business travel market metrics a global analysis of business

1 CONFIDENTIAL FOR INTERNAL USE ONLY

Business Travel Market Metrics A Global Analysis of Business Travel Activity

:

August 2009

1 IHS Global Insight / National Business Travel Association / Egencia August 2009

Table of Contents Introduction: How Big and Influential Is the Activity We Call Business Travel?..................................................................... 2 Approach, Methodology, Data Sources, and Definitions ........................................................................................................ 4 Global Business Travel Analysis............................................................................................................................................. 7

Global Summary.................................................................................................................................................................. 8 Business Travel's Contribution to Industries Around the Globe........................................................................................ 12 Global Business Travel Outlook ........................................................................................................................................ 15

World Economic Outlook Summary ............................................................................................................................. 15 The Outlook for the Top 20 Global Travel Markets ...................................................................................................... 28

U.S Business Travel Market.................................................................................................................................................. 89 U.S. Business Travel Forecast.............................................................................................................................................. 96

U.S. Macroeconomic Outlook............................................................................................................................................ 96 Business Travel Overview................................................................................................................................................. 98 Business Travel under alternative scenarios...................................................................................................................105 Business Travel with oil prices of $100 per barrel...........................................................................................................107

Business Travel Survey ......................................................................................................................................................109 The Economic Impact of U.S. Business Travel...................................................................................................................116

The Top Line: Total U.S. Business Travel Industry Spending .......................................................................................117 Economic Impact of the U.S. Business Travel industry ..................................................................................................118 Value added Impact of the U.S. Business Travel industry ..............................................................................................119 Income Impact of the U.S. Business Travel industry ......................................................................................................120 Employment Impact of the U.S. Business Travel industry ..............................................................................................121 Tax Impact of the U.S. Business Travel industry ............................................................................................................123

U.S. Business Traveler Profile ............................................................................................................................................124 Overview..........................................................................................................................................................................124 The Top Line: Person-Stayes and Spending .................................................................................................................125 Business Travel by Mode of Transportation....................................................................................................................127 Business Travel Spending Profile ...................................................................................................................................128 Business Travel Accommodations ..................................................................................................................................129 Who is the Typical Business Traveler? ...........................................................................................................................131


Introduction: How Big and Influential Is the Activity We Call Business Travel?

Business travel is a term that encompasses many activities and purposes. It includes trips taken on behalf of sales, operations management, educational advancement, social responsibility & charitable works, and performance rewards. Moreover, the activity of business travel is viewed in different ways by different actors. Travel suppliers see it as a significant source of revenue and primary market segment. Corporate management sees it as both a principal business input and a

controllable expense. Travel Buyers and Managers view it as an optimization challenge. Policymakers (should) see it as a generator of jobs, income, and tax revenue -albeit an underappreciated one. Finally, veteran business travelers view it as an important part of their daily lives.

For all its definitions and purposes, the activity of business travel lacks a comprehensive and coherent description. Clearly, information and metrics concerning business travel's size & growth, economic contribution, and traveler behavior would benefit all of the actors mentioned above. Unfortunately, there is no definitive source for these metrics, one that provides a comprehensive view of both the absolute and relative size of business travel activity.

The NBTA is the ideal organization to provide this critical foundation. Developing and distributing business travel measures, examining issues, and detail emerging trends are all within the stated goals of the organization and are consistent with member expectations.

To aid this effort, IHS Global Insight has developed measures of the current global market for business travel, analyzed its historical trends, and created a projection through 2013. A separate and more detailed view of the US business travel market was also provided. Next, the economic contribution or impact of business travel was estimated for the U.S. Finally, a comprehensive profile of the US business traveler provides a detailed analysis of travel incidence, spending, and behavior.

This report presents the results of our findings and the storylines behind them. IHS Global Insight has created a report covering the all-important demand side of the business travel market. Metrics covering business travel volume, trip behavior, spending, and costs have been combined with a complete profile of the U.S. business traveler. Clearly, supply side measures (e.g. air & hotel revenue) are an important part of the process, but it is the development of comprehensive measures of the demand side of business travel that make this research initiative unique.

The report also describes business travel's place in the global economy –what drives it, which sectors participate and at what levels, and how it has changed over time. Importantly, the process by which these business travel measures have been created can be refreshed on (at least) an annual basis so that ongoing monitoring of the business travel market is possible. Consequently, this report can perhaps be envisioned as an "annual report on the state of global business travel".

Travel managers, buyers, and suppliers will all benefit from the research findings. Informing marketing strategy, assisting resource allocation and prioritization, and benchmarking travel programs/policies are all potential applications of this research effort. Moreover, policymakers and citizens can both benefit from a better understanding of the size and contribution that business travel makes to job creation, income generation, and tax receipts in the U.S.

Examples of highlights and implications include:

•Business travel is becoming more global. Travel managers should be increasingly thinking in terms of global programs and policies.

•High-growth markets (such as China, India, and the Middle East) should be a key part of strategies going forward.


•The recession that began in earnest late in 2008 will make for a very difficult 2009. The global recovery will begin late in 2009, however, and gather momentum in 2010 and 2011. Global business travel will decline by nearly 15% in 2009, but the next two years will bring slow and steady improvement (+1% and +4%, respectively). This is a good time to re-evaluate strategies, programs, and policies so that you are better positioned to take advantage of the coming recovery.

•The rates of recovery from the current recession will vary in each country. Travel managers should leverage the market-specific projections to better prioritize market activity and resource allocation during next 18 months

•There are substantial opportunities for travel management to address the 46% of business travel spend that is outside of air, hotel, and rental cars.

•Industry sectors with high Travel-Spend-per-Sales-Dollar, such as real estate, government, utilities and professional services, stand to save the most from managed travel activities.

•The productivity of business travel has grown dramatically over the past decade. More and better travel management methods, technology alternatives and compliments, more dense and efficient trips, and slower increases in travel costs (relative to wages and other inputs) are among the reasons.

•Although business travel is becoming more productive, it is still a significant portion of company spend. On average in the U.S., business travel comprises about:

o 1 cent of every sales dollar

o 2.3 cents of each dollar of cost (including wages)

o 5 cents of each dollar of gross operating profit

•How much does business travel contribute to the U.S. economy? It is responsible for supporting over 4 million U.S. jobs, generating $188 billion in wages, and $80 billion in federal, state, and local taxes. One in 30 U.S. workers owes his/her job to business travel activity. If business travel were viewed as an industry, it would be the 13th largest in the country (Healthcare is #1). Policymakers should fully consider the repricussions of legislation or regulation that hinders business travel activity.

• American business travelers are typically between the ages of 35 and 54 years old. They are married (76%), and have no children living in their households (60%). They most likely work in a managerial or professional position (35%) and make an average yearly income of $78,700.

•Business travelers will usually drive to their destinations (60%). The most common destinations are Los Angeles (3.79%), New York (3.05%), San Francisco (2.77%), or Chicago (2.64%). The specific purpose of a business trip is quite broad, but is typically transient business (62%) involving sales/purchasing (11%) or group business involving seminars/training (15%). The business traveler will make a reservation (83%) to stay at a high-end or mid-level hotel (28% and 31%) usually pays with a credit card (63%).

•A business traveler will spend an average of $465 during their stay, mostly on transportation (37%) and food (20%). Their trip will usually lasts three days or less (87%) when they will leave to go home to Los Angeles (5.3%), New York (3.9%), or Dallas-Fort Worth (2.4%). A typical business trip will average 343 miles one-way.


Approach, Methodology, Data Sources, and Definitions

The overriding objective of this research initiative has been to create a process for developing credible estimates of the size, growth, and contribution of business travel to companies, industries, and countries around the world. Definitive and comprehensive measures simply do not exist at this time. This process must obviously produce defensible results; ones that are consistent with both the foundation data sources and any reputable aggregate or cross check

measures published by other recognized sources.

Once business travel measures have been generated, the intent is to return to this process periodically to monitor changes over time. The key is to build a process that is both credible and repeatable, utilizing all appropriate data. Updating the estimates of business travel activity requires re-executing this established process to reflect updates of the integral data sources.

PRINCIPAL DATA SOURCES

Measuring the size, growth, and contribution of business travel is neither a simple or precise task. For one, data inputs are relatively scarce, particularly outside the United States and certain Western European countries . Moreover, each data source tends to tell only a portion of the business travel story. Detailed searches have uncovered no comprehensive view of business travel volume or spending. Even in cases where travel metrics were available, they tended to cover either total travel or leisure travel only.

Much of the supply-side data that we assembled during the research did not make the trip purpose distinction either. For example, revenue and/or capacity metrics from, say, hotels or airlines generally do not distinguish a business traveler from a leisure one -likewise, for rental cars and restaurants. This type of supply-side data provided many important sanity checks but was insufficient to provide specific detailed insight that was additive towards a comprehensive view of business travel activity.

The second most critical data sourcing problem was the inconsistency of definitions across sources. Promising datasets that appeared to be ideal later proved to be less useful because of definitional inconsistencies surrounding industries, geography, or what constituted business travel itself. Indeed, something as simple as a different definition of a business trip sometimes thwarted attempts to use an otherwise robust data input. Obviously, the reconciliation of seemingly similar sources was paramount in compiling our final estimates.

Our principal sources included:

D.K. Shifflet & Associates Travel Panel – TRAVEL PERFORMANCE/MonitorSM

A bespoke survey of financial management (CFOs & Controllers) at a representative sample of U.S. public and private companies. Over 500 completed interviews captured information regarding travel & entertainment (T&E spending, as well as the commitment to travel management programs, policies, and personnel.

The U.S. Bureau of Economic Analysis,

The U.S. Department of Commerce's Office of Travel & Tourism Industries

The US Department of Transportation

Smith Travel Research

IPK International

United Nations/World Tourism Organization (UN/WTO)


National Input/Output Accounts for 48 of the 72 countries analyzed in the study (source: typically Ministry of Commerce or Statistics)

Various international government sources, including Ministries of Transportation, Tourism, and Commerce

IHS Global Insight's US and International data, modeling assets, and industry expertise.

METHODOLOGY & APPROACH

IHS Global Insight assembled an extensive data repository from which to build estimates of global business travel activity. The inventory of sources included many of the private and public datasets that are commonly used to describe economic and travel industry performance in many contexts. Moreover, a comprehensive literature search provided a list of related research efforts that helped guide the final development of our methodology in each phase of the project. Each phase began with an effort to understand and reconcile the differences between and among the pertinent data sources.

The development of our global database of business travel spending by country (72) and industry (48) required that we build a "sources and uses" view of the industries that both buy and sell travel services. That is, IHS Global Insight put together a four-dimensional sectoral matrix of travel suppliers/sellers (rows) and travel buyers (columns), the 3rd and 4th dimensions being time (1998-2008) and country. The values within each cell describe the sales of a seller's services (e.g. Hotels) to each buying industry (e.g. Utilities). For example, Airlines constitute one of the critical seller rows. Across the Airline row, each one of the 48 buying industries total purchases of airline tickets is compiled.

The data used to populate the cells in this matrix came from the National Input/Output Accounts from 48 of the 72 countries covered in the study. Generally, this data is part of the National Income Accounting framework of each country, typically managed by the Ministry of Commerce or Statistics. Because of effort and expense, most of the countries perform the integral survey and compilation efforts necessary to build these matrixes on an infrequent (usually every 2-5 years) basis. IHS Global Insight's World Industry Group executes an ongoing proprietary process to estimate the values of the matrix for the interim years. For the 24 countries that lacked published input/output matrices, IHS Global Insight assigned a matrix from a country with a similar physical, location, and industrial make-up.

