased concerns about macroeconomic imbalances, as reflected in recent downward revisions to the inflation forecasts in surveys published by Consensus Economics The good news is that real interest rates remain low, and monetary authorities have ample room for easing. The advanced economies' low core inflation rates suggest that monetary policy could heavily err on the accommodative side even if energy and raw material prices resumed their upward march over the coming months. By reducing the households' discretionary spending, any upward relative price shock from food, energy, or other industrial raw materials has a deflationary (rather than inflationary) effect on domestic demand. As a result, we do not expect any monetary tightening by major central banks before 2010. As a result, global growth should rebound in 2010. Despite its current weakness, we expect the world economy to stabilize during the second half of 2009, thanks to the advanced economies' reflationary measures, and shift to a higher gear by mid-2010. Nevertheless, given the protracted nature of housing-market adjustments, world growth will likely be less robust over the next several quarters than during the past five years of the current business cycle. Indeed, the anticipated global recovery could turn out to be unsustainable. Growth may falter again in 2010 or 2011, as many of the problems afflicting credit markets are deep rooted. Financial markets could remain vulnerable to periodic bouts of intense volatility and disruptive risk re-pricing. It may take additional, extraordinary policy action by policymakers, such as costly government bailouts of financial institutions and quantitative monetary easing, to get us out of the current rut and prevent a prolonged crisis. A longer-than-anticipated housing downturn is now the global economy's worst nightmare. With housing assets extremely overvalued in many countries, the current housing-market adjustments could turn out to be a very protracted
  19. 19. 18 IHS Global Insight / National Business Travel Association / Egencia August 2009 process. A synchronous worldwide housing crash has the potential to unleash powerful global deflationary pressures for several years. With a growing list of countries already mired in housing-market downturns of various degrees of severity, financial markets are likely to remain at risk of further turmoil and disorderly price correction. If the housing-market downturn intensifies and spreads to other countries, we could be facing an escalating debt-asset deflation, the likes of which has not been experienced since the 1930s. Global business profit and investment growth, which has decelerated intensely in line with nominal world GDP, will start to recover in the second half of 2009. The financial firms' profits will likely rebound first, from their current horrendous state, thanks to the central banks' rapid "steepening" of the yield curve. Non-financial firms' profit levels will also rebound soon after, as their drastic retrenchments reduce their costs, nominal global GDP stops contracting, and world aggregate demand begins to improve. Bottom Line: The global economy is in the midst of a potentially dangerous crisis that may linger on beyond 2010 and has the potential to get a lot worse before it gets better. Furthermore, the anticipated recovery that is likely to start in 2010 may prove disappointing given that the primary source of the ongoing weakness is a deep and protracted correction in housing markets. Housing market downturns tend to be long-lasting processes that can go on for 5 to 10 years. With most banks continuing to tighten their lending standards for businesses as well as consumers, financial markets will remain jittery and vulnerable to periodic bouts of intense volatility and disruptive risk re-pricing. The stabilization of financial markets may require even more aggressive monetary easing and liquidity injections than we have seen so far—such as government takeovers of many more financial institutions (or their "toxic" debts). Indeed, given the severity of the distortions in asset markets as a result of the past several years' easy credit, the complete normalization of credit markets could take several years. . World Economy Annual Aggregate Forecast Numbers (Percent change from a year earlier, unless otherwise specified) 2006 2007 2008 2009 2010 Real GDP 4.1 4.0 2.2 -2.6 1.9 Nominal Per-Capita GDP (U.S. Dollars) 7,495 8,331 9,071 8,359 8,753 Industrial Production 4.3 4.0 -0.3 -10.1 3.5 Merchandise Exports (Bil. of U.S. Dollars) 11,600 13,432 15,481 11,452 12,277 Merchandise Imports (Bil. of U.S. Dollars) 11,475 13,205 15,183 12,073 12,879 Merchandise Exports (Share of World GDP) 23.9 24.6 25.7 20.4 20.7 Real Retail Sales 2.8 2.6 0.3 -2.2 1.8 Consumer Price Index 3.1 3.3 5.0 1.5 2.2 Wholesale Price Index 4.6 4.1 8.6 -4.6 1.4 Money Supply, M1, Year-end 6.9 6.9 4.6 10.8 4.6 Broad Money Supply, Year-end 9.0 10.2 9.7 6.2 6.7 Policy Interest Rate (Percent) 4.9 4.9 3.2 2.2 2.5 Short-Term Interest Rate (Percent) 4.9 5.4 5.0 3.3 3.1 Long-Term Interest Rate (Percent) 4.7 5.0 4.8 4.3 4.3 Fiscal Balance (Share of GDP) -0.9 -0.4 -2.0 -6.9 -5.9
  20. 20. 19 IHS Global Insight / National Business Travel Association / Egencia August 2009
  21. 21. 20 IHS Global Insight / National Business Travel Association / Egencia August 2009 GDP Growth for Key Regions (Annual compound growth rate, percent) 1998–2002 2003–2007 2008–2012 World 2.8 3.5 2.0 United States 2.6 2.5 1.6 Canada 3.5 2.4 2.0 Western Europe 2.2 2.1 0.2 European Union 2.3 2.3 0.3 Eurozone 2.1 2.0 0.1 United Kingdom 3.0 2.3 0.7 Asia-Pacific 3.5 5.0 3.9 Japan 0.9 1.6 0.4 Rest of Region 5.9 7.3 5.8 Australia 3.4 3.1 2.4 China 8.7 10.8 8.6 India 5.7 8.5 7.0 South Korea 6.3 4.2 2.4 Commonwealth of Ind. States 6.8 7.5 1.4 Central Europe & the Balkans 2.8 5.6 1.6 Latin America & the Caribbean 0.7 3.1 1.3 Middle East & North Africa 3.6 6.2 3.5 Sub-Saharan Africa 3.3 5.6 3.2 Implications for Global Business Travel In step with the rest of the global economy, the business travel market is expected to recover from the "Great Recession" beginning in late 2009. The recovery will be sluggish at best during the early phase of the economic rebound, with more rapid expansion not arriving until 2010 and 2011. The U.S. and China are expected to lead the way in economic recovery, as well as business travel spending expansion. The rest of the world will follow this lead later in 2010 and into 2011.
  22. 22. 21 IHS Global Insight / National Business Travel Association / Egencia August 2009 As mentioned earlier in the Global Business Travel Analysis section, the U.S. and the rest of the world are on dramatically different growth trajectories. The same will be true for the next five years as well. In part of reflection of the relative growth performance of the economies of the U.S. versus, say, China or India, but also due to the very slow pace of American companies' willingness to lift business travel restrictions. This will be driven by anemic improvements in corporate profit performance, where most of the early improvement will come from cost reductions rather than top line improvement. The emerging growth picture for the U.S. is quite different than much of the rest of the world. Business travel spending in the U.S. will recover very slowly from the current recession. With a relatively weak outlook for both the top and bottom lines of corporate profit and loss statements, companies will be reluctant to add employees, purchase equipment, and relax cost containment measures. This is perhaps even truer of Western Europe, where deeper and longer-lasting housing and credit market problems paint a rather dim picture for business travel recovery. Moreover, the traditional European market is much more mature leaving less opportunity for quick gains. Meanwhile, emerging economies have the advantage of brighter long-term economic growth prospects. Many did not have a housing bubble to contend with, nor the need for massive deleveraging of consumer and business credit markets. Countries such as China, Brazil, and India were also able to implement significant stimulus packages to buoy their economies through the current recession. These packages, most with large infrastructure investment components, will help their economies recover more quickly as this global recession comes to an end beginning in late 2009. The net is for a continuation of the trend of U.S. and Western European business travel spending growing more slowly than the rest of the world. At $262 billion in 2008, the U.S. market is estimated to grow to only $266 billion by 2013, a compounded growth rate of only 0.3% per year. The World, on the other hand, will expand from $929 billion in 2008 to $986 billion five years later. This represents growth of 1.2% per year. Consequently, the U.S. share of total business travel spending will fall from 28% in 2008 to 27% by 2013. While virtually every country will participate in what IHS Global Insight calls "The Great Recession", some will fair better than others. Such was the case during the peak years of the last expansion period as well. In business travel spending, countries such as China, Russia, India and the United Kingdom all outpaced the U.S. on an annual growth basis. Indeed, many of these countries were not significantly impacted by the 2001 recession. Yet, each experienced a dramatic curtailment in business travel growth beginning as early as mid 2007. During 2008, the United Source: IHS Global Insight, NBTA
  23. 23. 22 IHS Global Insight / National Business Travel Association / Egencia August 2009 States had already experienced a decline in business travel well in advance of the rapid decay in many of the key economic indicators –largely a fourth quarter phenomena. By early 2009, every significant business travel market was experiencing year-over-year declines. The rather dramatic "V" shaped recession depicted below assumes a market bottom in late 2009. It will be 2010, even 2011 for some countries, before growth rates turn positive, however. Said differently, key business travel markets will recover from the "Great Recession", but the global recovery will be more tepid. Repairing the damage done to global housing and credit markets will take time. Still, the good news is that the Great Recession will end and growth markets will return. Growth in Business Travel Spending includes Domestic and Outbound International Trips -40% -30% -20% -10% 0% 10% 20% 30% 40% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Yr-to-YrPercent China India United States United Kingdom Germany Russia World Total Source: IHS Global Insight, NBTA, OECD, UN/WTO, Various Ministries of Commerce & Tourism
  24. 24. 23 IHS Global Insight / National Business Travel Association / Egencia August 2009 GLOBAL BUSINESS TRAVEL SPENDING GROWTH: 2008-2013 Change in Business Travel Spending $$ Through 2013 (in billions of current U.S.$) Depending upon the definition of business travel growth through 2013, the world picture looks quite different. Basing the definition on the increase in the level of business travel spending (above), North America and Asia are the dominant regions. Changing the perspective to the rate of growth (below) suggests a different spatial view of the globe. Latin America, Eastern Europe, Asia, and the Middle East appear more favorable. GLOBAL BUSINESS TRAVEL SPENDING GROWTH: 2008-2013 COMPOUND ANNUAL GROWTH RATE IN %
  25. 25. 24 IHS Global Insight / National Business Travel Association / Egencia August 2009 TOP 15 & BOTTOM 15 GLOBAL BUSINESS TRAVEL GROWTH MARKETS: Ranked on Change in Business Travel Spending $$ Through 2013 (all figures in millions of current U.S.$ unless otherwise noted) China leads the way in business travel spending growth through 2013. The combination of torrid economic growth and the sheer size of its business travel market push China to the top of the list. China's significant economic stimulus measures implemented early on in the current global recession are already bearing fruit. Infrastructure investment and consumption support were key platforms of the stimulus. Both will lead to greater business travel, particularly domestic trips, as their economy recovers. Source: HIS Global Insight, NBTA, OECD, UN/TWO, various Ministries of Commerce & Tourism
  26. 26. 25 IHS Global Insight / National Business Travel Association / Egencia August 2009 The U.S. comes in at #4 on the business travel dollar growth rankings, based upon size and a relatively early start at economic recovery. The recovery will begin as soon as the second half of 2009, yet will be slow by past standards. Expected to grow a relatively slow rate (0.3% per year) through 2013, the U.S. will still add more than $4.2 billion in business travel spending. India, like China, is expected to return to its earlier position as a global growth leader. India's economy is less dependent on export markets than China. Government stimulus efforts in India also focused on domestic demand support. This will lead to more growth in domestic business travel activity in the short-to-medium term. Japan will show surprising business travel resilience as their economy awakens from a long sleep. Improvements in domestic business activity and eventual recovery in export markets will drive more business travel. Japan's business travel market is already large and is expected in increase over 3.3% per year through 2013. Korea, Indonesia, Malaysia, Hong Kong, and Taiwan will rebound quickly as global export markets begin to thaw. Recovery in their international and, in some cases, domestic business travel markets will quickly follow suit. The size of their existing business travel markets coupled with expectations for a return to above-trend economic growth places them all on the Top 15 list. Emerging European markets, likewise, will shake off the current recession and begin to recover in 2010. Commodity market improvements, as well as export recovery, will get business travel spending growth back on track. Markets such as the Czech Republic, Romania, and Hungary are already large enough to make some noise on the country business travel hit parade. Economic growth expectations guarantee that they will continue to rise. Iran makes the Top 15 list based upon its size and growth over the past decade. Domestic business travel is already significant in this market, and international outbound has expanded despite longstanding economic sanctions. Still, Iran's political situation is a significant risk. Instability could erase business travel gains almost overnight, particularly if the situation boils over. A less robust and somewhat delayed economic recovery in much of Western Europe push many of its business travel markets into the Bottom 15 list, at least through 2013. The housing crisis in the U.K., Spain, and Ireland, among others, is much worse than in the U.S. and, unfortunately, still has a long way to go. Moreover, the banking and financial crisis is actually more acute and potentially damaging in Western Europe. Finally, longer-term systemic issues such as an aging population, labor market problems, and lower investment spending will continue to hamper growth in business travel spending in this part of the world. Germany and Italy make the Bottom 15 list primarily due to export dependence and sluggish domestic demand. Both countries have significant domestic business travel markets, particularly relative to the rest of Western Europe. Both countries are expected to be relatively late in the sequence of economic recovery and, as a result, show a loss in business travel spending through 2013. Russia's dependence upon commodity exports, particularly oil and natural gas, puts it at the bottom of the list through 2013. It will recover from the current recession, but it will be among the last countries to commence its rebound. Domestic and international business travel will begin to grow again, but too late to spare Russia the dubious distinction of being at the bottom of the 2008-2013 list. Transposing our view of business travel markets, IHS Global Insight can also evaluate the prospects for travel spending across global industry sectors. From the vantage point of industries, the pace of recovery from the current recession is very much a function of which countries dominate the sector and the amount to which economic stimulus package funds flow to that sector. For example, infrastructure investment in China, India, and the U.S. will propel sectors such as Government, Construction, Utilities, and Education to the top of the list. On the other hand, continuing problems in the global Banking & Financial sectors prevent it from making the Top 20.
