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The United States Business Travel Industry 2014 (Select Pages)

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The focus of this study is to quantify the economic contribution made by business travel to the overall U.S. economy. To achieve this, we estimated total annual spending initiated by business travel …

The focus of this study is to quantify the economic contribution made by business travel to the overall U.S. economy. To achieve this, we estimated total annual spending initiated by business travel in 2012 (most recent full year data available) and used a standard economic model to translate that spending into GDP, jobs, wages, and taxes. The study also sought to profile U.S. business travelers in a number of key areas in order to better understand their behavior, motivations, and spending patterns.

The full report is available for purchase for non-members and at no cost for GBTA members. To learn more about the Global Business Travel Association please visit www.gbta.org.

Published in: Travel, Business

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  • 1. Sponsored by: 2013 Q1 February 2014 The United States Business Travel Industry Road Warriors Impact on Jobs and the Economy
  • 2. 22 The United States Business Travel Industry February 2014 © February 2014 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. The United States Business Travel Industry Road Warriors Impact on Jobs and the Economy Table of Contents INTRODUCTION....................................................................................................................................................................................3  CONTACT................................................................................................................................................................................................3  EXECUTIVE SUMMARY......................................................................................................................................................................4  WHAT MAKES U.S. ROAD WARRIORS TICK: A PROFILE OF U.S. BUSINESS TRAVELERS ............................................6  OVERVIEW..............................................................................................................................................................................................6  THE TOP LINE: PERSON-STAYS & SPENDING .........................................................................................................................................7  TRIP MOTIVATION, PURPOSE, AND BEHAVIOR........................................................................................................................................8  MOST ACTIVE TRIP DESTINATIONS AND ORIGINS.................................................................................................................................10  BUSINESS TRAVEL BY MODE OF TRANSPORTATION AND TRIP DISTANCE.............................................................................................11  AVERAGE SPENDING BY TRIP PURPOSE ................................................................................................................................................12  ACCOMMODATIONS AND BOOKING METHOD .......................................................................................................................................13  U.S. BUSINESS TRAVELER DEMOGRAPHICS..........................................................................................................................................14  THE 2012 ECONOMIC CONTRIBUTION OF U.S. BUSINESS TRAVEL....................................................................................15  BUSINESS TRAVEL-INITIATED TRIPS AND SPENDING ............................................................................................................................15  HOW BUSINESSES, CITIZENS, AND GOVERNMENTS BENEFIT FROM BUSINESS TRAVEL: CONTRIBUTION TO U.S. GDP, JOBS, WAGES, AND TAXES ...........................................................................................................................................................................................20  A BROAD RANGE OF U.S. BUSINESSES BENEFIT WHEN WARRIORS HIT THE ROAD .............................................................................23  WHAT IS LOST WHEN BUSINESS TRAVEL IS REDUCED .........................................................................................................................25  TRAVEL’S CONTRIBUTION TO U.S. BUSINESS –REVISITING THE LANDMARK 2011 STUDY ON THE ROI OF U.S. BUSINESS TRAVEL.............................................................................................................................................................................29  BUSINESS TRAVEL’S CONTRIBUTION TO TOP & BOTTOM LINES...........................................................................................................29  BUSINESS TRAVEL’S CONTRIBUTION TO U.S. EXPORTS........................................................................................................................31  ABOUT ROCKPORT ANALYTICS...................................................................................................................................................33 
  • 3. 33 The United States Business Travel Industry February 2014 © February 2014 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. Introduction Business travel in the U.S. is a significant industry, totaling $384 billion in spending in 2012. When businesses send workers on the road, jobs are created, sales and taxes are generated and the national economy grows. The focus of this study is to quantify the economic contribution made by business travel to the overall U.S. economy. To achieve this, we estimated total annual spending initiated by business travel in 2012 (most recent full year data available) and used a standard economic model to translate that spending into GDP, jobs, wages, and taxes. The study also sought to profile U.S. business travelers in a number of key areas in order to better understand their behavior, motivations, and spending patterns. The total economic impact of business travelers is separated into three distinct effects: direct, indirect, and induced. The direct impacts represent the spending that “touches” the traveler. Among other costs, this includes airfare, hotels and car rentals. The indirect impact represents the benefit to local suppliers to those businesses that are directly serving the travelers. This includes, for example, food suppliers to restaurants. The induced impact adds the effect of travel‐generated wages as they are spent throughout the U.S. economy. Contact For more information or specific questions, please contact: Kenneth McGill Managing Director Rockport Analytics 610‐213‐2558 ken.mcgill@rockportanalytics.com Joe Bates Vice President, Research GBTA Foundation 703‐236‐1181 jbates@gbtafoundation.org Methodology Notes:  The economic impacts described in this study are based on domestic traveler spending as reported by D.K. Shifflet & Associates (DKSA), international spending reported by the National Travel & Tourism Office (NTTO), and meeting spending derived from a Convention Industry Council (CIC) study.  