These seller-dominant matrixes were then transposed to produce estimates of the amount that each buying sector (e.g. business services) purchases from each travel supply sectors (airlines, hotels, rental cars, restaurants, retail, entertainment, etc.) as a percentage of that buying sector's total annual sales. Adding each supplier sector together, IHS Global Insight created an overall business travel "purchase coefficient" for each buying sector. These purchase coefficients were then tracked over the period 1998-2008.

The derivation of IHS Global Insight's initial estimates of business travel spending required that we apply the business travel purchase matrixes to published levels of total sales for each (buying) sector in each country. The total sales database is a key asset of IHS Global Insight's World Industry Service. The World Industry Service also routinely forecasts total sales by sector and country, a critical component to our business travel spending projections.

The final estimates of business travel spending by country and sector required that IHS Global Insight fold in other data inputs covering total travel volume and spending in each country, where available. Countries such as the US, UK, Germany and others were compared and adjusted according to sources such as the UN/WTO, DK Shifflet & Associates, WTTC, and IPK International. Moreover, the Ministries of Tourism for some of the countries provide estimates of overall travel, sometimes separated into leisure and business purposes. Where available and definitionally consistent, these were used as important cross-checks.

In the U.S. Economic Impact of Business Travel section of the study, IHS Global Insight turned to our repository of economic models and data for assistance in translating the contribution of business travel spending to businesses, households, and governments. The spending streams created by domestic and outbound international business trips were traced through the US economy and their downstream economic contributions to job creation, income generation, and tax receipts were derived. Our model repository included the IMPLAN model, developed at the University of


Minnesota, and currently managed by the MIG Group. The IMPLAN model has fast become the defacto standard for U.S. economic impact assessment among analysts, academia, and policy consultants. IHS Global Insight uses IMPLAN extensively in its economic impact work on behalf of tourism destinations around the country.

DEFINITIONS

The resulting global travel database, forecasts, and report created from this research effort can be used to inform many strategic and tactical decisions. Users among the travel manager, buyer, and supplier community should, however, be sure of what the estimates do and do not include, particularly when comparing the findings to other external or internal measures. In fact, during initial presentations of the results, IHS Global Insight fielded a similar set of definitional questions that we thought deserved mention in this report.

The first definition is that of business travel itself. Our objective was to be as comprehensive as possible resulting in the inclusion of all kinds of business trips and trip spending, including:

Trips booked within and outside managed travel programs

Daytrips and overnight trips

Domestic and outbound international trips

Trips on behalf of sales, operations, training, convention/meeting, maintenance/repair, incentive, and customer service

Trip spending includes all categories -air, hotel, rental car, other ground transportation, personal vehicles, food & beverage, entertainment, and miscellaneous expenses.

Another important definitional note revolves around the use of U.S. dollars to represent business travel spending. Comparison across countries required that local currencies be converted to US dollars using prevailing exchange rates from IHS Global Insight's FOREX database. Moreover, all dollar values are expressed in current or nominal terms. This means the effects of inflation are included in both the estimates of industry sales and business travel spending.


Global Business Travel Analysis

One of the principal outcomes of this research effort is a credible, comprehensive, and repeatable set of measures describing business travel activity –by industry, by country, by job function and over time. Where feasible, metrics such as business trip volume and spending have been consistently developed across market segments in order to arrive at a dataset that can be used to support any number of strategic, tactical, and policy decisions.

The nature and detail of the business travel metrics contained in this report and its accompanying database are largely dictated by available data from both secondary and primary sources. Supplier-based information from airlines, hotels, and rental car companies has been reconciled with demand-side sources from governments, traveler research panels, and travel management companies in an effort to create the most comprehensive view of business travel.

This section of the report will present our finds regarding the size and growth of global business travel. We will first summarize the global picture, with U.S. business travel being described in a separate section of the report. This section will provide business travel measures for seventy-one (71) other countries around the world.

What factors determine the size and growth of business travel activity? There are eight distinguishing characteristics that influence the level and rate of growth of business travel in our analysis:

Size of the economy –the level of business activity is paramount of course, as is its growth trajectory.

Land mass, population, and business dispersion of the country –larger countries with widely dispersed populations require more travel to facilitate economic and business development

Industry mix of the economy –countries whose economies are dominated by sectors that are more travel-intense will rise in the rankings

Productivity of business travel –business travel is a material/service input to virtually every industry. Whether business travel's role in business success is rising or falling over time is a function of its factor productivity and the availability of substitutes. In countries with well-developed network infrastructure, for example, high-quality video conferencing alternatives can incrementally reduce the amount of business travel. On the other side, better transportation infrastructure can reduce the cost of a trip, perhaps promoting more and/or longer trips.

Degree of export dominance –countries with large trade sectors (China, Germany, Japan, Indonesia) will tend to engage in more international business travel. On a per-trip basis, spending will tend to be higher in these economies. Trip volume will tend to be lower, however. In countries where economic activity is more dependent upon consumption (U.S., India, U.K.), domestic business travel will dominate.

Physical location –proximity to markets and supply chain. Countries that are far from their markets will by definition require more business travel to in order for businesses to succeed

Infrastructure development –this factor speaks to the ability to travel. Is the transportation and hospitality infrastructure sufficient for business travel to flourish?

Environmental, tax, security, and regulatory policy –does the government help or hinder business travel? Policies aimed at improving security, reducing fiscal deficits, or regulating land use -depending upon how they are structured- can incrementally damage or promote business travel.


GLOBAL SUMMARY

IHS Global Insight estimates that total business travel spending across the globe reached $929 billion in 2008. This represents growth of over 3% versus 2007, much of it coming from countries other than the United States. The definition of business travel in this case includes both domestic and outbound international trips.

North America, Western Europe, and Asia dominate global business travel activity, with each representing about 30% of total in 2008. Asia, Emerging Europe, and Middle East & Africa have led the way with respect to the rate of growth since 1998, however.

The lion's share of this nearly $900+ billion dollars does take place within the U.S., however. At $261 billion, the U.S. comprises about 28% of all business travel. Given its size and torrid growth, China is the second largest business travel market at $93.8 billion in 2008.

Growth around the world has been anything but uniform. While the U.S. dominates in terms of spending levels, growth has been more robust in Asia, Latin America, the Middle East, and Eastern Europe. This is largely a reflection of rapid economic growth in these regions, as well as the tendency for business travel to be used more intensively in earlier stages of company/industry development. Many of these counties also lack the infrastructure sufficient to promote non-travel alternatives to business communication needs.


Western Europe, North America (NAFTA), and Asia-Pacific are all about the same size with respect to the level of business travel spending in 2008. Together, they account for nearly 90% of global activity. The remaining 10% takes place in Latin America, Emerging Europe, and the Middle East & Africa (MEA). Growth in business travel spending over the past decade paints a slightly different picture. North America and Western Europe have been the growth laggards, while Asia, Emerging Europe, and MEA have led the way. IHS Global Insight estimates that worldwide business travel spending activity has increased by over 35% since 1998. Some of this growth is due to inflation (all estimates are in current US dollars), but most represents real increases in the volume and dispersion of business travel activity around the world.

Among the top 25 markets, Russia has been the fastest growing over the past decade (1998-2008), registering compound annual growth of about 16% per year. This is more than eight times the rate of U.S. growth (1.9%) during that same period. Indonesia (15%) and China (14%) also registered double digit growth per year over that period. Turkey (9.2%), India (8.8%) and South Korea (8.4%) are also notable in terms of business travel spending expansion. Meanwhile, World growth in business travel spending (measured in nominal dollars) over the last decade achieved 4.6%

per year.

While many countries grew more quickly than the U.S, all started from a much smaller base. China, the number two business travel market, is only about 1/3 the size of the U.S. at present. Japan, at $78 billion in 2008, is the third largest market, yet only 30% as large as the U.S. Italy floats to the top of the rankings on the strength of its export and domestic economic performance over the past decade. Moreover, Italy's current industrial mix favors industry's that are relatively more travel intense.

The market with the fastest rate of growth during the last decade was Zimbabwe, at 35% per year. This performance is impressive, but total business travel spending in that country was only $3.2 billion in 2008.

Another way to analyze growth is to focus upon the change in the level of business travel spending between 1998 and 2008. In the U.S., for example, annual business travel spending was $44 billion higher in 2008 than it was in 1998. China expanded by nearly $70 billion and Russia grew by only $15 billion during the

same period. Zimbabwe grew to $3.2 billion from virtually zero during the past decade.


The top 25 business travel markets are shown in the table below, along with their 1998-2008 growth performance. TOP 25 GLOBALBUSINESS TRAVEL MARKETS

Based on Domestic and Outbound International (in millions of current U.S. $$)

IHS Global Insight also examined business travel spending by industry around the world. The table below identifies the largest and most travel-dependent sectors. The level and growth of business travel spending is contrasted with organic global industry sales. Sector growth in business travel spending is dependent upon both the organic growth of the industry as well as the intensity and productivity of travel as a critical input.


TOP 20 GLOBAL BUSINESS TRAVEL SECTORS: 2008 Business Travel Spending $$

The Utilities, Food Processing & Services, Real Estate, and Government sectors float to the top of the rankings primarily due to their sheer size across the globe. Utilities, Food Processing, and Real Estate do engage in significant business travel in relative terms as well. For example, Utilities have a very large service & repair component at both the retail and generation levels, ones that require significant investments in business travel. Many employees of these organizations travel almost every day.

Virtually every country has a well-established presence in these basic sectors. For many developing economies, these sectors are the primary benefactors of critical infrastructure investment. With the exception of Utilities, their usage of business travel per dollar of industry sales or per industry employee is generally not as large as, say, the Banking & Financial sector or Professional & Business services, yet the size of these industries, as demonstrated in the column entitled, "Industry Sales 2008", adds up to significant levels of business travel spending.

Turning to subject of growth in business travel spending over the last decade, Oil Refining, Education, Chemicals, and Social & Personal Services lead the list. In part due to organic growth around the world, in part due to rapid economic expansion in developing countries, and in part due to increasing usage of business travel, these industries have led the way.

Note that the Top 25 sectors account for nearly 92% of all global business travel. The remaining industries are either relatively small (e.g. Textile Manufacturing), less intense users of business travel (e.g. Mining, Retail Trade), or both (e.g. Apparel, Wood Products). The last column in the table counts the dollar increase in business travel spending over the decade 1998 to 2008. Here again, the larger business travel sectors tend to dominate the list. Business travel spending in the Food Processing & Services had a relatively sluggish growth rate over the decade, but its size and global dispersion

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Utilities

Food P

roces

sing a

nd Servi

ces

Real E

state

Socia l &

Pers

onal

Service

s

Profes

siona

l & Bus

iness S

ervice

s

Govern

ment

Transpo

rtatio

n Servi

ces

Wholesa

le Trad

e

Constr

uction

Communic

ation

s Servi

ces

Bankin

g & Finan

ce

Equipm

ent R

ental

& Leas

ing

Agricu

lture,

Hun

ting,

Forestr

y, Fish

ing

Petrole

um R

efinin

g

Rubbe

r & Plas

tic M

anufac

turing

Resea

rch &

Dev

elopm

ent S

ervice

s

Non-M

etallic

Mine

ral P

roducts

Hotels

& Res

tauran

ts

Fabric

ated M

etal P

roducts

Paper

& Paper P

roduc

ts

in M

illio

ns o

f Cur

rent

US$


make it the 5th largest industry for increasing the level of business travel spending, roughly adding $1.8 billion per year during 1998-2008.