  27. 27. 26 IHS Global Insight / National Business Travel Association / Egencia August 2009 TOP 20 GLOBAL GROWTH SECTORS THROUGH 2013: Ranked on Change in Business Travel Spending $$ Through 2013 From a business travel spending perspective, Government is clearly participating in the current recession. Because of its key role in leading many countries out of of recession, Government business travel growth in 2010 will be among the highest. Likewise, for Education. Taken over the five-year period 2009-2013, Government (federal and local) will show the largest level increase in business travel spending. Sectors such as Utilities, Food Processing & Services, and Education make the list for two key reasons. First, they exist in virtually every country and have a scale correlated with the size/growth of population. Secondly, recovery from the global recession will be led by these industries. Government stimulus money has poured into infrastructure development, propelling these sectors out of the recovery gate sooner. Notable industries missing from this list include Banking & Finance and Profession & Business Services. While these sectors are relatively travel-intense, the depth of their declines and the slower pace of their expected recoveries keep them just below the cutoff of the Top 20 list. Business travel spending for these industries, as well as for Wholesale Trade, will grow during this recovery, just not enough to break into the Top 20. In the case of Banking & Finance, despite average annual growth of 1.6% per year through 2013, the magnitude of the decline during this recession unfortunately prevents a return to the previous peak. The prospects and rankings for many of these sectors changes dramatically as one moves from country to country. To illustrate this point, the next section takes each of the Top 20 business travel country markets and dives deeper into the issue of industry-by-industry performance over the next five years. Source: IHS Global Insight, NBTA, OECD, various Ministries of Commerce, Statistics, & Tourism
  28. 28. 27 IHS Global Insight / National Business Travel Association / Egencia August 2009 Which sectors represent the best targets? From a purely external perspective, the short answer is those that are: (1) organically growing their own lines of business at home and abroad, (2) are already business travel-intense, and (3) are expected to grow that intensity over the next few years. Once way to depict the distribution of sectors across these key criterion is to use a "dogs-and-stars" scatter plot. Dispersing the industries across business travel spending size (2008) and growth (2008-2013 CAGR%) suggests their relative position and potential attractiveness as a target market. All of the sectors falling in the "Stars" quadrant are already notably large spenders on business travel. They are also expected to grow that spending over the next five years. We have already mentioned Utilities and Construction, but other sectors such as Communications Services, Transportation Services, and Chemicals also deserve consideration. Motor Vehicles is perhaps the most notable "Lower Priority" quadrant. For one, this industry is not a large user of business travel. Moreover, its global market challenges are already well-known. Notable sectors in the "Emerging" quadrant include Computer Manufacturing, Instrumentation, and Industrial Machinery. Banking & Finance, Business Services, and Wholesale Trade find themselves in the "Mature" quadrant. We already know them to be very travel-intense. The challenge lies in their ability (and pace) to recover from the current recession and grow business travel through 2013. Global Business Travel Target Markets 2008-2013 Utilities Food Processing and Services Real Estate Professional & Business Services Government Transportation ServicesWholesale Trade Construction Communications ServicesBanking & Finance Equipment Rental & Leasing Agriculture, Hunting, Forestry, Fishing Petroleum Refining Rubber & Plastic Manufacturing Non-Metallic Mineral Products Hotels & Restaurants Fabricated Metal Products Paper & Paper Products Chemicals & Chemical ProductsPrinting & Publishing Communication Equipment Transportation Equipment Computer Service & Related ActivitiesRetail Trade Electrical Machinery & ApparatusTextiles Industrial Machinery & EquipmentBasic Metals Manufacturing Wood & Wood ProductsOther Manufacturing Motor Vehicles Medical, Precision & Optical Instruments Recycling Office, Accounting & Computing Machinery Apparel Leather & Leather Products$1,000 $10,000 $100,000 -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 2008-2013 Growth (CAGR%) in Business Travel Spending 2008BusinessTravelSpending inMillionsofCurrentUS$ EEmmeerrggiinngg LLoowweerr PPrriioorriittyy MMaattuurree SSttaarrss
