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No Brexit effect yet but GBTA warns of 'challenging' 2017

Western Europe reports highlights challenges for business travel managers including uncertainty and travel friction
17/11/2016

Pictured: Article 50 could be triggered in March 2017, which would open the door to Brexit negotiations

The Brexit referendum result has not yet hindered the UK's growing business travel market, but travel managers have been warned to expect more uncertainty and "travel friction".


The Global Business Travel Association (GBTA) says while indicators remain positive, with consumers still consuming and businesses still hiring, next year will be more challenging for the UK business travel market.


In its GBTA BTI Outlook - Western Europe report, total business travel spend in the UK is predicted to increase 7 per cent this year before slowing to an increase of 2.4 per cent in 2017. GBTA warns that future challenges could include new waves of uncertainty around the triggering of Article 50 and extreme new visa requirements.


Catherine McGavock, GBTA’s regional vice president EMEA, said: "Despite the uncertainties surrounding Brexit, the UK’s economy and business travel market have not imploded as many critics feared. Next year will present more of a challenge from the UK’s business travel market though as the downside risk becomes more palpable with many firms likely to postpone or reduce investment, which could lead to a slowing economy."


Domestic business travel within the UK will increase 5.9  per cent this year followed by 2.5 per cent in 2017, reaching USD$59.7 billion (£47.8bn), while international travel will grow 8.9 per cent this year to 2.3 per cent next year, hitting $18.2bn (£14.6bn).


Across Europe, Germany is the strongest market, with total business travel spend expected to rise 7.4 per cent in 2016 and another 7.6 per cent in 2017, reaching $73.4bn (£58.8bn).


McGavock added: "Consumers are consuming and businesses are hiring, investing and traveling for now. While spending has been somewhat resilient, measures of near-term investment intensions plunged in the third quarter of this year, suggesting coming weakness."


The report highlights specific effects Brexit may have on business travel as;


- Uncertainty: New waves of uncertainty may develop following the actual delivery of Article 50 as trade and immigration negotiations begin


- Travel pricing: The end of open skies for European air carriers may result in fewer flights and higher fares and reinstituting mobile roaming charges could expose road warriors to rising voice and data communication costs


- Travel friction: The debate over immigration could lead to extreme new UK visa requirements, which would likely be reciprocated across the EU. Coupled with rising security concerns in a new separated world, business travellers may face more difficulty and scrutiny moving throughout the EU


- Access: The free movement of people and money throughout the EU brought many advantages for business travel. Going forward airlines may have to renegotiate routes and gates with both the UK and the EU potentially resulting in fewer flights and higher fares, processing and acceptance of credit cards becomes more complicated and the end of the European Health Insurance Card for UK business travellers could muddle health coverage during trips


- Location decisions: Establishing restrictions on the right for EU citizens to work in any member state will have profound longer-term impacts on business travel levels and patterns


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