TOP 25 GLOBAL BUSINESS TRAVEL SECTORS: Ranked on 2008 Business Travel Spending $$

BUSINESS TRAVEL'S CONTRIBUTION TO INDUSTRIES AROUND THE GLOBE

One of the most important conceptual and numeric building blocks of this research effort is the estimations of the contribution of business travel spending to top-line revenues of industries. This metric essentially captures each industry's travel intensity. The need for business travel as a material/service input varies across both industries and countries. An understanding of the level of business travel spending per dollar of revenue puts the need for business travel in perspective relative to both sales and other critical inputs such as labor costs, other materials and services expenses, even equipment and structures investment.

The global business travel database that has been built in support of this research effort includes metrics for both industry performance (sales by sector) and business travel utilization for each country. The level of business travel spend per dollar of revenue is also an essential data concept. We have not only worked to derive a current value for this key measure, but have also sought to track its change over time. Increases or decreases over the past decade essentially address changes in the "productivity" of business travel in the production recipe of each industry sector.


As mentioned, our key measure of business travel intensity varies across industries and countries. For any one sector, the degree of business travel required to support a measured level of revenue is a function of the unique operating framework of that sector, as well as the physical, regulatory, and cultural attributes of each country.

The chart shows the distribution of travel-spend-per-revenue dollar across the 72 countries examined in the study for the sector, Professional & Business Services. We chose this industry as an example because it is anecdotally understood to

be among the most travel-intense of the 48 sectors included in our research. With a global average of 1.1¢ per dollar of revenue, the chart shows the dispersion of the 72 countries around the global average. It should be noted that for some of the countries, IHS Global Insight was unable to find a defensible source for this critical metric. Generally, they were smaller or developing countries (e.g. Bangladesh, Jordan, Costa Rica, etc.) that lack detailed economic and business data of all kinds. In those cases, we imposed the global average –hence the many countries that appear on the global average line.

Note the above-average travel intensity of some of the Western European countries, registering in the 1.5¢-1.6¢ per revenue dollar range. This is a significant difference over some of the developing countries such as Mexico or the Ukraine, showing rates in the half-cent per revenue dollar range. Western Europe boasts a large and well-developed Professional & Business Services sector that must engage in a great deal of business travel in order to support its relatively large level of sector revenue. The opposite is true of countries such as Mexico or Greece, where the industry is in an earlier stage of development.

Next, we take a deeper dive into a specific country showing the differences in travel intensity across domestic industries. Using the United Kingdom as an example, many of the key sectors have been highlighted in the bar chart. Measures of business travel intensity range from a high of 3.7¢ per revenue dollar for Equipment Leasing to a low of Mining with fractions of a penny per revenue dollar. The U.K. all-industry average is about 0.9¢ per revenue dollar.

Source: IHS Global Insight, OECD, UN/WTO, various Ministries of Commerce, Statistics, & Tourism


Keep in mind that this metric is not an indicator of the size of business travel spending. Rubber & Plastics, for example, may show relatively high travel intensity, but the industry is a small player in the U.K. economy. The opposite is true of sectors such as Education or Government.

Keeping with the U.K. example, we can also illustrate the notion of travel intensity over time. As previously mentioned, upward or downward trends in travel spend-per-revenue-dollar speak to the changing productivity of business travel as a

key production input. Examining the change in business travel's intensity in the Professional & Business Services industry, we note that travel intensity is trending down over the last decade. Travel is becoming a smaller portion of the

industry's total cost. Said differently, business travel's productivity is on the rise.

There are many possible reasons for the increase in travel productivity:

A reduction in travel prices relative to the price of other inputs and of wages

A rise in the length of stay of business trips, where business travelers are seeing more sales prospects, conducting more meetings, or

Source: HIS Global Insight, OECD, UN/WTO


attending more training sessions per trip.

Increased usage of business travel alternatives such as conference calls, Webcasts, and video conferencing.

Improvements in both the usage and quality of travel management. Through cost reductions and productivity improvements, travel management has added to the efficiency and contribution made by business travel.

A gradual change in the structure of the industry where, for example, companies begin to locate closer to their markets and/or supply chains.

IHS Global Insight has forecasted future changes in travel intensity for each industry. Using a combination of a number of secular and cyclical factors, we have generally continued the trends observed over the past decade across industries and countries. This was an important building block for the business travel spending projections presented in the next section.

GLOBAL BUSINESS TRAVEL OUTLOOK

The next section will cover the IHS Global Insight forecast for global business travel. Our view of the medium-term future of travel (2009-2013) is driven primarily by two fundamental factors: (1) our expectations for global macroeconomic performance and (2) the underlying contribution that business travel makes to each industry in each country. To establish our macroeconomic expectations through 2013, we have turned to IHS Global Insight's Country Intelligence Group's data, economic models, and country experts. This unit of IHS Global Insight monitors economic activity in over 200 countries and provides clients with daily analysis, ongoing risk assessments, and monthly forecasts.

Our view of the contribution of business travel to each country-sector combination has been established by analyzing trends in the business travel "purchasing" behavior of 48 sectors across 72 countries. Analyzing trends in the level of business travel spending per dollar of industry sales (or per employee) over time, IHS Global Insight was able to extend these factors out to 2013. The combination of the forecast of industry sales (macroeconomic environment) and the trend in business travel spending per dollar of sales (business travel intensity & productivity) was used to generate our projections.

We begin with a summary explanation of the global macroeconomic environment covering the current recession, the coming recovery, and growth prospects through 2013.

World Economic Outlook Summary

The global economy ran into a brick wall at the end of 2008. The advanced economies' strong downshift during 2008 has set up the global economy for its worst recession since World War II. The world economy's expansion has been going through a rough patch since mid-2007, when the lagged cumulative effect of monetary tightening around the world during the preceding several years finally dented the global housing boom, triggering a growing credit tightening and then outright crunch in advanced economies. World GDP growth has decelerated markedly, from a robust annualized growth rate of 4.7% in the second quarter of 2007 to a dismal contraction of 0.1% in the third quarter of 2008—which already was far below the global economy's long-term annual trend rate of 3.4%. Moreover, we estimate world

GDP contracted 6.0% in the fourth quarter and expect a further major contraction of similar magnitude in the first quarter of 2009. Economic conditions have deteriorated severely since mid-September because of an intensification of financial market turbulence and an unprecedented credit crunch in the global banking system. Although the sharp retreat of oil and


other primary commodities prices since last July is providing timely relief for both consumers and businesses, the price levels are likely to remain elevated compared with their long-term historical averages.

Moreover, the odds are that the global economy will continue to face major headwinds for some months as a result of the declines in global property markets and the tightening of lending standards by beleaguered financial institutions.

International trade is no longer supporting world growth. Until recently, international trade had been a key pillar of support for the global economy in general and raw-material-exporting economies and countries with undervalued currencies in particular. With nearly two-thirds of the world economy now in the midst of a major contraction, though, foreign trade has now become a drag for the global growth. IHS Global Insight expects world nominal merchandise exports to contract more than 23% in 2009. World trade could stabilize before the end of this year, but it is unlikely to make a full recovery to its normal pace of double global GDP growth before 2011.

The worst of the downturn is behind us. The global economy's recession, which intensified at an alarming pace in September 2008, has been moderating since March and appears to be nearing its end. Recent data releases are no longer as depressing as they were earlier this year, and there are increasing signs for at least a modest recovery during the second half of this year. Financial-market indicators, in particular, have been showing increasing signs of stabilisation for several months as credit conditions have started to loosen up and corporate bond spreads have narrowed, which are providing badly needed financial relief for beleaguered businesses.

Our latest bottom-up global economic forecast-which was started in late May and published in mid-June-resulted in a world GDP growth projection of -2.6% for 2009, which represents the world economy's most severe annual contraction in more than 60 years. To be sure, the world economy is still in a highly fragile state, with most investors still avoiding risky assets and market consensus anticipating a "great recession" for 2009. The downturn has been particularly acute in the case of industries, as aggregate global output is projected to decline by more than 10% during 2009. Latest national-account reports confirm that world GDP growth declined sharply for the second consecutive quarter in the first quarter of 2009.

Nevertheless, recent high-frequency data releases suggest that the rate of contraction has diminished in the second quarter, and there is now a good chance that we may see a modest rise in global GDP in the third quarter. The economies of Greater China and the United States are likely to lead the recovery among emerging markets and advanced economies, respectively, because of their diverse base, dynamic structure, and more flexible and competitive markets relative to their peers.

Given the unsettled condition of global credit markets, the world economy's deleveraging is likely to continue through late 2009. The severity of the financial market turmoil has already devastated the U.S. investment banking sector, severely depressed asset prices worldwide, and caught policymakers flatfooted. The global credit system has become highly dysfunctional. The entire subprime mortgage market remains effectively shut down, and more broadly, the structured credit markets are still in seizure. The volume of both outstanding asset-backed commercial paper and leveraged buy-out activity has fallen off dramatically. The number of initial public offerings (IPOs) has collapsed to near zero since the second quarter. Financial firms, which have been forced to write down trillions of dollars in bad debt since the second quarter of 2007, are finding it increasingly difficult to raise capital—in part because of the sharp drop in their share prices during the past two years and in part because their credit ratings have nosedived sharply. The strain on the financial system has engulfed the corporate sector, as reflected in rising corporate bond spreads, particularly in the high-yield segment.

World growth will not get above trend until the advanced economies' housing markets stabilize. The advanced economies are now in a very fragile state, as they have been dragged down by a protracted housing downturn and deleveraging in financial markets. Because of the huge share of these countries in the global economy, world quarterly GDP growth is now in the midst of a major contraction. IHS Global Insight now expects the downturn to engulf all economies, including emerging markets and less-developed countries, given their dependence on exporting to advanced economies.


Weak growth will keep financial markets volatile. The global financial system has already seen its capital base damaged by the U.S.-led housing and mortgage crisis, and the credibility of its institutions has come under question as a result of inadequate transparency and imprudent investment decisions. The deteriorating global economic outlook and uncertainties on the extent of damage to financial institutions' balance sheets will keep lending activity subdued, risky assets out of favor, and investors skittish for at least the next several months. The resulting deleveraging and disintermediation have already depressed global economic activity.

High oil prices represent another major risk for the global economy's growth prospects. During the past seven years, periodic spikes in global oil prices sapped economic recovery by dampening consumer confidence and discouraging businesses from adopting aggressive expansion plans. High oil prices were particularly harmful to energy-intensive sectors, such as transportation and some industrial-material-processing industries. The responsibility of oil prices for the global economy's momentum losses should not be exaggerated, though. Although oil prices undoubtedly shaved several tenths of a percentage point from the global economy's aggregate growth since 2004, their impact was far less severe compared with previous oil crises—particularly those of the 1970s and 1980s. Indeed, rising oil prices had relatively modest adverse effects on overall inflation during the last business cycle because of the global economy's lower oil intensity and lingering output gaps in many sectors, which greatly diminished the impact of high oil prices on core inflation. We take a specific look at the impact of oil prices on business travel in the U.S. Business Travel Forecast section of this report.

With oil prices having retreated by more than 60% during the second half of 2008, central banks have had substantial latitude for easing their monetary policies as much as they want. Nevertheless, some financial-market analysts continue to believe that oil remains in a long-term bull market and expect global crude prices to resume their upward advance.

The advanced economies' inflation upsurge is over. High oil and raw-material prices led to spikes in headline inflation throughout the world during 2007 and the first half of 2008, but core inflation rates remained relatively low, particularly among advanced economies and dynamic Asian economies. In any case, since mid-2008, the ongoing world growth deceleration, along with powerful deflationary pressures from the housing downturn, has weakened labor markets; constrained unit labor cost growth, and exerted downward pressure on the prices of housing and energy and other industrial raw materials. These developments have contained inflationary pressures and eased concerns about macroeconomic imbalances, as reflected in recent downward revisions to the inflation forecasts in surveys published by Consensus Economics

The good news is that real interest rates remain low, and monetary authorities have ample room for easing. The advanced economies' low core inflation rates suggest that monetary policy could heavily err on the accommodative side even if energy and raw material prices resumed their upward march over the coming months. By reducing the households' discretionary spending, any upward relative price shock from food, energy, or other industrial raw materials has a deflationary (rather than inflationary) effect on domestic demand. As a result, we do not expect any monetary tightening by major central banks before 2010.

