NATIONAL REPORT – New data from the Global Business Travel
Association (GBTA) suggests the travel industry is anticipating a slowdown. The
group’s July outlook poll, which surveyed 950 corporate travel managers,
suppliers, travel management companies and other stakeholders across 45
countries in mid-June, showed that optimism within the sector had plummeted
from 67% in late 2024 to just 28% by this summer.
The deteriorating outlook was especially pronounced among
suppliers: While 37% expected revenue drops in April, that figure had jumped to
48% in the latest survey. Hotel suppliers are especially pessimistic, with 58%
anticipating revenue decreases averaging 17%.
Jan Freitag, senior vice president of lodging insights for
STR and the national director of hospitality analytics for CoStar Group,
pointed to recent STR hotel data supporting these concerns.
“If you look at the weekday U.S. occupancy percent change
for the last four months, that has been negative,” he said. “So, in March,
April, May and June, weekday occupancy has declined compared to 2024. And that
weekday occupancy softness is, to me, already a sign that all is not well in
the business segment.”
So, in March, April, May and June, weekday occupancy has declined compared to 2024. And that weekday occupancy softness is, to me, already a sign that all is not well in the business segment.
Jan Freitag
The uncertainty stems largely from what Freitag described as
the “tariff on-again, off-again, on-again, off-again” environment, which he
said has infused uncertainty into the global macroeconomic picture, causing
some companies to take a “wait-and-see approach” as it relates to corporate
transient travel decisions.
He also noted that for the first six months of this year,
group occupancy had declined.
Despite the headwinds, the GBTA’s comprehensive Business
Travel Index still projects global business travel spend will grow 7%, to $1.57
trillion, in 2025, though this represents a deceleration from previous
forecasts.
Companies shift gears
Travel management companies (TMCs) are reporting similarly
sluggish spending patterns.
At the GBTA’s annual convention last week in Denver, Gabe
Rizzi, president of the TMC Altour, said business is essentially flat year over
year to date, which is well below the company’s double-digit growth plan.
Business with government contractors and some manufacturing sectors are down
double digits, he added, and government IT sectors are off approximately 25%.
In light of the anemic corporate travel environment, Rizzi
said the company is focusing sharply on new client recruitment, including
working toward leveraging partnerships announced in April with Kayak for
Business and Blockskye.
“Corporate travel is like a canary in the coal mine,” Rizzi
said. “Whenever there is uncertainty in the geopolitical sphere, everyone takes
a wait-and-see approach.”
Corporate travel is like a canary in the coal mine. Whenever there is uncertainty in the geopolitical sphere, everyone takes a wait-and-see approach.
Gabe Rizzi
American Express reported that travel and entertainment
spending by its commercial customers grew just 1% year over year in the second
quarter, down from 2% growth in the first quarter. The company attributed the
slowdown to “softer airline and lodging spend.”
Airlines, however, represented a bright spot amid the
overall pessimism, with only 39% expecting revenue declines this year,
according to the GBTA survey.
During Q2 earnings calls this month, Delta said corporate
sales were up low single digits year over year in June, while United Airlines
reported even stronger momentum. United CEO Scott Kirby said that while
business demand “is not all the way back,” demand “has certainly inflected in a
positive direction.”
Still, this optimism does not extend across all industries.
Sectors with significant exposure to tariffs, such as car manufacturing, are
likely to be “disproportionately impacted,” Freitag said, and may decrease
their corporate travel spend.
Suzanne Neufang, the GBTA’s CEO, echoed that sentiment.
“Manufacturing, it goes without saying, I think is the most
at risk because of the disruption that’s happening,” she said. “But we don’t
quite know which way it’s going to go right now.”
Visa worries
Beyond the tariff impact, U.S. government policy has been
cited as a factor causing companies to increasingly modify their meetings
strategies.
The GBTA poll shows rising numbers of organizations have
canceled their U.S.-based meetings, relocated events outside the U.S. or
shifted to virtual formats since April, with 20% of organizations reporting
that they’ve canceled sending employees to U.S.-based events, up from 10%
earlier this spring.
“And it wasn’t just non-U.S. companies responding that way,”
Neufang said. “It was also companies who are based in the U.S. who are changing
their meeting locations, and that could be for visa reasons, because certain
employee bases are still having a tough time getting visas to travel into the
U.S., from a fast turnaround perspective.”
The survey also found that one in five travel buyers
globally said employees have declined U.S.-based business trips due to concerns
related to U.S. government actions, and more than one-third of global
respondents reported that they personally know someone whose travel has been
affected by U.S. policy changes, up from 23% in April.
Note: This story first appeared in Travel Weekly