Latest Casualty of Mixed Economic Outlook: Business Travel
With more questions than answers about what to expect with the U.S. and European economies for the rest of this year and early next year, companies are pulling back on business travel.
The latest forecast by the Global Business Travel Association (GBTA) calls for a 1.6 percent reduction in business travel for all of 2012 and a drop of 1.1 percent in business trips next year.
“Corporations are in a wait-and-see mode and holding back on investment decisions that would help boost the economy,” said Michael W. McCormick, GBTA executive director and COO. (Read More: Top US Cities for Meetings and Events.)
Unfortunately for corporate travel departments, fewer business trips does not mean lower travel costs. In fact, GBTA forecasts corporate travel spending will increase 2.6 percent this year and 4.9 percent next year. Both reflect the fact higher airfares are expected to stay in place for the foreseeable future.
One of the biggest issues weighing on the mind of corporate leaders is the looming "fiscal cliff," the year-end deadline when tax cuts expire and automatic spending reductions go into effect. (Read More: Corporate America Sweats as US Nears 'Fiscal Cliff.')
Until lawmakers in Washington address the issue, many corporate travel managers are taking a wait and see approach.
“This is an economy in need of some good news to shore up business confidence and encourage more travel,” McCormick said.
New Hiring Not Spurring Business Travel
The GBTA said new analysis shows the rebound in jobs in the U.S. has not prompted the typical bounce in business travel. Why?
According to the GBTA, many of the jobs added in the last two years are in sectors where there is less business travel, including the retail, restaurant and manufacturing industries. Workers in those industries tend to make fewer business trips than folks working in the business service, financial, or utility industries. (Read More: Jobs Growth Rises 114,000 as Rate Slides to 7.8 Percent.)
—By CNBC's Phil LeBeau