As a result, global growth should rebound in 2010. Despite its current weakness, we expect the world economy to stabilize during the second half of 2009, thanks to the advanced economies' reflationary measures, and shift to a higher gear by mid-2010. Nevertheless, given the protracted nature of housing-market adjustments, world growth will likely be less robust over the next several quarters than during the past five years of the current business cycle.

Indeed, the anticipated global recovery could turn out to be unsustainable. Growth may falter again in 2010 or 2011, as many of the problems afflicting credit markets are deep rooted. Financial markets could remain vulnerable to periodic bouts of intense volatility and disruptive risk re-pricing. It may take additional, extraordinary policy action by policymakers, such as costly government bailouts of financial institutions and quantitative monetary easing, to get us out of the current rut and prevent a prolonged crisis.

A longer-than-anticipated housing downturn is now the global economy's worst nightmare. With housing assets extremely overvalued in many countries, the current housing-market adjustments could turn out to be a very protracted


process. A synchronous worldwide housing crash has the potential to unleash powerful global deflationary pressures for several years. With a growing list of countries already mired in housing-market downturns of various degrees of severity, financial markets are likely to remain at risk of further turmoil and disorderly price correction. If the housing-market downturn intensifies and spreads to other countries, we could be facing an escalating debt-asset deflation, the likes of which has not been experienced since the 1930s.

Global business profit and investment growth, which has decelerated intensely in line with nominal world GDP, will start to recover in the second half of 2009. The financial firms' profits will likely rebound first, from their current horrendous state, thanks to the central banks' rapid "steepening" of the yield curve. Non-financial firms' profit levels will also rebound soon after, as their drastic retrenchments reduce their costs, nominal global GDP stops contracting, and world aggregate demand begins to improve.

Bottom Line: The global economy is in the midst of a potentially dangerous crisis that may linger on beyond 2010 and has the potential to get a lot worse before it gets better. Furthermore, the anticipated recovery that is likely to start in 2010 may prove disappointing given that the primary source of the ongoing weakness is a deep and protracted correction in housing markets. Housing market downturns tend to be long-lasting processes that can go on for 5 to 10 years. With most banks continuing to tighten their lending standards for businesses as well as consumers, financial markets will remain jittery and vulnerable to periodic bouts of intense volatility and disruptive risk re-pricing. The stabilization of financial markets may require even more aggressive monetary easing and liquidity injections than we have seen so far—such as government takeovers of many more financial institutions (or their "toxic" debts). Indeed, given the severity of the distortions in asset markets as a result of the past several years' easy credit, the complete normalization of credit markets could take several years.

.

World Economy Annual Aggregate Forecast Numbers (Percent change from a year earlier, unless otherwise specified)

2006 2007 2008 2009 2010

Real GDP 4.1 4.0 2.2 -2.6 1.9

Nominal Per-Capita GDP (U.S. Dollars) 7,495 8,331 9,071 8,359 8,753

Industrial Production 4.3 4.0 -0.3 -10.1 3.5

Merchandise Exports (Bil. of U.S. Dollars) 11,600 13,432 15,481 11,452 12,277

Merchandise Imports (Bil. of U.S. Dollars) 11,475 13,205 15,183 12,073 12,879

Merchandise Exports (Share of World GDP) 23.9 24.6 25.7 20.4 20.7

Real Retail Sales 2.8 2.6 0.3 -2.2 1.8

Consumer Price Index 3.1 3.3 5.0 1.5 2.2

Wholesale Price Index 4.6 4.1 8.6 -4.6 1.4

Money Supply, M1, Year-end 6.9 6.9 4.6 10.8 4.6

Broad Money Supply, Year-end 9.0 10.2 9.7 6.2 6.7

Policy Interest Rate (Percent) 4.9 4.9 3.2 2.2 2.5

Short-Term Interest Rate (Percent) 4.9 5.4 5.0 3.3 3.1

Long-Term Interest Rate (Percent) 4.7 5.0 4.8 4.3 4.3

Fiscal Balance (Share of GDP) -0.9 -0.4 -2.0 -6.9 -5.9


GDP Growth for Key Regions (Annual compound growth rate, percent)

1998–2002 2003–2007 2008–2012

World 2.8 3.5 2.0

United States 2.6 2.5 1.6

Canada 3.5 2.4 2.0

Western Europe 2.2 2.1 0.2

European Union 2.3 2.3 0.3

Eurozone 2.1 2.0 0.1

United Kingdom 3.0 2.3 0.7

Asia-Pacific 3.5 5.0 3.9

Japan 0.9 1.6 0.4

Rest of Region 5.9 7.3 5.8

Australia 3.4 3.1 2.4

China 8.7 10.8 8.6

India 5.7 8.5 7.0

South Korea 6.3 4.2 2.4

Commonwealth of Ind. States 6.8 7.5 1.4

Central Europe & the Balkans 2.8 5.6 1.6

Latin America & the Caribbean 0.7 3.1 1.3

Middle East & North Africa 3.6 6.2 3.5

Sub-Saharan Africa 3.3 5.6 3.2

Implications for Global Business Travel In step with the rest of the global economy, the business travel market is expected to recover from the "Great Recession" beginning in late 2009. The recovery will be sluggish at best during the early phase of the economic rebound, with more rapid expansion not arriving until 2010 and 2011. The U.S. and China are expected to lead the way in economic recovery, as well as business travel spending expansion. The rest of the world will follow this lead later in 2010 and into 2011.


As mentioned earlier in the Global Business Travel Analysis section, the U.S. and the rest of the world are on dramatically different growth trajectories. The same will be true for the next five years as well. In part of reflection of the relative growth performance of the economies of the U.S. versus, say, China or India, but also due to the very slow pace of American companies' willingness to lift business travel restrictions. This will be driven by anemic improvements in corporate profit performance, where most of the early improvement will come from cost reductions rather than top line improvement.

The emerging growth picture for the U.S. is quite different than much of the rest of the world. Business travel spending in the U.S. will recover very slowly from the current recession. With a relatively weak outlook for both the top and bottom lines of corporate profit and loss statements, companies will be reluctant to add employees, purchase equipment,

and relax cost containment measures.

This is perhaps even truer of Western Europe, where deeper and longer-lasting housing and credit market problems paint a rather dim picture for business travel recovery. Moreover, the traditional European market is much more mature leaving less opportunity for quick gains. Meanwhile, emerging economies have the advantage of brighter long-term economic growth prospects. Many did not have a housing bubble to contend with, nor the need for massive deleveraging of consumer and business credit markets. Countries such as China, Brazil, and India were also able to implement significant stimulus packages to buoy their economies through the current recession. These packages, most with large infrastructure investment components, will help their economies recover more quickly as this global recession comes to an end beginning in late 2009.

The net is for a continuation of the trend of U.S. and Western European business travel spending growing more slowly than the rest of the world. At $262 billion in 2008, the U.S. market is estimated to grow to only $266 billion by 2013, a compounded growth rate of only 0.3% per year. The World, on the other hand, will expand from $929 billion in 2008 to $986 billion five years later. This represents growth of 1.2% per year. Consequently, the U.S. share of total business travel spending will fall from 28% in 2008 to 27% by 2013.

While virtually every country will participate in what IHS Global Insight calls "The Great Recession", some will fair better than others. Such was the case during the peak years of the last expansion period as well. In business travel spending, countries such as China, Russia, India and the United Kingdom all outpaced the U.S. on an annual growth basis. Indeed, many of these countries were not significantly impacted by the 2001 recession. Yet, each experienced a dramatic curtailment in business travel growth beginning as early as mid 2007. During 2008, the United

Source: IHS Global Insight, NBTA


States had already experienced a decline in business travel well in advance of the rapid decay in many of the key economic indicators –largely a fourth quarter phenomena. By early 2009, every significant business travel market was experiencing year-over-year declines.

The rather dramatic "V" shaped recession depicted below assumes a market bottom in late 2009. It will be 2010, even 2011 for some countries, before growth rates turn positive, however. Said differently, key business travel markets will recover from the "Great Recession", but the global recovery will be more tepid. Repairing the damage done to global housing and credit markets will take time. Still, the good news is that the Great Recession will end and growth markets will return.

Growth in Business Travel Spendingincludes Domestic and Outbound International Trips

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Yr-to

-Yr P

erce

nt

ChinaIndiaUnited StatesUnited KingdomGermanyRussiaWorld Total

Source: IHS Global Insight, NBTA, OECD, UN/WTO, Various Ministries of Commerce & Tourism


GLOBAL BUSINESS TRAVEL SPENDING GROWTH: 2008-2013 Change in Business Travel Spending $$ Through 2013

(in billions of current U.S.$)

Depending upon the definition of business travel growth through 2013, the world picture looks quite different. Basing the definition on the increase in the level of business travel spending (above), North America and Asia are the dominant regions. Changing the perspective to the rate of growth (below) suggests a different spatial view of the globe. Latin America, Eastern Europe, Asia, and the Middle East appear more favorable.

GLOBAL BUSINESS TRAVEL SPENDING GROWTH: 2008-2013 COMPOUND ANNUAL GROWTH RATE IN %


TOP 15 & BOTTOM 15 GLOBAL BUSINESS TRAVEL GROWTH MARKETS: Ranked on Change in Business Travel Spending $$ Through 2013

(all figures in millions of current U.S.$ unless otherwise noted)

China leads the way in business travel spending growth through 2013. The combination of torrid economic growth and the sheer size of its business travel market push China to the top of the list. China's significant economic stimulus measures implemented early on in the current global recession are already bearing fruit. Infrastructure investment and consumption support were key platforms of the stimulus. Both will lead to greater business travel, particularly domestic trips, as their economy recovers.

Source: HIS Global Insight, NBTA, OECD, UN/TWO, various Ministries of Commerce & Tourism


The U.S. comes in at #4 on the business travel dollar growth rankings, based upon size and a relatively early start at economic recovery. The recovery will begin as soon as the second half of 2009, yet will be slow by past standards. Expected to grow a relatively slow rate (0.3% per year) through 2013, the U.S. will still add more than $4.2 billion in business travel spending.

India, like China, is expected to return to its earlier position as a global growth leader. India's economy is less dependent on export markets than China. Government stimulus efforts in India also focused on domestic demand support. This will lead to more growth in domestic business travel activity in the short-to-medium term.

Japan will show surprising business travel resilience as their economy awakens from a long sleep. Improvements in domestic business activity and eventual recovery in export markets will drive more business travel. Japan's business travel market is already large and is expected in increase over 3.3% per year through 2013.

Korea, Indonesia, Malaysia, Hong Kong, and Taiwan will rebound quickly as global export markets begin to thaw. Recovery in their international and, in some cases, domestic business travel markets will quickly follow suit. The size of their existing business travel markets coupled with expectations for a return to above-trend economic growth places them all on the Top 15 list.

Emerging European markets, likewise, will shake off the current recession and begin to recover in 2010. Commodity market improvements, as well as export recovery, will get business travel spending growth back on track. Markets such as the Czech Republic, Romania, and Hungary are already large enough to make some noise on the country business travel hit parade. Economic growth expectations guarantee that they will continue to rise.

Iran makes the Top 15 list based upon its size and growth over the past decade. Domestic business travel is already significant in this market, and international outbound has expanded despite longstanding economic sanctions. Still, Iran's political situation is a significant risk. Instability could erase business travel gains almost overnight, particularly if the situation boils over.