  29. 29. 28 IHS Global Insight / National Business Travel Association / Egencia August 2009 The Outlook for the Top 20 Global Travel Markets The next section of the report presents the results of IHS Global Insight's business travel spending analysis and projections for the top twenty (20) global markets. For each of these 20 countries, we have presented a snapshot of the business travel market through the inclusion of: 1. A brief overview of the macroeconomic environment provided by IHS Global Insight's Country Intelligence Group, 2. A chart showing the history of total business travel spending in that country, as well as our projection through 2013, 3. A table illustrating our estimates of business travel spending by industry within that country, and 4. A table ranking business travel market opportunities by industry. The table takes a "dogs-and-stars" view of both the current size of business travel in the industry and its growth prospects through 2013. The most desirable opportunities are those with large current levels of business travel spending and good prospects for future growth. The industries are allocated to the following four categories of market opportunity based upon their dispersion around the means of both business travel measures: Low Priority –those industries with either low levels of business travel, lower growth expectations, or both Mature –industries with relatively large levels of current business travel spending, but have less robust future growth prospects are classified as more mature. Emerging –industries with excellent growth prospects, but relatively smaller current levels of business travel spending are placed in this category. Stars –these are industries with both large current levels of business travel spending and relatively strong prospects for future growth. Chart and table sources are (unless otherwise noted) from IHS Global Insight, NBTA, OECD, UN/WTO, and country- specific Ministries of Commerce, Statistics, and Tourism
  30. 30. 29 IHS Global Insight / National Business Travel Association / Egencia August 2009 Australia Economic Outlook Inventories, investment, and consumer spending all continue to decline. IHS Global Insight subsequently expects the economy will experience a contraction of around 0.6% in 2009 as the lagged, full impact of the downturn unfurls from the second quarter onwards. In anticipation of a potential economic slowdown, authorities have dramatically loosened monetary and fiscal policy. Spending programs include direct cash disbursals for low- and middle-income households for employment generation and support for first-time buyers in the real estate market. Australian banks are marked for their high levels of capitalization and more conservative lending practices. Nevertheless, rapidly rising unemployment and growing income insecurity could offset the positive impact of looser credit. BUSINESS TRAVEL SPENDING, AUSTRALIA (Millions of US$) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F
  31. 31. 30 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL SPENDING METRICS AUSTRALIA Total Sales Business Travel Spending Industry 2008 (mn US$) % of Total 2008 (mn US$) % of Total 1998- 2008 CAGR 2009 %ch 2010 %ch 2009- 2013 CAGR 2009-2013 Change (mn US$) Real Estate $131,683 7.7% $1,602.6 9.2% 8.2% -25.9% 2.3% 1.8% $152.76 Education $77,916 4.6% $288.8 1.7% 11.1% -15.3% 9.9% 8.1% $136.81 Government $84,424 4.9% $934.3 5.4% 6.9% -20.0% 3.7% 1.9% $92.50 Social & Personal Services $44,642 2.6% $903.9 5.2% 7.8% -27.8% 1.9% 0.6% $27.85 Rubber & Plastic Manufacturing $7,756 0.5% $224.0 1.3% 4.2% -26.3% 1.9% 1.7% $19.95 Communications Services $47,840 2.8% $771.1 4.4% 5.7% -25.9% 1.2% 0.4% $16.39 Industrial Machinery & Equipment $11,966 0.7% $52.7 0.3% 7.9% -22.2% 0.7% 2.6% $7.16 Paper & Paper Products $6,989 0.4% $171.0 1.0% 7.4% -27.9% 1.3% 0.6% $5.57 Medical, Precision & Optical Instruments $2,965 0.2% $32.0 0.2% 9.7% -21.9% 3.1% 2.1% $3.59 Transportation Equipment $6,804 0.4% $88.9 0.5% 3.4% -24.5% 1.6% 0.6% $2.79 Mining $134,670 7.9% $22.2 0.1% 24.8% -27.5% 1.7% 1.7% $1.94 Hotels & Restaurants $29,122 1.7% $227.9 1.3% 4.7% -26.3% 1.1% 0.1% $1.33 Electrical Machinery & Apparatus $6,152 0.4% $66.5 0.4% 9.0% -25.0% -0.7% 0.0% $0.14 Private Households Employees $2,472 0.1% $0.0 0.0% 11.6% -15.9% 12.7% 11.3% $0.03 Leather & Leather Products $441 0.0% $2.7 0.0% 6.1% -21.7% -0.8% -0.3% -$0.04 Office, Accounting & Computing Machinery $848 0.0% $3.1 0.0% -0.1% -26.7% 0.1% -1.7% -$0.25 Apparel $2,177 0.1% $13.4 0.1% 4.1% -22.6% -0.6% -0.8% -$0.53 Health & Social Work $113,950 6.7% $6.1 0.0% -3.3% -52.2% 21.7% -3.7% -$1.05 Wood & Wood Products $7,394 0.4% $138.0 0.8% 6.3% -27.9% 0.8% -0.3% -$1.98 Textiles $3,199 0.2% $55.8 0.3% 1.2% -27.2% -0.9% -0.7% -$2.04 Total $1,709,747 100% $17,457 100% 6.4% -27.5% 0.4% -0.7% -$571.39
  32. 32. 31 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL WINNERS AND LOSERS AUSTRALIA Industry Business Travel Spending (2008, mn US$) Business Travel Spending (CAGR, 2009-2013) Industry Status Real Estate $1,602.6 1.8% Star Transportation Services $1,241.6 -0.1% Star Government $934.3 1.9% Star Social & Personal Services $903.9 0.6% Star Communications Services $771.1 0.4% Star Education $288.8 8.1% Emerging Hotels & Restaurants $227.9 0.1% Emerging Rubber & Plastic Manufacturing $224.0 1.7% Emerging Paper & Paper Products $171.0 0.6% Emerging Wood & Wood Products $138.0 -0.3% Emerging Transportation Equipment $88.9 0.6% Emerging Electrical Machinery & Apparatus $66.5 0.0% Emerging Industrial Machinery & Equipment $52.7 2.6% Emerging Medical, Precision & Optical Instruments $32.0 2.1% Emerging