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GBTA BTI™ Outlook – Western Europe: 2013 H1 (Select Pages)

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The Global Business Travel Association ("GBTA"), has released its latest GBTA BTI™ Outlook report on Western Europe as part of its semi-annual series.

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.

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GBTA BTI™ Outlook – Western Europe: 2013 H1 (Select Pages)

  1. 1. GBTA BTI™ Outlook – Western Europe Prospects for Domestic & International Outbound Business Travel 2013-2014 2013H1 Europe continues to struggle under the weight of outsized sovereign debt burdens and the austerity programs prescribed as remedy. Unfortunately, 2013 looks to be another year of weakness, particularly in the periphery, before 2014 brings modest growth. Combined, the five largest business travel markets will see spending expand by only 0.4% and 3.7% for 2013 and 2014, respectively.
  2. 2. GBTA BTI™ Outlook – Western Europe 2013H1 Page 9© April 2013 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. the end of 2012, profits were still declining, albeit at slower rates. The outlook for 2013 is for operating surpluses to stabilize and slowly begin to grow as top-line revenue starts a slow ascent and earlier cost-cutting efforts begin to pay off. Oil prices began to stabilize in late 2011 and have been largely moving sideways since that time. While still consistently above the $100/bbl level (Brent Crude), oil has traded in an increasingly narrow range into early 2013. This has brought welcome relief to a struggling European economy. Jet fuel also steadied over that same period. Currently $3.09 per gallon (Jan. 2013), adequate supply and tepid demand growth suggest a slight drift upward in 2013, with a more rapid expansion the following year. Most analysts are expecting oil prices to rise slowly in 2013, averaging about $113-$114/bbl. With global economic growth stronger in 2014, prices will reach the $120/bbl level. Of course, the risk of a Middle East supply interruption is ever-present. 2013-2014 Economic Outlook Growth prospects for the five key European business travel markets, and for the Euro Area as a whole, remain weak. Germany (0.9%) and France (0.2%) were just barely able to muster positive GDP growth in 2012, while other key economies, including the U.K. had clearly backslid into recession. Performance in 2013 will also be mixed. The Eurozone is expected to remain in recession during the first quarter of 2013, with conditions in many of the periphery countries still $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $0 $20 $40 $60 $80 $100 $120 $140 $160 USD$ per Gallon $USD per Barrel Jet Fuel & Crude Oil in Lockstep Crude Oil (Brent ‐left scale) Jet Fuel (right scale) 2012 Averages: Crude Oil = $112/bbl Jet Fuel = $3.06/gal Sideways during 2011‐12. Likely to drift upward in  2013 as global economy strengthens Source: Energy Information Administration
  3. 3. GBTA BTI™ Outlook – Western Europe 2013H1 Page 22© April 2013 GBTA and its affiliates. All rights reserved. Members may copy this publication in its entirety for internal company use. Spain Spanish business travel spending totaled $4.29 billion USD in 2012 Q4, on a seasonally adjusted basis. This represents a -9.8% annual decline in spend, slightly worse than the $4.32 billion we projected for Q4 in our GBTA BTI™ Outlook 2012H2. Spending on business travel in Spain totaled $17.9 billion USD in 2012 (€13.9 billion), down 7.9% from $19.4 billion USD in 2011. Recovery in Spain continues to be elusive, which is reflected in our downgraded forecast for business travel over 2013. Why? (1) Unemployment remains a stubbornly high at 26% with no signs of falling; (2) although the yields have fallen slightly on Spanish bonds, borrowing costs are still relatively high; (3) an aging population and the troubled Spanish pension system will need to be addressed; (4) and prices continue to fall in Spain’s real estate market. In fact, Spain’s housing bubble has cost properties approximately 40% of their value since 2007. We expect spending on Spanish business travel will continue to decrease, quarter-over-quarter, through the third quarter of 2013. In aggregate, Spanish business travel spending is expected to fall another -6.2% in 2013 (to $16.8 billion USD). In 2014, we expect modest growth, however, with total spending up by 1.8% to $17.1 billion USD -the first increase since 2010. Both domestic and international outbound business travel will take a hit in 2013, falling -5.4% and -9.4%, respectively. The growth in 2014 will mostly be driven by domestic business travel, which is projected to grow slightly (2.2%). IOB is likely to remain relatively flat, expanding 0.1%, over the same period.

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