A less robust and somewhat delayed economic recovery in much of Western Europe push many of its business travel markets into the Bottom 15 list, at least through 2013. The housing crisis in the U.K., Spain, and Ireland, among others, is much worse than in the U.S. and, unfortunately, still has a long way to go. Moreover, the banking and financial crisis is actually more acute and potentially damaging in Western Europe. Finally, longer-term systemic issues such as an aging population, labor market problems, and lower investment spending will continue to hamper growth in business travel spending in this part of the world.

Germany and Italy make the Bottom 15 list primarily due to export dependence and sluggish domestic demand. Both countries have significant domestic business travel markets, particularly relative to the rest of Western Europe. Both countries are expected to be relatively late in the sequence of economic recovery and, as a result, show a loss in business travel spending through 2013.

Russia's dependence upon commodity exports, particularly oil and natural gas, puts it at the bottom of the list through 2013. It will recover from the current recession, but it will be among the last countries to commence its rebound. Domestic and international business travel will begin to grow again, but too late to spare Russia the dubious distinction of being at the bottom of the 2008-2013 list.

Transposing our view of business travel markets, IHS Global Insight can also evaluate the prospects for travel spending across global industry sectors. From the vantage point of industries, the pace of recovery from the current recession is very much a function of which countries dominate the sector and the amount to which economic stimulus package funds flow to that sector. For example, infrastructure investment in China, India, and the U.S. will propel sectors such as Government, Construction, Utilities, and Education to the top of the list. On the other hand, continuing problems in the global Banking & Financial sectors prevent it from making the Top 20.


TOP 20 GLOBAL GROWTH SECTORS THROUGH 2013:

Ranked on Change in Business Travel Spending $$ Through 2013

From a business travel spending perspective, Government is clearly participating in the current recession. Because of its key role in leading many countries out of of recession, Government business travel growth in 2010 will be among the highest. Likewise, for Education. Taken over the five-year period 2009-2013, Government (federal and local) will show the largest level increase in business travel spending.

Sectors such as Utilities, Food Processing & Services, and Education make the list for two key reasons. First, they exist in virtually every country and have a scale correlated with the size/growth of population. Secondly, recovery from the global recession will be led by these industries. Government stimulus money has poured into infrastructure development, propelling these sectors out of the recovery gate sooner.

Notable industries missing from this list include Banking & Finance and Profession & Business Services. While these sectors are relatively travel-intense, the depth of their declines and the slower pace of their expected recoveries keep them just below the cutoff of the Top 20 list. Business travel spending for these industries, as well as for Wholesale Trade, will grow during this recovery, just not enough to break into the Top 20. In the case of Banking & Finance, despite average annual growth of 1.6% per year through 2013, the magnitude of the decline during this recession unfortunately prevents a return to the previous peak.

The prospects and rankings for many of these sectors changes dramatically as one moves from country to country. To illustrate this point, the next section takes each of the Top 20 business travel country markets and dives deeper into the issue of industry-by-industry performance over the next five years.

Source: IHS Global Insight, NBTA, OECD, various Ministries of Commerce, Statistics, & Tourism


Which sectors represent the best targets? From a purely external perspective, the short answer is those that are:

(1) organically growing their own lines of business at home and abroad,

(2) are already business travel-intense, and

(3) are expected to grow that intensity over the next few years.

Once way to depict the distribution of sectors across these key criterion is to use a "dogs-and-stars" scatter plot. Dispersing the industries across business travel spending size (2008) and growth (2008-2013 CAGR%) suggests their relative position and potential attractiveness as a target market.

All of the sectors falling in the "Stars" quadrant are already notably large spenders on business travel. They are also expected to grow that spending over the next five years. We have already mentioned Utilities and Construction, but other sectors such as Communications Services, Transportation Services, and Chemicals also deserve consideration. Motor Vehicles is perhaps the most notable "Lower Priority" quadrant. For one, this industry is not a large user of business travel. Moreover, its global market challenges are already well-known. Notable sectors in the "Emerging" quadrant include Computer Manufacturing, Instrumentation, and Industrial Machinery.

Banking & Finance, Business Services, and Wholesale Trade find themselves in the "Mature" quadrant. We already know them to be very travel-intense. The challenge lies in their ability (and pace) to recover from the current recession and grow business travel through 2013.

Global Business Travel Target Markets 2008-2013

UtilitiesFood Processing and Services

Real EstateProfessional & Business

Services GovernmentTransportation ServicesWholesale Trade

Construction Communications ServicesBank ing & Finance

Equipment Rental & LeasingAgriculture, Hunting, Forestry,

FishingPetroleum RefiningRubber & Plastic Manufacturing

Non-Metallic Mineral ProductsHotels & RestaurantsFabricated Metal Products Paper & Paper ProductsChemicals & Chemical

ProductsPrinting & Publishing Communication Equipment

Transportation EquipmentComputer Service & Related

ActivitiesRetail TradeElectrical Machinery &

ApparatusTextiles Industrial Machinery & EquipmentBasic Metals Manufacturing

Wood & Wood ProductsOther Manufacturing

Motor Vehicles Medical, Precision & Optical Instruments

RecyclingOffice, Accounting & Computing

Machinery Apparel

Leather & Leather Products$1,000

$10,000

$100,000

-4.0% -2.0% 0.0% 2.0% 4.0% 6.0%

2008-2013 Growth (CAGR%) in Business Travel Spending

2008

Bus

ines

s Tr

avel

Spe

ndin

g in

Milli

ons

of C

urre

nt U

S$

EEmmeerrggiinngg LLoowweerr PPrriioorriittyy

MMaattuurree SSttaarrss


The Outlook for the Top 20 Global Travel Markets

The next section of the report presents the results of IHS Global Insight's business travel spending analysis and projections for the top twenty (20) global markets. For each of these 20 countries, we have presented a snapshot of the business travel market through the inclusion of:

1. A brief overview of the macroeconomic environment provided by IHS Global Insight's Country Intelligence Group,

2. A chart showing the history of total business travel spending in that country, as well as our projection through 2013,

3. A table illustrating our estimates of business travel spending by industry within that country, and

4. A table ranking business travel market opportunities by industry. The table takes a "dogs-and-stars" view of both the current size of business travel in the industry and its growth prospects through 2013. The most desirable opportunities are those with large current levels of business travel spending and good prospects for future growth. The industries are allocated to the following four categories of market opportunity based upon their dispersion around the means of both business travel measures:

Low Priority –those industries with either low levels of business travel, lower growth expectations, or both

Mature –industries with relatively large levels of current business travel spending, but have less robust future growth prospects are classified as more mature.

Emerging –industries with excellent growth prospects, but relatively smaller current levels of business travel spending are placed in this category.

Stars –these are industries with both large current levels of business travel spending and relatively strong prospects for future growth.

Chart and table sources are (unless otherwise noted) from IHS Global Insight, NBTA, OECD, UN/WTO, and country-specific Ministries of Commerce, Statistics, and Tourism


Australia

Economic Outlook Inventories, investment, and consumer spending all continue to decline. IHS Global Insight subsequently expects

the economy will experience a contraction of around 0.6% in 2009 as the lagged, full impact of the downturn unfurls from the second quarter onwards.

In anticipation of a potential economic slowdown, authorities have dramatically loosened monetary and fiscal policy. Spending programs include direct cash disbursals for low- and middle-income households for employment generation and support for first-time buyers in the real estate market.

Australian banks are marked for their high levels of capitalization and more conservative lending practices. Nevertheless, rapidly rising unemployment and growing income insecurity could offset the positive impact of looser credit.

BUSINESS TRAVEL SPENDING, AUSTRALIA (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS AUSTRALIA

Total Sales Business Travel Spending

Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $131,683 7.7% $1,602.6 9.2% 8.2% -25.9% 2.3% 1.8% $152.76 Education $77,916 4.6% $288.8 1.7% 11.1% -15.3% 9.9% 8.1% $136.81 Government $84,424 4.9% $934.3 5.4% 6.9% -20.0% 3.7% 1.9% $92.50 Social & Personal Services $44,642 2.6% $903.9 5.2% 7.8% -27.8% 1.9% 0.6% $27.85 Rubber & Plastic Manufacturing $7,756 0.5% $224.0 1.3% 4.2% -26.3% 1.9% 1.7% $19.95 Communications Services $47,840 2.8% $771.1 4.4% 5.7% -25.9% 1.2% 0.4% $16.39 Industrial Machinery & Equipment $11,966 0.7% $52.7 0.3% 7.9% -22.2% 0.7% 2.6% $7.16 Paper & Paper Products $6,989 0.4% $171.0 1.0% 7.4% -27.9% 1.3% 0.6% $5.57 Medical, Precision & Optical Instruments $2,965 0.2% $32.0 0.2% 9.7% -21.9% 3.1% 2.1% $3.59 Transportation Equipment $6,804 0.4% $88.9 0.5% 3.4% -24.5% 1.6% 0.6% $2.79 Mining $134,670 7.9% $22.2 0.1% 24.8% -27.5% 1.7% 1.7% $1.94 Hotels & Restaurants $29,122 1.7% $227.9 1.3% 4.7% -26.3% 1.1% 0.1% $1.33 Electrical Machinery & Apparatus $6,152 0.4% $66.5 0.4% 9.0% -25.0% -0.7% 0.0% $0.14 Private Households Employees $2,472 0.1% $0.0 0.0% 11.6% -15.9% 12.7% 11.3% $0.03 Leather & Leather Products $441 0.0% $2.7 0.0% 6.1% -21.7% -0.8% -0.3% -$0.04 Office, Accounting & Computing Machinery $848 0.0% $3.1 0.0% -0.1% -26.7% 0.1% -1.7% -$0.25 Apparel $2,177 0.1% $13.4 0.1% 4.1% -22.6% -0.6% -0.8% -$0.53 Health & Social Work $113,950 6.7% $6.1 0.0% -3.3% -52.2% 21.7% -3.7% -$1.05 Wood & Wood Products $7,394 0.4% $138.0 0.8% 6.3% -27.9% 0.8% -0.3% -$1.98 Textiles $3,199 0.2% $55.8 0.3% 1.2% -27.2% -0.9% -0.7% -$2.04 Total $1,709,747 100% $17,457 100% 6.4% -27.5% 0.4% -0.7% -$571.39


BUSINESS TRAVEL WINNERS AND LOSERS AUSTRALIA

Industry Business Travel

Spending (2008, mn US$)

Business Travel Spending

(CAGR, 2009-2013)

Industry Status

Real Estate $1,602.6 1.8% Star Transportation Services $1,241.6 -0.1% Star Government $934.3 1.9% Star Social & Personal Services $903.9 0.6% Star Communications Services $771.1 0.4% Star

Education $288.8 8.1% Emerging Hotels & Restaurants $227.9 0.1% Emerging Rubber & Plastic Manufacturing $224.0 1.7% Emerging Paper & Paper Products $171.0 0.6% Emerging Wood & Wood Products $138.0 -0.3% Emerging Transportation Equipment $88.9 0.6% Emerging Electrical Machinery & Apparatus $66.5 0.0% Emerging Industrial Machinery & Equipment $52.7 2.6% Emerging Medical, Precision & Optical Instruments $32.0 2.1% Emerging Mining $22.2 1.7% Emerging Leather & Leather Products $2.7 -0.3% Emerging Private Households Employees $0.0 11.3% Emerging

Utilities $1,507.6 -0.6% Mature Professional & Business Services $1,333.7 -3.0% Mature Food Processing and Services $1,278.4 -1.0% Mature Construction $945.5 -1.1% Mature Banking & Finance $872.6 -3.5% Mature Wholesale Trade $816.7 -2.7% Mature Equipment Rental & Leasing $715.5 -2.3% Mature Agriculture, Hunting, Forestry, Fishing $547.9 -0.6% Mature Research & Development Services $530.4 -3.1% Mature

Fabricated Metal Products $369.7 -3.4% Low Priority Non-Metallic Mineral Products $336.5 -3.1% Low Priority Printing & Publishing $274.9 -3.7% Low Priority Retail Trade $206.8 -1.2% Low Priority Petroleum Refining $204.4 -1.1% Low Priority Computer Service & Related Activities $199.2 -2.4% Low Priority Basic Metals Manufacturing $130.7 -4.7% Low Priority Other Manufacturing $117.9 -2.3% Low Priority Chemicals & Chemical Products $98.3 -1.3% Low Priority Communication Equipment $63.5 -1.2% Low Priority Textiles $55.8 -0.7% Low Priority Motor Vehicles $48.1 -1.6% Low Priority Apparel $13.4 -0.8% Low Priority Recycling $12.2 -5.1% Low Priority Health & Social Work $6.1 -3.7% Low Priority Office, Accounting & Computing Machinery $3.1 -1.7% Low Priority

Total $17,456.9 -0.7% Mature


Austria

Economic Outlook Economic growth will become sharply negative in 2009 and take long to recover due to persisting global financial-

market turbulences triggered by the U.S. subprime crisis, substantial euro appreciation, and weakened consumer purchasing power.

