Domestic business travel will grow faster in 2019 than it did the past three years, according to the U.S. Travel Association, and for the period from December 2018 through May 2019, it will grow 3.2 percent year over year. Strong corporate profits and the near-team outlook for business investment point to 2019 starting off strong for business travel. According to the National Federation of Independent Business Professionals and the Business Roundtable, optimism from both small and large companies about the economy is high. "We think that business investment is going to carry forward and business travel along with that will continue to be compelled in the first half of this year,"said USTA SVP of research David Huether.
U.S. domestic business and leisure travel combined will grow 2.4 percent year over year for the period between December 2018 and May 2019, according to USTA. Leisure travel growth will soften slightly but remain at about 2 percent as wage growth continues to firm up and consumer confidence remains near its historic high.
Huether doesn't see any of the economic bubbles that typically lead to recessions. He expects U.S. economic growth to slow a bit in 2019 but not significantly. "We're still seeing very healthy growth in corporate profits and disposable income, so I think I'm a little more sanguine on the domestic side. The fundamentals are in good shape."
In contrast, growth of international inbound travel to the U.S will decelerate year over year for the period from December 2018 through May 2019, after showing relatively strong growth in the past year. He gives three reasons for the coming slowdown. One: International inbound travelers will reduce their visits to the U.S. because the dollar, after edging upward in value throughout 2018, will reach its highest since 2002. Two: Global economic growth will be weaker, which will reduce demand for international travel to the U.S. Three: The growth in international visitations from Brazil and Mexico, both of which saw strong growth in recent years, will taper.
Travel from China to the U.S. already has slowed drastically, Huether said, because Chinese outbound travel slowed in general last year, the Chinese government warned its travelers about safety in the U.S. and trade between the two countries is slowing. He doubted trade tensions were to blame for the slowing growth in visitations from China to the U.S.
Growth in annual international inbound travel to the U.S. for the period from December 2018 through May 2019 will decelerate to low-single digits. "While we expect visitations from abroad to continue to grow, it's going to be growing at a significantly slower pace than the 2010-to-2015 period, where you had overseas visitation growing sometimes in the 5 percent to 7 percent range," he said. The U.S. share of global long-haul travel will also continue to fall in the coming years.
Huether said quarterly meetings with other trade association economists revealed significant uncertainty about how recent trade tensions between the U.S. and other countries will impact international trade flows. "There could be some spillover effect on business travel between two countries if trade flows sour significantly," Huether said. "It's possible, but at this point, it's very difficult to make a clear estimate on it."