Mining $22.2 1.7% Emerging Leather & Leather Products $2.7 -0.3% Emerging Private Households Employees $0.0 11.3% Emerging Utilities $1,507.6 -0.6% Mature Professional & Business Services $1,333.7 -3.0% Mature Food Processing and Services $1,278.4 -1.0% Mature Construction $945.5 -1.1% Mature Banking & Finance $872.6 -3.5% Mature Wholesale Trade $816.7 -2.7% Mature Equipment Rental & Leasing $715.5 -2.3% Mature Agriculture, Hunting, Forestry, Fishing $547.9 -0.6% Mature Research & Development Services $530.4 -3.1% Mature Fabricated Metal Products $369.7 -3.4% Low Priority Non-Metallic Mineral Products $336.5 -3.1% Low Priority Printing & Publishing $274.9 -3.7% Low Priority Retail Trade $206.8 -1.2% Low Priority Petroleum Refining $204.4 -1.1% Low Priority Computer Service & Related Activities $199.2 -2.4% Low Priority Basic Metals Manufacturing $130.7 -4.7% Low Priority Other Manufacturing $117.9 -2.3% Low Priority Chemicals & Chemical Products $98.3 -1.3% Low Priority Communication Equipment $63.5 -1.2% Low Priority Textiles $55.8 -0.7% Low Priority Motor Vehicles $48.1 -1.6% Low Priority Apparel $13.4 -0.8% Low Priority Recycling $12.2 -5.1% Low Priority Health & Social Work $6.1 -3.7% Low Priority Office, Accounting & Computing Machinery $3.1 -1.7% Low Priority Total $17,456.9 -0.7% Mature
  33. 33. 32 IHS Global Insight / National Business Travel Association / Egencia August 2009 Austria Economic Outlook Economic growth will become sharply negative in 2009 and take long to recover due to persisting global financial- market turbulences triggered by the U.S. subprime crisis, substantial euro appreciation, and weakened consumer purchasing power. Inflation will be very soft in coming months and is expected to rise to 1.1% in 2010. As domestic demand continues to suffer from rising unemployment, the debate will rather shift toward deflation risks—although IHS Global Insight still regards such fears as overblown. Political uncertainty will remain elevated after the collapse and resurrection of the grand coalition government and the strengthening of the far right in the September 2008 polls. BUSINESS TRAVEL SPENDING, AUSTRIA (Millions of US$) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F
  34. 34. 33 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL SPENDING METRICS AUSTRIA Total Sales Business Travel Spending Industry 2008 (mn US$) % of Total 2008 (mn US$) % of Total 1998- 2008 CAGR 2009 %ch 2010 %ch 2009- 2013 CAGR 2009-2013 Change (mn US$) Utilities $35,068 4.6% $1,459.5 15.6% 8.7% -13.6% 3.7% -30.2% $89.71 Education $23,463 3.1% $87.0 0.9% 7.7% -3.2% 11.1% 7.7% $38.93 Rubber & Plastic Manufacturing $8,073 1.1% $233.1 2.5% 7.6% -14.5% 3.4% 2.4% $29.90 Industrial Machinery & Equipment $30,234 4.0% $133.1 1.4% 12.2% -8.6% 3.9% 4.0% $28.44 Real Estate $51,754 6.8% $629.9 6.7% 6.9% -14.3% 1.6% 0.7% $22.79 Paper & Paper Products $8,663 1.1% $211.9 2.3% 6.2% -16.8% 3.6% 1.7% $18.95 Electrical Machinery & Apparatus $10,217 1.3% $110.4 1.2% 9.1% -10.1% 3.7% 3.0% $17.70 Government $31,132 4.1% $344.5 3.7% 1.8% -9.0% 3.3% 0.8% $14.16 Medical, Precision & Optical Instruments $3,715 0.5% $40.1 0.4% 9.5% -9.1% 5.8% 3.9% $8.53 Wood & Wood Products $11,185 1.5% $208.8 2.2% 7.8% -18.1% 3.1% -52.9% $8.47 Chemicals & Chemical Products $15,358 2.0% $65.7 0.7% 7.8% -18.2% 2.7% 0.2% $0.79 Communications Services $15,271 2.0% $246.1 2.6% 5.6% -13.8% 1.0% 0.1% $0.73 Mining $3,689 0.5% $0.7 0.0% 14.9% -15.1% 3.5% 1.6% $0.06 Private Households Employees $124 0.0% $0.0 0.0% 6.1% -3.7% 12.7% 10.1% $0.00 Office, Accounting & Computing Machinery $194 0.0% $0.7 0.0% -0.9% -19.4% -3.4% -3.8% -$0.12 Leather & Leather Products $981 0.1% $6.0 0.1% 7.7% -8.3% -0.1% -0.5% -$0.15 Health & Social Work $34,031 4.4% $1.8 0.0% -7.0% -44.7% 22.5% -3.7% -$0.31 Apparel $1,006 0.1% $6.2 0.1% 4.5% -10.9% -0.5% -1.6% -$0.48 Recycling $906 0.1% $10.0 0.1% 16.8% -27.6% 4.2% -1.8% -$0.88 Motor Vehicles $19,299 2.5% $45.1 0.5% 10.7% -21.6% -0.1% -0.6% -$1.25 Total $764,839 100% $9,370 100% 5.5% -16.0% 1.5% -0.4% -$184.78
  35. 35. 34 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL WINNERS AND LOSERS AUSTRIA Industry Business Travel Spending (2008, mn US$) Business Travel Spending (CAGR, 2009-2013) Industry Status Professional & Business Services $680.2 -3.2% Star Real Estate $629.9 0.7% Star Food Processing and Services $577.6 -0.2% Star Social & Personal Services $507.0 -0.1% Star Construction $389.8 -1.3% Star Equipment Rental & Leasing $350.7 -2.2% Star Government $344.5 0.8% Star Banking & Finance $276.0 -3.5% Star Communications Services $246.1 0.1% Star Fabricated Metal Products $239.7 -1.9% Star Rubber & Plastic Manufacturing $233.1 2.4% Star Non-Metallic Mineral Products $229.6 -3.1% Star Hotels & Restaurants $218.5 -0.4% Emerging Paper & Paper Products $211.9 1.7% Emerging Agriculture, Hunting, Forestry, Fishing $138.6 -2.3% Emerging Industrial Machinery & Equipment $133.1 4.0% Emerging Electrical Machinery & Apparatus $110.4 3.0% Emerging Printing & Publishing $101.0 -3.1% Emerging Petroleum Refining $97.7 -1.6% Emerging Computer Service & Related Activities $96.2 -3.1% Emerging Other Manufacturing $92.7 -1.7% Emerging Retail Trade $92.2 -1.3% Emerging Education $87.0 7.7% Emerging Communication Equipment $80.6 -1.2% Emerging Basic Metals Manufacturing $73.5 -1.9% Emerging Chemicals & Chemical Products $65.7 0.2% Emerging Textiles $50.4 -1.3% Emerging Motor Vehicles $45.1 -0.6% Emerging Medical, Precision & Optical Instruments $40.1 3.9% Emerging Research & Development Services $11.5 -3.6% Emerging Recycling $10.0 -1.8% Emerging Apparel $6.2 -1.6% Emerging Leather & Leather Products $6.0 -0.5% Emerging Health & Social Work $1.8 -3.7% Emerging Mining $0.7 1.6% Emerging Office, Accounting & Computing Machinery $0.7 -3.8% Emerging Private Households Employees $0.0 10.1% Emerging Utilities $1,459.5 -30.2% Mature Transportation Services $660.5 -41.5% Mature Wholesale Trade $508.4 -46.0% Mature Wood & Wood Products $208.8 -52.9% Low Priority Transportation Equipment $57.1 -64.1% Low Priority Total $9,370.3 -0.4% Star
  36. 36. 35 IHS Global Insight / National Business Travel Association / Egencia August 2009 Belgium Economic Outlook Belgian GDP is projected to contract 3.3% in 2009 after growing 1.0% in 2008 which is largely due to a deteriorating export market critical to the country’s overall economic performance. The current financial market crisis and very tight lending conditions will restrict consumer spending in the near term. In addition, the labor market is being hit by the current global economic downturn, and we expect employment to decline in 2009. Fiscal policy will continue to be restricted by the country’s high levels of public debt. We expect the Belgian government budget to slip into negative territory in 2009–10, following six years of persistently balanced budgets. BUSINESS TRAVEL SPENDING, BELGIUM (Millions of US$) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F
  37. 37. 36 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL SPENDING METRICS BELGIUM Total Sales Business Travel Spending Industry 2008 (mn US$) % of Total 2008 (mn US$) % of Total 1998- 2008 CAGR 2009 %ch 2010 %ch 2009- 2013 CAGR 2009-2013 Change (mn US$) Education $34,366 3.0% $134.5 1.0% 8.1% -2.8% 12.0% 7.9% $62.58 Rubber & Plastic Manufacturing $10,516 0.9% $320.7 2.3% 6.0% -16.1% 5.0% 2.2% $36.74 Government $45,055 3.9% $526.7 3.8% 4.4% -9.4% 5.0% 1.2% $32.59 Real Estate $55,610 4.8% $714.9 5.2% 5.1% -16.6% 3.3% 0.7% $26.11 Food Processing and Services $48,595 4.2% $1,233.4 9.0% 2.3% -14.6% 3.7% 0.3% $20.65 Industrial Machinery & Equipment $19,583 1.7% $91.0 0.7% 9.7% -9.6% 5.1% 3.9% $19.29 Electrical Machinery & Apparatus $8,094 0.7% $92.4 0.7% 6.1% -13.1% 3.5% 1.9% $8.94 Social & Personal Services $24,840 2.1% $531.3 3.9% 5.9% -17.4% 3.7% 0.3% $7.95 Construction $78,184 6.7% $585.6 4.3% 5.9% -17.5% 3.6% 0.3% $7.44 Medical, Precision & Optical Instruments $3,219 0.3% $36.7 0.3% 12.0% -10.9% 7.5% 3.7% $7.28 Paper & Paper Products $5,977 0.5% $154.5 1.1% 5.7% -18.7% 4.1% 0.9% $7.13 Transportation Equipment $3,108 0.3% $42.9 0.3% 3.4% -10.1% 7.0% 3.1% $7.00 Leather & Leather Products $543 0.0% $3.5 0.0% 9.9% -4.4% 4.1% 1.9% $0.34 Mining $1,587 0.1% $0.6 0.0% 14.0% -15.2% 7.2% 3.7% $0.12 Private Households Employees $1,305 0.1% $0.0 0.0% 6.1% -3.8% 15.5% 11.1% $0.02 Office, Accounting & Computing Machinery $331 0.0% $1.3 0.0% 5.6% -15.6% -0.1% -1.9% -$0.12 Health & Social Work $52,622 4.5% $3.0 0.0% -6.1% -45.7% 22.7% -4.2% -$0.57 Motor Vehicles $28,125 2.4% $69.5 0.5% 4.1% -20.9% 3.8% -0.3% -$0.95 Apparel $1,920 0.2% $12.4 0.1% 3.1% -12.7% 0.7% -1.6% -$0.99 Wood & Wood Products $4,706 0.4% $92.8 0.7% 7.6% -20.5% 3.4% -0.2% -$1.01 Total $1,164,142 100% $13,766 100% 5.1% -20.0% 3.1% -0.9% -$608.81
  38. 38. 37 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL WINNERS AND LOSERS BELGIUM Industry Business Travel Spending (2008, mn US$) Business Travel Spending (CAGR, 2009-2013) Industry Status Food Processing and Services $1,233.4 0.3% Star Real Estate $714.9 0.7% Star Construction $585.6 0.3% Star Social & Personal Services $531.3 0.3% Star Government $526.7 1.2% Star Rubber & Plastic Manufacturing $320.7 2.2% Emerging Hotels & Restaurants $157.2 -0.2% Emerging Paper & Paper Products $154.5 0.9% Emerging Education $134.5 7.9% Emerging Wood & Wood Products $92.8 -0.2% Emerging Electrical Machinery & Apparatus $92.4 1.9% Emerging Industrial Machinery & Equipment $91.0 3.9% Emerging Motor Vehicles $69.5 -0.3% Emerging Transportation Equipment $42.9 3.1% Emerging Medical, Precision & Optical Instruments $36.7 3.7% Emerging Leather & Leather Products $3.5 1.9% Emerging Mining $0.6 3.7% Emerging Private Households Employees $0.0 11.1% Emerging Professional & Business Services $1,828.8 -2.4% Mature Transportation Services $1,263.9 -1.0% Mature Petroleum Refining $982.0 -1.5% Mature Wholesale Trade $919.7 -2.6% Mature Utilities $831.5 -1.4% Mature Banking & Finance $455.0 -3.3% Mature Equipment Rental & Leasing $386.6 -1.9% Mature Communications Services $357.5 -0.8% Mature Non-Metallic Mineral Products $313.6 -2.6% Low Priority Fabricated Metal Products $278.2 -2.8% Low Priority Chemicals & Chemical Products $270.8 -0.6% Low Priority Retail Trade $161.5 -1.2% Low Priority Textiles $152.0 -0.7% Low Priority Computer Service & Related Activities $143.9 -3.1% Low Priority Basic Metals Manufacturing $142.8 -3.3% Low Priority Printing & Publishing $137.9 -4.0% Low Priority Agriculture, Hunting, Forestry, Fishing $111.2 -1.7% Low Priority Other Manufacturing $76.9 -3.8% Low Priority Recycling $56.5 -4.0% Low Priority Communication Equipment $47.0 -2.9% Low Priority Research & Development Services $43.9 -2.9% Low Priority Apparel $12.4 -1.6% Low Priority Health & Social Work $3.0 -4.2% Low Priority Office, Accounting & Computing Machinery $1.3 -1.9% Low Priority Total $13,766.1 -0.9% Mature