Inflation will be very soft in coming months and is expected to rise to 1.1% in 2010. As domestic demand continues to suffer from rising unemployment, the debate will rather shift toward deflation risks—although IHS Global Insight still regards such fears as overblown.

Political uncertainty will remain elevated after the collapse and resurrection of the grand coalition government and the strengthening of the far right in the September 2008 polls.

BUSINESS TRAVEL SPENDING, AUSTRIA (Millions of US$)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS AUSTRIA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Utilities $35,068 4.6% $1,459.5 15.6% 8.7% -13.6% 3.7% -30.2% $89.71 Education $23,463 3.1% $87.0 0.9% 7.7% -3.2% 11.1% 7.7% $38.93 Rubber & Plastic Manufacturing $8,073 1.1% $233.1 2.5% 7.6% -14.5% 3.4% 2.4% $29.90 Industrial Machinery & Equipment $30,234 4.0% $133.1 1.4% 12.2% -8.6% 3.9% 4.0% $28.44 Real Estate $51,754 6.8% $629.9 6.7% 6.9% -14.3% 1.6% 0.7% $22.79 Paper & Paper Products $8,663 1.1% $211.9 2.3% 6.2% -16.8% 3.6% 1.7% $18.95 Electrical Machinery & Apparatus $10,217 1.3% $110.4 1.2% 9.1% -10.1% 3.7% 3.0% $17.70 Government $31,132 4.1% $344.5 3.7% 1.8% -9.0% 3.3% 0.8% $14.16 Medical, Precision & Optical Instruments $3,715 0.5% $40.1 0.4% 9.5% -9.1% 5.8% 3.9% $8.53 Wood & Wood Products $11,185 1.5% $208.8 2.2% 7.8% -18.1% 3.1% -52.9% $8.47 Chemicals & Chemical Products $15,358 2.0% $65.7 0.7% 7.8% -18.2% 2.7% 0.2% $0.79 Communications Services $15,271 2.0% $246.1 2.6% 5.6% -13.8% 1.0% 0.1% $0.73 Mining $3,689 0.5% $0.7 0.0% 14.9% -15.1% 3.5% 1.6% $0.06 Private Households Employees $124 0.0% $0.0 0.0% 6.1% -3.7% 12.7% 10.1% $0.00 Office, Accounting & Computing Machinery $194 0.0% $0.7 0.0% -0.9% -19.4% -3.4% -3.8% -$0.12 Leather & Leather Products $981 0.1% $6.0 0.1% 7.7% -8.3% -0.1% -0.5% -$0.15 Health & Social Work $34,031 4.4% $1.8 0.0% -7.0% -44.7% 22.5% -3.7% -$0.31 Apparel $1,006 0.1% $6.2 0.1% 4.5% -10.9% -0.5% -1.6% -$0.48 Recycling $906 0.1% $10.0 0.1% 16.8% -27.6% 4.2% -1.8% -$0.88 Motor Vehicles $19,299 2.5% $45.1 0.5% 10.7% -21.6% -0.1% -0.6% -$1.25 Total $764,839 100% $9,370 100% 5.5% -16.0% 1.5% -0.4% -$184.78


BUSINESS TRAVEL WINNERS AND LOSERS AUSTRIA




(CAGR, 2009-2013)

Industry Status

Professional & Business Services $680.2 -3.2% Star Real Estate $629.9 0.7% Star Food Processing and Services $577.6 -0.2% Star Social & Personal Services $507.0 -0.1% Star Construction $389.8 -1.3% Star Equipment Rental & Leasing $350.7 -2.2% Star Government $344.5 0.8% Star Banking & Finance $276.0 -3.5% Star Communications Services $246.1 0.1% Star Fabricated Metal Products $239.7 -1.9% Star Rubber & Plastic Manufacturing $233.1 2.4% Star Non-Metallic Mineral Products $229.6 -3.1% Star

Hotels & Restaurants $218.5 -0.4% Emerging Paper & Paper Products $211.9 1.7% Emerging Agriculture, Hunting, Forestry, Fishing $138.6 -2.3% Emerging Industrial Machinery & Equipment $133.1 4.0% Emerging Electrical Machinery & Apparatus $110.4 3.0% Emerging Printing & Publishing $101.0 -3.1% Emerging Petroleum Refining $97.7 -1.6% Emerging Computer Service & Related Activities $96.2 -3.1% Emerging Other Manufacturing $92.7 -1.7% Emerging Retail Trade $92.2 -1.3% Emerging Education $87.0 7.7% Emerging Communication Equipment $80.6 -1.2% Emerging Basic Metals Manufacturing $73.5 -1.9% Emerging Chemicals & Chemical Products $65.7 0.2% Emerging Textiles $50.4 -1.3% Emerging Motor Vehicles $45.1 -0.6% Emerging Medical, Precision & Optical Instruments $40.1 3.9% Emerging Research & Development Services $11.5 -3.6% Emerging Recycling $10.0 -1.8% Emerging Apparel $6.2 -1.6% Emerging Leather & Leather Products $6.0 -0.5% Emerging Health & Social Work $1.8 -3.7% Emerging Mining $0.7 1.6% Emerging Office, Accounting & Computing Machinery $0.7 -3.8% Emerging Private Households Employees $0.0 10.1% Emerging

Utilities $1,459.5 -30.2% Mature Transportation Services $660.5 -41.5% Mature Wholesale Trade $508.4 -46.0% Mature

Wood & Wood Products $208.8 -52.9% Low Priority Transportation Equipment $57.1 -64.1% Low Priority

Total $9,370.3 -0.4% Star


Belgium

Economic Outlook Belgian GDP is projected to contract 3.3% in 2009 after growing 1.0% in 2008 which is largely due to a

deteriorating export market critical to the country’s overall economic performance.

The current financial market crisis and very tight lending conditions will restrict consumer spending in the near term. In addition, the labor market is being hit by the current global economic downturn, and we expect employment to decline in 2009.

Fiscal policy will continue to be restricted by the country’s high levels of public debt. We expect the Belgian government budget to slip into negative territory in 2009–10, following six years of persistently balanced budgets.

BUSINESS TRAVEL SPENDING, BELGIUM (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS BELGIUM


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Education $34,366 3.0% $134.5 1.0% 8.1% -2.8% 12.0% 7.9% $62.58 Rubber & Plastic Manufacturing $10,516 0.9% $320.7 2.3% 6.0% -16.1% 5.0% 2.2% $36.74 Government $45,055 3.9% $526.7 3.8% 4.4% -9.4% 5.0% 1.2% $32.59 Real Estate $55,610 4.8% $714.9 5.2% 5.1% -16.6% 3.3% 0.7% $26.11 Food Processing and Services $48,595 4.2% $1,233.4 9.0% 2.3% -14.6% 3.7% 0.3% $20.65 Industrial Machinery & Equipment $19,583 1.7% $91.0 0.7% 9.7% -9.6% 5.1% 3.9% $19.29 Electrical Machinery & Apparatus $8,094 0.7% $92.4 0.7% 6.1% -13.1% 3.5% 1.9% $8.94 Social & Personal Services $24,840 2.1% $531.3 3.9% 5.9% -17.4% 3.7% 0.3% $7.95 Construction $78,184 6.7% $585.6 4.3% 5.9% -17.5% 3.6% 0.3% $7.44 Medical, Precision & Optical Instruments $3,219 0.3% $36.7 0.3% 12.0% -10.9% 7.5% 3.7% $7.28 Paper & Paper Products $5,977 0.5% $154.5 1.1% 5.7% -18.7% 4.1% 0.9% $7.13 Transportation Equipment $3,108 0.3% $42.9 0.3% 3.4% -10.1% 7.0% 3.1% $7.00 Leather & Leather Products $543 0.0% $3.5 0.0% 9.9% -4.4% 4.1% 1.9% $0.34 Mining $1,587 0.1% $0.6 0.0% 14.0% -15.2% 7.2% 3.7% $0.12 Private Households Employees $1,305 0.1% $0.0 0.0% 6.1% -3.8% 15.5% 11.1% $0.02 Office, Accounting & Computing Machinery $331 0.0% $1.3 0.0% 5.6% -15.6% -0.1% -1.9% -$0.12 Health & Social Work $52,622 4.5% $3.0 0.0% -6.1% -45.7% 22.7% -4.2% -$0.57 Motor Vehicles $28,125 2.4% $69.5 0.5% 4.1% -20.9% 3.8% -0.3% -$0.95 Apparel $1,920 0.2% $12.4 0.1% 3.1% -12.7% 0.7% -1.6% -$0.99 Wood & Wood Products $4,706 0.4% $92.8 0.7% 7.6% -20.5% 3.4% -0.2% -$1.01 Total $1,164,142 100% $13,766 100% 5.1% -20.0% 3.1% -0.9% -$608.81


BUSINESS TRAVEL WINNERS AND LOSERS BELGIUM




(CAGR, 2009-2013)

Industry Status

Food Processing and Services $1,233.4 0.3% Star Real Estate $714.9 0.7% Star Construction $585.6 0.3% Star Social & Personal Services $531.3 0.3% Star Government $526.7 1.2% Star

Rubber & Plastic Manufacturing $320.7 2.2% Emerging Hotels & Restaurants $157.2 -0.2% Emerging Paper & Paper Products $154.5 0.9% Emerging Education $134.5 7.9% Emerging Wood & Wood Products $92.8 -0.2% Emerging Electrical Machinery & Apparatus $92.4 1.9% Emerging Industrial Machinery & Equipment $91.0 3.9% Emerging Motor Vehicles $69.5 -0.3% Emerging Transportation Equipment $42.9 3.1% Emerging Medical, Precision & Optical Instruments $36.7 3.7% Emerging Leather & Leather Products $3.5 1.9% Emerging Mining $0.6 3.7% Emerging Private Households Employees $0.0 11.1% Emerging

Professional & Business Services $1,828.8 -2.4% Mature Transportation Services $1,263.9 -1.0% Mature Petroleum Refining $982.0 -1.5% Mature Wholesale Trade $919.7 -2.6% Mature Utilities $831.5 -1.4% Mature Banking & Finance $455.0 -3.3% Mature Equipment Rental & Leasing $386.6 -1.9% Mature Communications Services $357.5 -0.8% Mature

Non-Metallic Mineral Products $313.6 -2.6% Low Priority Fabricated Metal Products $278.2 -2.8% Low Priority Chemicals & Chemical Products $270.8 -0.6% Low Priority Retail Trade $161.5 -1.2% Low Priority Textiles $152.0 -0.7% Low Priority Computer Service & Related Activities $143.9 -3.1% Low Priority Basic Metals Manufacturing $142.8 -3.3% Low Priority Printing & Publishing $137.9 -4.0% Low Priority Agriculture, Hunting, Forestry, Fishing $111.2 -1.7% Low Priority Other Manufacturing $76.9 -3.8% Low Priority Recycling $56.5 -4.0% Low Priority Communication Equipment $47.0 -2.9% Low Priority Research & Development Services $43.9 -2.9% Low Priority Apparel $12.4 -1.6% Low Priority Health & Social Work $3.0 -4.2% Low Priority Office, Accounting & Computing Machinery $1.3 -1.9% Low Priority

Total $13,766.1 -0.9% Mature


Brazil

Economic Outlook Brazil will come out of the recession earlier than most countries in the developed world helped by domestic

demand, strong fiscal stimulus, expansionary monetary policy, and credit availability.

