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CRUISING ALTITUDE

Companies are spending more on business travel—but not because employees are hitting the road more

Amy X. Wang
By Amy X. Wang

Reporter

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Gone are the days when business trips meant cushy, wood-paneled flights, lavish meals, and boozy bashes, it seems. When the global recession hit, it dented corporate travel budgets everywhere. Now, with the world economy in recovery, spending on travel is finally expected to pick up again in 2016—but only slightly, and with much of the growth driven by price, not increases in amenities or transaction level.

In its outlook for US-outbound business travel released today (Jan. 12), the Global Business Travel Association predicts a modest 3% growth in US corporate spending on employee travel for both 2016 and 2017. The group, which tracks international corporate travel trends, used volume of travel, spending-per-trip, and travel prices to calculate its index (below) against the pre-recession year of 2005. The findings are in line with the organization’s outlook for European business travel.

The GTBA’s latest report breaks down price changes in specific components of business travel, noting that while base airfare is due to get cheaper in 2016, rental cars and lodging look like they’ll be 3% to 5% more expensive—causing companies to spend more on each trip without increasing their number of trips. GTBA’s research team attributes the rise in the latter two categories to a combination of rising demand with shrinking supply.

“We’ve seen strong market growth, and overall some of the better numbers we’d been hoping to see for some time now,” Michael McCormick, executive director of the GTBA, tells Quartz. But, “it’s not robust growth. Largely, transactions are flat.”

Travel Leaders Group, a travel agent network, foresees similarly slow growth.

Economic strains are playing a large part in companies’ reluctance to send employees out on business trips right now. Business travel is a both a strong driver of business growth and a leading indicator for the economy; its small increases, then, put together a larger picture of not-quite-rebounded growth in most countries.

But companies’ declining interest in business travel also reflects a new attitude ringing through the corporate world: mindful caution about profit margins. Airlines and other travel services can ramp up their premium perks all they want, but companies nowadays are much less likely to care about those extra benefits than about their bottom line, McCormick says.

“At the end of day, companies are sending their employees all over the world to conduct business,” he tells Quartz. “The money companies spend is much more purpose-driven, with an investment in mind.”