  39. 39. 38 IHS Global Insight / National Business Travel Association / Egencia August 2009 Brazil Economic Outlook Brazil will come out of the recession earlier than most countries in the developed world helped by domestic demand, strong fiscal stimulus, expansionary monetary policy, and credit availability. The central bank will continue to take measures to avoid a liquidity crisis by guaranteeing the availability of credit for banks and corporations. We expect commodity prices to show high volatility, although revolving around current levels. A trade surplus is anticipated for the foreseeable future even though exports are expected to drop 21% and imports contract 18% thus keeping the trade balance in positive territory at around US$15 billion. BUSINESS TRAVEL SPENDING, BRAZIL (Millions of US$) $0 $5,000 $10,000 $15,000 $20,000 $25,000 98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F
  40. 40. 39 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL SPENDING METRICS BRAZIL Total Sales Business Travel Spending Industry 2008 (mn US$) % of Total 2008 (mn US$) % of Total 1998- 2008 CAGR 2009 %ch 2010 %ch 2009- 2013 CAGR 2009-2013 Change (mn US$) Education $80,708 3.2% $202.2 1.0% 4.6% -8.6% 14.9% 7.3% $84.74 Mining $69,543 2.7% $14.6 0.1% 22.0% -19.4% 6.8% 1.2% $0.90 Private Households Employees $1,421 0.1% $0.0 0.0% 4.1% -8.8% 16.4% 8.8% $0.01 Health & Social Work $62,590 2.5% $2.3 0.0% - 10.0% -48.5% 25.3% -5.4% -$0.55 Medical, Precision & Optical Instruments $6,474 0.3% $47.3 0.2% 10.5% -22.1% 6.8% -0.9% -$2.04 Industrial Machinery & Equipment $68,168 2.7% $202.8 1.0% 11.1% -21.7% 5.2% -0.6% -$5.62 Electrical Machinery & Apparatus $22,648 0.9% $165.4 0.8% 9.4% -20.6% 5.0% -0.7% -$5.93 Office, Accounting & Computing Machinery $6,985 0.3% $17.3 0.1% 9.4% -32.0% -0.6% -8.6% -$6.28 Recycling $3,462 0.1% $25.9 0.1% 8.6% -41.3% 4.4% -7.7% -$8.54 Apparel $12,539 0.5% $52.0 0.3% 9.8% -22.4% 3.1% -4.1% -$9.73 Leather & Leather Products $12,207 0.5% $50.6 0.3% 11.9% -24.1% 2.4% -4.4% -$10.18 Wood & Wood Products $8,212 0.3% $103.6 0.5% 8.7% -29.3% 5.7% -66.3% -$16.03 Hotels & Restaurants $42,082 1.7% $222.6 1.1% 3.9% -21.7% 5.7% -1.5% -$16.60 Real Estate $99,482 3.9% $818.5 4.0% 2.4% -18.9% 5.6% -0.4% -$17.62 Retail Trade $89,767 3.5% $158.2 0.8% 4.0% -20.6% 4.1% -2.5% -$18.83 Paper & Paper Products $29,488 1.2% $487.7 2.4% 9.3% -24.8% 6.6% -0.8% -$18.88 Computer Service & Related Activities $17,387 0.7% $107.8 0.5% -3.6% -22.0% 2.2% -4.1% -$20.16 Transportation Equipment $22,775 0.9% $201.1 1.0% 11.6% -24.1% 5.5% -2.3% -$21.96 Textiles $15,912 0.6% $187.5 0.9% 5.9% -25.8% 2.7% -3.6% -$31.69 Other Manufacturing $15,012 0.6% $116.6 0.6% 3.6% -31.8% 1.5% -6.6% -$33.67 Total $2,547,658 100% $20,230 100% 4.0% -24.4% 5.0% -2.5% -$2,439.69
  41. 41. 40 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL WINNERS AND LOSERS BRAZIL Industry Business Travel Spending (2008, mn US$) Business Travel Spending (CAGR, 2009-2013) Industry Status Food Processing and Services $2,755.0 -3.0% Star Utilities $2,643.4 -2.3% Star Government $1,400.8 -0.7% Star Transportation Services $1,143.4 -1.9% Star Communications Services $1,098.3 -1.1% Star Agriculture, Hunting, Forestry, Fishing $1,054.8 -2.6% Star Petroleum Refining $860.1 -3.4% Star Real Estate $818.5 -0.4% Star Social & Personal Services $643.2 -1.2% Star Construction $636.7 -3.8% Star Banking & Finance $609.5 -4.4% Star Rubber & Plastic Manufacturing $592.1 -1.8% Star Paper & Paper Products $487.7 -0.8% Star Equipment Rental & Leasing $379.9 -3.6% Emerging Chemicals & Chemical Products $357.8 -3.3% Emerging Hotels & Restaurants $222.6 -1.5% Emerging Industrial Machinery & Equipment $202.8 -0.6% Emerging Education $202.2 7.3% Emerging Transportation Equipment $201.1 -2.3% Emerging Textiles $187.5 -3.6% Emerging Electrical Machinery & Apparatus $165.4 -0.7% Emerging Retail Trade $158.2 -2.5% Emerging Computer Service & Related Activities $107.8 -4.1% Emerging Apparel $52.0 -4.1% Emerging Leather & Leather Products $50.6 -4.4% Emerging Medical, Precision & Optical Instruments $47.3 -0.9% Emerging Mining $14.6 1.2% Emerging Private Households Employees $0.0 8.8% Emerging Professional & Business Services $719.5 -4.7% Mature Non-Metallic Mineral Products $535.2 -5.0% Mature Wholesale Trade $516.8 -4.7% Mature Research & Development Services $285.6 -5.5% Low Priority Fabricated Metal Products $185.4 -5.4% Low Priority Printing & Publishing $165.8 -5.6% Low Priority Motor Vehicles $163.1 -5.0% Low Priority Basic Metals Manufacturing $153.5 -8.7% Low Priority Communication Equipment $145.9 -6.2% Low Priority Other Manufacturing $116.6 -6.6% Low Priority Wood & Wood Products $103.6 -66.3% Low Priority Recycling $25.9 -7.7% Low Priority Office, Accounting & Computing Machinery $17.3 -8.6% Low Priority Health & Social Work $2.3 -5.4% Low Priority Total $20,230.0 -2.5% Star
  42. 42. 41 IHS Global Insight / National Business Travel Association / Egencia August 2009 Canada Economic Outlook Growth is falling sharply and with poor outlook for the second quarter, IHS Global Insight forecasts a 2.3% contraction in 2009. Inflation has been abating in Canada over the past few months because of the weakening economy but is expected to rebound closer to the Bank of Canada's 2% target in 2010. We expect this downward pressure on prices to persist throughout the year, as the economy contracts through mid-year and excess supply increases as the output gap widens. The Canadian dollar has steadily drifted up with commodity prices remaining a key factor. The Canadian dollar's current slow advance is due in large part to the climb in the price of oil, as well as the recent increase in natural gas prices. As oil prices recover from their current lows, the dollar is likely to appreciate. BUSINESS TRAVEL SPENDING, CANADA (Millions of US$) $0 $5,000 $10,000 $15,000 $20,000 $25,000 98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F
  43. 43. 42 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL SPENDING METRICS CANADA Total Sales Business Travel Spending Industry 2008 (mn US$) % of Total 2008 (mn US$) % of Total 1998- 2008 CAGR 2009 %ch 2010 %ch 2009- 2013 CAGR 2009-2013 Change (mn US$) Real Estate $179,948 6.7% $1,608.9 8.1% 6.7% -12.1% 16.2% 5.9% $538.37 Government $198,435 7.4% $1,613.3 8.1% 5.3% -9.6% 16.6% 5.5% $498.66 Social & Personal Services $76,484 2.9% $1,137.7 5.7% 7.2% -13.4% 16.0% 5.3% $336.87 Utilities $45,086 1.7% $1,378.5 6.9% 4.7% -18.2% 14.5% -39.6% $227.34 Food Processing and Services $84,364 3.2% $1,489.1 7.5% 3.0% -13.5% 13.7% 2.7% $210.42 Education $86,976 3.3% $236.8 1.2% 9.9% -2.7% 24.9% 13.1% $200.87 Communications Services $58,271 2.2% $689.9 3.5% 6.5% -12.5% 14.3% 4.6% $174.63 Transportation Services $105,851 4.0% $949.7 4.8% 5.7% -20.1% 14.2% -43.9% $159.33 Construction $222,373 8.3% $1,158.4 5.8% 9.1% -18.8% 13.4% 2.6% $157.30 Rubber & Plastic Manufacturing $26,302 1.0% $558.0 2.8% 7.6% -23.5% 16.1% 3.8% $112.85 Transportation Equipment $26,387 1.0% $253.2 1.3% 4.8% -7.5% 20.0% -55.1% $111.02 Agriculture, Hunting, Forestry, Fishing $63,045 2.4% $426.2 2.1% 5.2% -11.1% 12.6% 3.3% $76.19 Professional & Business Services $88,995 3.3% $987.3 5.0% 5.4% -15.8% 11.5% 1.5% $75.32 Hotels & Restaurants $62,729 2.3% $360.6 1.8% 4.5% -16.4% 14.0% 3.5% $68.17 Petroleum Refining $86,872 3.2% $665.8 3.3% 19.6% -56.8% 38.0% 1.8% $63.06 Equipment Rental & Leasing $15,283 0.6% $549.2 2.8% 6.6% -16.7% 12.1% 1.8% $50.62 Wholesale Trade $123,310 4.6% $1,097.9 5.5% 6.2% -18.0% 10.5% -43.6% $38.31 Paper & Paper Products $29,173 1.1% $524.3 2.6% 3.8% -26.7% 14.5% 1.4% $37.63 Banking & Finance $191,802 7.2% $1,125.5 5.7% 6.5% -20.7% 12.0% 0.6% $36.22 Industrial Machinery & Equipment $35,806 1.3% $115.8 0.6% 9.3% -14.5% 15.0% 5.5% $35.60 Total $2,675,671 100% $19,909 100% 5.9% -18.3% 14.5% 3.1% $3,272.33
  44. 44. 43 IHS Global Insight / National Business Travel Association / Egencia August 2009 BUSINESS TRAVEL WINNERS AND LOSERS CANADA Industry Business Travel Spending (2008, mn US$) Business Travel Spending (CAGR, 2009-2013) Industry Status Government $1,613.3 5.5% Star Real Estate $1,608.9 5.9% Star Food Processing and Services $1,489.1 2.7% Star Construction $1,158.4 2.6% Star Social & Personal Services $1,137.7 5.3% Star Banking & Finance $1,125.5 0.6% Star Professional & Business Services $987.3 1.5% Star Communications Services $689.9 4.6% Star Petroleum Refining $665.8 1.8% Star Rubber & Plastic Manufacturing $558.0 3.8% Star Equipment Rental & Leasing $549.2 1.8% Star Paper & Paper Products $524.3 1.4% Star Agriculture, Hunting, Forestry, Fishing $426.2 3.3% Emerging Research & Development Services $396.3 1.0% Emerging Hotels & Restaurants $360.6 3.5% Emerging Printing & Publishing $334.2 -0.4% Emerging Fabricated Metal Products $317.6 0.0% Emerging Non-Metallic Mineral Products $272.8 -0.8% Emerging Retail Trade $253.9 1.8% Emerging Education $236.8 13.1% Emerging Chemicals & Chemical Products $189.8 1.1% Emerging Basic Metals Manufacturing $158.0 -2.6% Emerging Computer Service & Related Activities $148.2 1.9% Emerging Other Manufacturing $133.7 -0.5% Emerging Motor Vehicles $125.5 -1.5% Emerging Industrial Machinery & Equipment $115.8 5.5% Emerging Communication Equipment $110.7 0.9% Emerging Electrical Machinery & Apparatus $82.6 3.7% Emerging Textiles $53.3 1.0% Emerging Medical, Precision & Optical Instruments $52.9 5.9% Emerging Apparel $16.0 0.8% Emerging Recycling $8.0 -2.2% Emerging Mining $6.2 4.4% Emerging Office, Accounting & Computing Machinery $5.5 -1.9% Emerging Health & Social Work $4.3 0.8% Emerging Leather & Leather Products $2.0 -1.6% Emerging Private Households Employees $0.0 15.1% Emerging Utilities $1,378.5 -39.6% Mature Wholesale Trade $1,097.9 -43.6% Mature Transportation Services $949.7 -43.9% Mature Wood & Wood Products $311.5 -56.4% Low Priority Transportation Equipment $253.2 -55.1% Low Priority Total $19,908.9 3.1% Star

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