The central bank will continue to take measures to avoid a liquidity crisis by guaranteeing the availability of credit for banks and corporations. We expect commodity prices to show high volatility, although revolving around current levels.

A trade surplus is anticipated for the foreseeable future even though exports are expected to drop 21% and imports contract 18% thus keeping the trade balance in positive territory at around US$15 billion.

BUSINESS TRAVEL SPENDING, BRAZIL (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS BRAZIL


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Education $80,708 3.2% $202.2 1.0% 4.6% -8.6% 14.9% 7.3% $84.74 Mining $69,543 2.7% $14.6 0.1% 22.0% -19.4% 6.8% 1.2% $0.90 Private Households Employees $1,421 0.1% $0.0 0.0% 4.1% -8.8% 16.4% 8.8% $0.01

Health & Social Work $62,590 2.5% $2.3 0.0% -

10.0% -48.5% 25.3% -5.4% -$0.55 Medical, Precision & Optical Instruments $6,474 0.3% $47.3 0.2% 10.5% -22.1% 6.8% -0.9% -$2.04 Industrial Machinery & Equipment $68,168 2.7% $202.8 1.0% 11.1% -21.7% 5.2% -0.6% -$5.62 Electrical Machinery & Apparatus $22,648 0.9% $165.4 0.8% 9.4% -20.6% 5.0% -0.7% -$5.93 Office, Accounting & Computing Machinery $6,985 0.3% $17.3 0.1% 9.4% -32.0% -0.6% -8.6% -$6.28 Recycling $3,462 0.1% $25.9 0.1% 8.6% -41.3% 4.4% -7.7% -$8.54 Apparel $12,539 0.5% $52.0 0.3% 9.8% -22.4% 3.1% -4.1% -$9.73 Leather & Leather Products $12,207 0.5% $50.6 0.3% 11.9% -24.1% 2.4% -4.4% -$10.18 Wood & Wood Products $8,212 0.3% $103.6 0.5% 8.7% -29.3% 5.7% -66.3% -$16.03 Hotels & Restaurants $42,082 1.7% $222.6 1.1% 3.9% -21.7% 5.7% -1.5% -$16.60 Real Estate $99,482 3.9% $818.5 4.0% 2.4% -18.9% 5.6% -0.4% -$17.62 Retail Trade $89,767 3.5% $158.2 0.8% 4.0% -20.6% 4.1% -2.5% -$18.83 Paper & Paper Products $29,488 1.2% $487.7 2.4% 9.3% -24.8% 6.6% -0.8% -$18.88 Computer Service & Related Activities $17,387 0.7% $107.8 0.5% -3.6% -22.0% 2.2% -4.1% -$20.16 Transportation Equipment $22,775 0.9% $201.1 1.0% 11.6% -24.1% 5.5% -2.3% -$21.96 Textiles $15,912 0.6% $187.5 0.9% 5.9% -25.8% 2.7% -3.6% -$31.69 Other Manufacturing $15,012 0.6% $116.6 0.6% 3.6% -31.8% 1.5% -6.6% -$33.67 Total $2,547,658 100% $20,230 100% 4.0% -24.4% 5.0% -2.5% -$2,439.69


BUSINESS TRAVEL WINNERS AND LOSERS BRAZIL




(CAGR, 2009-2013)

Industry Status

Food Processing and Services $2,755.0 -3.0% Star Utilities $2,643.4 -2.3% Star Government $1,400.8 -0.7% Star Transportation Services $1,143.4 -1.9% Star Communications Services $1,098.3 -1.1% Star Agriculture, Hunting, Forestry, Fishing $1,054.8 -2.6% Star Petroleum Refining $860.1 -3.4% Star Real Estate $818.5 -0.4% Star Social & Personal Services $643.2 -1.2% Star Construction $636.7 -3.8% Star Banking & Finance $609.5 -4.4% Star Rubber & Plastic Manufacturing $592.1 -1.8% Star Paper & Paper Products $487.7 -0.8% Star

Equipment Rental & Leasing $379.9 -3.6% Emerging Chemicals & Chemical Products $357.8 -3.3% Emerging Hotels & Restaurants $222.6 -1.5% Emerging Industrial Machinery & Equipment $202.8 -0.6% Emerging Education $202.2 7.3% Emerging Transportation Equipment $201.1 -2.3% Emerging Textiles $187.5 -3.6% Emerging Electrical Machinery & Apparatus $165.4 -0.7% Emerging Retail Trade $158.2 -2.5% Emerging Computer Service & Related Activities $107.8 -4.1% Emerging Apparel $52.0 -4.1% Emerging Leather & Leather Products $50.6 -4.4% Emerging Medical, Precision & Optical Instruments $47.3 -0.9% Emerging Mining $14.6 1.2% Emerging Private Households Employees $0.0 8.8% Emerging

Professional & Business Services $719.5 -4.7% Mature Non-Metallic Mineral Products $535.2 -5.0% Mature Wholesale Trade $516.8 -4.7% Mature

Research & Development Services $285.6 -5.5% Low Priority Fabricated Metal Products $185.4 -5.4% Low Priority Printing & Publishing $165.8 -5.6% Low Priority Motor Vehicles $163.1 -5.0% Low Priority Basic Metals Manufacturing $153.5 -8.7% Low Priority Communication Equipment $145.9 -6.2% Low Priority Other Manufacturing $116.6 -6.6% Low Priority Wood & Wood Products $103.6 -66.3% Low Priority Recycling $25.9 -7.7% Low Priority Office, Accounting & Computing Machinery $17.3 -8.6% Low Priority Health & Social Work $2.3 -5.4% Low Priority

Total $20,230.0 -2.5% Star


Canada

Economic Outlook Growth is falling sharply and with poor outlook for the second quarter, IHS Global Insight forecasts a 2.3%

contraction in 2009.

Inflation has been abating in Canada over the past few months because of the weakening economy but is expected to rebound closer to the Bank of Canada's 2% target in 2010. We expect this downward pressure on prices to persist throughout the year, as the economy contracts through mid-year and excess supply increases as the output gap widens.

The Canadian dollar has steadily drifted up with commodity prices remaining a key factor. The Canadian dollar's current slow advance is due in large part to the climb in the price of oil, as well as the recent increase in natural gas prices. As oil prices recover from their current lows, the dollar is likely to appreciate.

BUSINESS TRAVEL SPENDING, CANADA (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS CANADA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $179,948 6.7% $1,608.9 8.1% 6.7% -12.1% 16.2% 5.9% $538.37 Government $198,435 7.4% $1,613.3 8.1% 5.3% -9.6% 16.6% 5.5% $498.66 Social & Personal Services $76,484 2.9% $1,137.7 5.7% 7.2% -13.4% 16.0% 5.3% $336.87 Utilities $45,086 1.7% $1,378.5 6.9% 4.7% -18.2% 14.5% -39.6% $227.34 Food Processing and Services $84,364 3.2% $1,489.1 7.5% 3.0% -13.5% 13.7% 2.7% $210.42 Education $86,976 3.3% $236.8 1.2% 9.9% -2.7% 24.9% 13.1% $200.87 Communications Services $58,271 2.2% $689.9 3.5% 6.5% -12.5% 14.3% 4.6% $174.63 Transportation Services $105,851 4.0% $949.7 4.8% 5.7% -20.1% 14.2% -43.9% $159.33 Construction $222,373 8.3% $1,158.4 5.8% 9.1% -18.8% 13.4% 2.6% $157.30 Rubber & Plastic Manufacturing $26,302 1.0% $558.0 2.8% 7.6% -23.5% 16.1% 3.8% $112.85 Transportation Equipment $26,387 1.0% $253.2 1.3% 4.8% -7.5% 20.0% -55.1% $111.02 Agriculture, Hunting, Forestry, Fishing $63,045 2.4% $426.2 2.1% 5.2% -11.1% 12.6% 3.3% $76.19 Professional & Business Services $88,995 3.3% $987.3 5.0% 5.4% -15.8% 11.5% 1.5% $75.32 Hotels & Restaurants $62,729 2.3% $360.6 1.8% 4.5% -16.4% 14.0% 3.5% $68.17 Petroleum Refining $86,872 3.2% $665.8 3.3% 19.6% -56.8% 38.0% 1.8% $63.06 Equipment Rental & Leasing $15,283 0.6% $549.2 2.8% 6.6% -16.7% 12.1% 1.8% $50.62 Wholesale Trade $123,310 4.6% $1,097.9 5.5% 6.2% -18.0% 10.5% -43.6% $38.31 Paper & Paper Products $29,173 1.1% $524.3 2.6% 3.8% -26.7% 14.5% 1.4% $37.63 Banking & Finance $191,802 7.2% $1,125.5 5.7% 6.5% -20.7% 12.0% 0.6% $36.22 Industrial Machinery & Equipment $35,806 1.3% $115.8 0.6% 9.3% -14.5% 15.0% 5.5% $35.60 Total $2,675,671 100% $19,909 100% 5.9% -18.3% 14.5% 3.1% $3,272.33


BUSINESS TRAVEL WINNERS AND LOSERS CANADA




(CAGR, 2009-2013)

Industry Status

Government $1,613.3 5.5% Star Real Estate $1,608.9 5.9% Star Food Processing and Services $1,489.1 2.7% Star Construction $1,158.4 2.6% Star Social & Personal Services $1,137.7 5.3% Star Banking & Finance $1,125.5 0.6% Star Professional & Business Services $987.3 1.5% Star Communications Services $689.9 4.6% Star Petroleum Refining $665.8 1.8% Star Rubber & Plastic Manufacturing $558.0 3.8% Star Equipment Rental & Leasing $549.2 1.8% Star Paper & Paper Products $524.3 1.4% Star

Agriculture, Hunting, Forestry, Fishing $426.2 3.3% Emerging Research & Development Services $396.3 1.0% Emerging Hotels & Restaurants $360.6 3.5% Emerging Printing & Publishing $334.2 -0.4% Emerging Fabricated Metal Products $317.6 0.0% Emerging Non-Metallic Mineral Products $272.8 -0.8% Emerging Retail Trade $253.9 1.8% Emerging Education $236.8 13.1% Emerging Chemicals & Chemical Products $189.8 1.1% Emerging Basic Metals Manufacturing $158.0 -2.6% Emerging Computer Service & Related Activities $148.2 1.9% Emerging Other Manufacturing $133.7 -0.5% Emerging Motor Vehicles $125.5 -1.5% Emerging Industrial Machinery & Equipment $115.8 5.5% Emerging Communication Equipment $110.7 0.9% Emerging Electrical Machinery & Apparatus $82.6 3.7% Emerging Textiles $53.3 1.0% Emerging Medical, Precision & Optical Instruments $52.9 5.9% Emerging Apparel $16.0 0.8% Emerging Recycling $8.0 -2.2% Emerging Mining $6.2 4.4% Emerging Office, Accounting & Computing Machinery $5.5 -1.9% Emerging Health & Social Work $4.3 0.8% Emerging Leather & Leather Products $2.0 -1.6% Emerging Private Households Employees $0.0 15.1% Emerging

Utilities $1,378.5 -39.6% Mature Wholesale Trade $1,097.9 -43.6% Mature Transportation Services $949.7 -43.9% Mature

Wood & Wood Products $311.5 -56.4% Low Priority Transportation Equipment $253.2 -55.1% Low Priority

Total $19,908.9 3.1% Star


China

Economic Outlook The latest data suggest the downturn may be bottoming, but it is still premature to conclude that recovery will be

sharp. For China's economy to achieve a sustainable and robust recovery, strong consumer demand or export demand is needed.