The most recent full year data (2012) for all inputs was analyzed and compared to other economic data for the same period. This data is fully consistent with the travel spending estimates released each quarter in the GBTA BTI™ Outlook – United States.  Expected growth in business travel activity of 3.8% and 6.6% for 2013 and 2014, respectively, suggests that the findings in this study have continued to expand.  Only spending that took place within the United States was included since it is only this portion that ultimately accrues to U.S. Gross Domestic Product.  Study findings include only the impacts of business‐initiated travel and meetings. Leisure travel was not included.  An economic model of the United States is critical to estimating how traveler spending resounds through the U.S. economy. The IMPLAN model, a non‐proprietary economic model that has fast become the defacto standard for most economic impact assessments in the United States, was chosen by the authors.
  • 4. 44 The United States Business Travel Industry February 2014 © February 2014 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. Executive Summary  Business travel supports a broad array of business objectives. Of the 452 million business trips taken in the U.S. during 2012, nearly two‐thirds (65%) were for transient purposes such as operations management, sales, client service, government and military travel, and travel for construction or repair. The other one‐third of business trips were taken for group travel purposes, including travel for conventions, training, professional development, and seminars.  U.S. business travelers are most likely to be mid‐career (age 35‐55) and be employed in a managerial or professional position. Business travelers have an average annual household income of $102,329 and almost three‐quarters of business travelers are married.  In 2012, U.S. domestic business travelers spent an average of $540 per trip, including $147 on lodging, $230 on transportation, $100 on food and beverage, $28 on shopping, and $22 on entertainment. These averages consider all trips –day and overnight and all methods of transportation –air, rail, personal auto and rental car. Business trips that utilized air travel as the primary mode of transportation averaged $1,100 in total spending per trip.  In 2012, top U.S. business travel markets were New York, Los Angeles, Chicago, Boston, and Dallas. Out of the top‐25 business travel origin markets, average spending skewed highest in Houston, Washington DC, New York and Atlanta.  The average business trip lasts 1.75 days and covers 268 miles (945 miles if primary transportation is by air). The typical U.S. business traveler takes about 4 day and 2 overnight trips per month. Over the course of a year, a road warrior on average spends 19 nights in a hotel.  In 2012, business travel spending within the United States totaled $384 billion USD. This was comprised of $244 billion in trip‐related spending (60%) and $140 billion in meetings operations expenditures.  International inbound trip spending was estimated at over $19 billion in 2012, with over $8.3 billion of that taking place within the U.S. International outbound travelers spent a total of $32 billion in 2012, $6.2 billion of which took place within the U.S.  Business travel in the U.S. contributed $491 billion to U.S. GDP in 2012. Essentially, every dollar of business travel spending generated about $1.28 in GDP. Business travel was responsible for about 3% of U.S. GDP in 2012. Of the $491 billion total, $208 billion accrued directly to businesses that served travelers or meeting attendees. The supply Stakeholder/ Beneficiary 2012 Benefit Business Travel Industry $384 billion in travel & meetings spending 4 million industry jobs $208 billion in revenue (GDP) U.S Economy $491 billion in total GDP (3% of total U.S. GDP) Jobs 7.1 million total jobs supported $297 billion in wages & salaries Businesses Potential 20:1 ROI from increased Travel &Entertainment spending Taxes $118 billion in taxes ‐$62 billion federal and $56 billion in state & local receipts
  • 5. 55 The United States Business Travel Industry February 2014 © February 2014 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. chain for these businesses received an additional indirect contribution of $120.5 billion. Finally, the downstream spending of business‐travel supported wages generated an induced contribution of $162.8 billion.  In 2012, business travel supported 7.1 million jobs in the U.S. Just short of 4 million of those were with hotels, airlines, rental car companies, and other direct providers of travel services. About 1.3 million were with travel supply chain employers and about 1.9 million more resided with firms that supplied consumer goods and services to business travel‐supported workers.  U.S business travel contributed significantly to federal, state, and local tax receipts ‐$118 billion in total. In 2012, business travel‐initiated federal taxes totaled $62 billion. Meanwhile, state and local taxes attributable to business travel surpassed $56 billion. Of each dollar spent on business travel, about 30₵ goes to taxes.  For every one percent increase in business travel spending, the U.S. economy gains an additional 71,000 jobs, nearly $5 billion in GDP, $3 billion in wages, and $1.2 billion more in tax collections.  The United States Congress continues to examine reform of the corporate tax system. Proposals to reduce U.S. corporate tax rates, among the highest in the world, have included strategies to close certain loopholes and eliminate a list of existing deductions –including the deduction of travel and expenses (T&E). Eliminating the T&E deduction would effectively raise the cost of business travel by 35%, the current U.S. corporate tax rate. This would be expected to reduce business trips by anywhere from a 9% to 18%; at the low end, this would be about 40 million trips. This translates into $22 billion in lost travel spending, which would result in the loss of 418,000 U.S. travel sector jobs, $28 billion in GDP, and $6.8 billion in tax revenue.