What Does an Increase in Business Travel Mean for the U.S. Economy?

A new report predicts a rise in U.S. business travel and argues this is a solid indicator of improving economy.

Jul 14, 2014 at 10:14AM

Frankfurt Airport Offers Free Round The Clock Internet Access

Source: Fraport AG

A new report indicates that business travel -- and business travel spending -- is on the rise in the U.S. The organization behind the report, the Global Business Travel Association, says that the increase is a very reliable indicator that the overall economy is strengthening. 

Here is the logic, as explained by GBTA Executive Director and COO Michael W. McCormick: "Business travel spending in the U.S. supports 7.1 million jobs," he said in a press release. "We continue to see a correlation: growth in business travel is intrinsically linked to jobs development and ultimately growth in the U.S. economy."

In other words, the more business conferences and meetings that occur on the road, the more need there will be for workers in hotels, airports, restaurants, car rental agencies, etc. 

Gbta

Source: GBTA BTI™ Outlook – United States 2014 Q2

A closer look at the numbers in the report lend credence to McCormick's claim. Business travel within the U.S. rose almost 3% since last year, with travel spending up 7.6%, to $71.2 billion, during the first quarter of 2014. Additionally, spending on U.S. business travel is projected to grow by $292.3 billion in 2014, a 6.8% increase from 2013. Anytime businesses pump hundreds of billions of dollars into the economy, a positive ripple effect can be expected. In this case, airlines, hotels, car rental agencies, and restaurants will all benefit, along with the travel websites that serve as intermediaries between travelers and their destinations. 

A boost for plastic
The increase in business travel will also be a windfall for credit card companies; all business expenses typically go on plastic so they can be accounted for after returning home. Tad Fordyce, senior VP and head of Global Commercial Solutions at Visa (NYSE:V), a sponsor of the report, said in the press release that he is encouraged by the upward trend present in the GBTA BTI, a proprietary index of business travel activity, which is now estimated to reach 134 in Q2 2014, up from 132 last quarter. 

"The expected growth outlined in the GBTA BTI means for exciting times not only in the business travel market but for our country's economy as well," Fordyce said in the release.

Gbta

Source: GBTA BTI™ Outlook – United States 2014 Q2


But haven't execs been all gloom and doom?
On paper, the assertion that more business travel means the economy is strengthening seems to be a reasonable conclusion to reach, even though it's pretty much impossible to quantify what a 6.8% increase in travel spending and 2.3% increase in business trips will mean for the U.S economy.

But does the projected uptick in business travel actually serve as a reliable indicator of the U.S. economy's health? What about the recent reports by both Deloitte and the Business Roundtable that detail the fading optimism and growing pessimism in U.S. boardrooms regarding the U.S. economy? The Deloitte report shows that CFOs in the U.S. are 7% less optimistic about the economy in the coming year. Meanwhile, the Business Roundtable report shows that CEOs expect the economy to grow by 0.1% less than it did last year. How does that square with the rising GBTA BTI?

In the comfort zone
The fact is that CEOs and CFOs would not be signing off on an increase in the amount of trips taken by employees -- or approving bigger travel spending budgets -- if they saw storm clouds ahead. Despite the lack of enthusiasm expressed by the recently surveyed heads of major U.S. companies, they are green-lighting more business travel within their own companies. They must be comfortable enough with the short-term economic outlook.

More employees traveling means more deals are getting done, more training is taking place, and all of the economic benefits that follow in the wake of increased business travel can be counted on.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Louis Battaglia has no position in any stocks mentioned. The Motley Fool recommends Visa. The Motley Fool owns shares of Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers