Business Travel On The Rebound

Oil-Price Equation

Hotels rates, which have risen modestly over the last year, are less subject to fluctuation, since the industry has less control over its inventory.

Airlines, for example, can ground planes and eliminate routes depending on economic performance and the cost of fuel, which has climbed significantly alongside rising crude oil prices.

If prices remain elevated for long, business travel spending could be curbed significantly.

For example, if oil averages $125 per barrel between 2011 and 2013, U.S. business travel spending would be reduced by nearly $5.8 billion, or 1.5 percent, and roughly 700,000 trips, the GBTA reports.

If oil hits $200 per barrel during the same time frame, it would potentially reduce domestic business travel spending by nearly $9 billion, or about 2.5 percent.

Yet, the group also notes that a short-term oil price spike — which some now say was the case between February and May — would not force an overall market decline, just slower growth.

As corporate confidence slowly returns, U.S. businesses are relaxing the travel budget restrictions they put in place during the Great Recession.

Many are just now opening up their budgets to accommodate large-group events, which require six to nine months lead time, client development meetings and the increased airfare required to move their best and brightest across the globe.

“Businesses are not only traveling more, but they’re having to pay more to travel,” says Hace. “That will continue to adjust some of their decision making and to some extent damper how quickly they ramp up travel.”