Risks in the medium-term outlook cannot be overlooked. In fact, China's tax revenue has deteriorated from a 26.1% year-on-year (y/y) growth in the first three quarters of 2008 to an 11.1% contraction in the first four months of 2009. Additionally, massive loan growth raises the risk of bad loans surfacing down the road.

The main problem for China's economy is the free-falling export demand. Exports account for 36% of Chinese GDP making China more exposed to external-demand shocks. After export decline eased to 17.1% in March, from a 21.1% contraction in the first two months of the year, exports fell 22.6% and 26.4% in April and May, respectively.

BUSINESS TRAVEL SPENDING, CHINA (Millions of US$)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS CHINA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Utilities $495,161 4.3% $15,297.8 16.3% 18.8% -5.8% 5.0% 6.3% $5,433.63 Food Processing and Services $513,064 4.5% $9,151.2 9.8% 12.7% -4.0% 5.9% 6.6% $3,457.71 Government $475,683 4.2% $3,907.8 4.2% 11.7% 7.0% 10.7% 10.3% $2,479.43 Real Estate $408,707 3.6% $3,692.4 3.9% 13.0% -1.3% 8.1% 10.0% $2,267.41 Construction $824,684 7.2% $4,340.9 4.6% 16.2% -0.5% 7.8% 8.4% $2,160.22 Transportation Services $450,049 4.0% $3,955.1 4.2% 11.0% -7.3% 7.1% 7.8% $1,814.22 Rubber & Plastic Manufacturing $147,683 1.3% $3,165.7 3.4% 19.1% -6.3% 6.2% 8.1% $1,496.61 Electrical Machinery & Apparatus $335,269 2.9% $2,688.7 2.9% 21.7% -2.1% 5.4% 7.6% $1,183.04 Textiles $249,895 2.2% $3,232.9 3.4% 18.9% -10.5% 5.4% 6.2% $1,142.11 Wholesale Trade $449,244 3.9% $4,041.9 4.3% 7.9% -4.0% 2.0% 4.9% $1,094.03 Communications Services $184,973 1.6% $2,213.1 2.4% 20.3% -1.4% 6.8% 8.3% $1,088.54 Paper & Paper Products $102,741 0.9% $1,865.9 2.0% 19.5% -4.2% 8.0% 9.3% $1,048.72 Non-Metallic Mineral Products $235,180 2.1% $4,153.3 4.4% 14.5% -2.3% 2.4% 4.4% $1,003.33 Transportation Equipment $200,298 1.8% $1,942.3 2.1% 13.0% -2.4% 7.8% 8.7% $1,000.36 Education $261,329 2.3% $719.0 0.8% 12.8% 9.2% 15.5% 15.9% $786.28 Professional & Business Services $228,722 2.0% $2,564.0 2.7% 15.5% -4.8% 3.6% 5.0% $715.64 Communication Equipment $212,760 1.9% $1,706.2 1.8% 15.0% -7.6% 3.4% 7.2% $714.31 Agriculture, Hunting, Forestry, Fishing $862,125 7.6% $5,888.7 6.3% 8.2% -3.8% -0.1% 2.0% $607.86 Chemicals & Chemical Products $612,812 5.4% $1,947.3 2.1% 18.1% -13.8% 6.6% 5.3% $570.04 Equipment Rental & Leasing $35,890 0.3% $1,303.2 1.4% 17.6% -1.7% 5.0% 6.2% $458.47 Total $11,393,651 100% $93,846 100% 14.6% -6.3% 5.8% 6.5% $34,856.60


BUSINESS TRAVEL WINNERS AND LOSERS CHINA




(CAGR, 2009-2013)

Industry Status

Construction $4,340.9 8.4% Star Transportation Services $3,955.1 7.8% Star Government $3,907.8 10.3% Star Real Estate $3,692.4 10.0% Star Rubber & Plastic Manufacturing $3,165.7 8.1% Star Electrical Machinery & Apparatus $2,688.7 7.6% Star

Communications Services $2,213.1 8.3% Emerging Transportation Equipment $1,942.3 8.7% Emerging Paper & Paper Products $1,865.9 9.3% Emerging Communication Equipment $1,706.2 7.2% Emerging Industrial Machinery & Equipment $856.2 8.2% Emerging Education $719.0 15.9% Emerging Wood & Wood Products $561.6 7.0% Emerging Medical, Precision & Optical Instruments $437.2 6.7% Emerging Social & Personal Services $112.2 7.7% Emerging Private Households Employees $0.0 18.8% Emerging

Utilities $15,297.8 6.3% Mature Food Processing and Services $9,151.2 6.6% Mature Agriculture, Hunting, Forestry, Fishing $5,888.7 2.0% Mature Non-Metallic Mineral Products $4,153.3 4.4% Mature Wholesale Trade $4,041.9 4.9% Mature Textiles $3,232.9 6.2% Mature Petroleum Refining $2,908.4 2.9% Mature Professional & Business Services $2,564.0 5.0% Mature

Basic Metals Manufacturing $2,210.9 3.8% Low Priority Chemicals & Chemical Products $1,947.3 5.3% Low Priority Banking & Finance $1,463.9 4.7% Low Priority Equipment Rental & Leasing $1,303.2 6.2% Low Priority Hotels & Restaurants $1,025.4 6.6% Low Priority Research & Development Services $1,011.2 3.9% Low Priority Office, Accounting & Computing Machinery $995.8 4.0% Low Priority Fabricated Metal Products $972.1 5.3% Low Priority Other Manufacturing $825.4 5.5% Low Priority Printing & Publishing $551.0 4.2% Low Priority Apparel $504.6 6.5% Low Priority Leather & Leather Products $392.4 6.2% Low Priority Motor Vehicles $383.0 6.5% Low Priority Computer Service & Related Activities $382.5 6.1% Low Priority Recycling $236.3 2.2% Low Priority Retail Trade $210.1 6.6% Low Priority Mining $24.1 5.1% Low Priority Health & Social Work $4.9 3.4% Low Priority

Total $93,846.5 6.5% Mature


France

Economic Outlook GDP continued to contract sharply during the first quarter of 2008, and the outlook for the coming months is still

negative. IHS Global Insight currently believes that output is unlikely to grow until at least the first quarter of 2010.

Unemployment edged upward during the fourth quarter of 2008 and is likely to increase even more in the coming quarters, as weaker output growth and historically low business confidence take their toll on firms' employment decisions. The latest short-tem data show sharp destruction of jobs in the market sectors, and the situation is likely to get worse before it gets better.

France's residential house prices are expected to continue to fall at an average of 10% in 2009. The ongoing credit squeeze is weighing on financial institutions' appetites for house loans. With significantly tightened lending criteria and rising unemployment it is likely that prices will slow even further.

BUSINESS TRAVEL SPENDING, FRANCE (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS FRANCE


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $453,513 8.7% $3,302.4 9.2% 7.2% -13.8% 4.3% 1.9% $318.81 Government $268,535 5.2% $1,778.1 4.9% 2.7% -8.1% 6.5% 2.5% $232.13 Education $168,433 3.2% $373.5 1.0% 7.6% -4.3% 11.2% 7.8% $169.09 Transportation Equipment $95,011 1.8% $742.6 2.1% 5.0% -8.1% 6.9% -52.4% $138.48 Social & Personal Services $197,205 3.8% $2,389.1 6.6% 5.7% -16.2% 3.5% 0.7% $81.85 Rubber & Plastic Manufacturing $51,665 1.0% $892.6 2.5% 5.8% -17.4% 3.4% 1.3% $57.96 Industrial Machinery & Equipment $98,469 1.9% $259.3 0.7% 7.7% -12.7% 3.0% 2.1% $28.15 Paper & Paper Products $31,250 0.6% $457.4 1.3% 5.2% -17.5% 3.6% 1.0% $23.96 Medical, Precision & Optical Instruments $27,639 0.5% $178.7 0.5% 3.9% -12.2% 5.0% 2.3% $21.60 Communications Services $101,918 2.0% $982.8 2.7% 6.6% -13.9% 2.0% 0.0% $2.38 Chemicals & Chemical Products $153,017 3.0% $391.9 1.1% 4.9% -17.6% 2.8% 0.1% $1.43 Private Households Employees $8,542 0.2% $0.1 0.0% 9.6% -4.9% 13.4% 10.3% $0.06 Mining $12,041 0.2% $1.7 0.0% 12.0% -17.9% 2.0% 0.4% $0.04 Leather & Leather Products $4,407 0.1% $16.2 0.0% 6.7% -9.3% 0.0% -0.7% -$0.57 Wood & Wood Products $17,325 0.3% $193.5 0.5% 5.4% -18.7% 3.0% -64.9% -$0.93

Office, Accounting & Computing Machinery $2,627 0.1% $5.8 0.0% -

12.7% -22.2% -1.5% -4.5% -$1.19 Health & Social Work $298,419 5.8% $9.5 0.0% -6.6% -44.8% 24.6% -3.1% -$1.37 Apparel $12,716 0.2% $46.7 0.1% 5.8% -10.5% 0.8% -0.9% -$2.02 Hotels & Restaurants $121,071 2.3% $566.9 1.6% 3.5% -16.6% 2.4% -0.1% -$3.02 Electrical Machinery & Apparatus $40,654 0.8% $262.8 0.7% 5.3% -18.3% 0.7% -0.5% -$6.72 Total $5,185,208 100% $36,021 100% 4.6% -17.1% 2.3% -0.6% -$1,075.29


BUSINESS TRAVEL WINNERS AND LOSERS FRANCE




(CAGR, 2009-2013)

Industry Status

Professional & Business Services $4,046.8 -2.6% Star Real Estate $3,302.4 1.9% Star Food Processing and Services $2,746.8 -0.4% Star Social & Personal Services $2,389.1 0.7% Star Government $1,778.1 2.5% Star Construction $1,555.9 -1.5% Star Banking & Finance $1,302.3 -4.2% Star Equipment Rental & Leasing $1,173.8 -2.4% Star Communications Services $982.8 0.0% Star Rubber & Plastic Manufacturing $892.6 1.3% Star

Agriculture, Hunting, Forestry, Fishing $723.9 -1.8% Emerging Fabricated Metal Products $705.8 -3.7% Emerging Petroleum Refining $643.6 -1.7% Emerging Non-Metallic Mineral Products $584.1 -3.7% Emerging Computer Service & Related Activities $577.5 -2.7% Emerging Hotels & Restaurants $566.9 -0.1% Emerging Research & Development Services $505.3 -3.0% Emerging Paper & Paper Products $457.4 1.0% Emerging Chemicals & Chemical Products $391.9 0.1% Emerging Education $373.5 7.8% Emerging Retail Trade $361.0 -1.3% Emerging Printing & Publishing $343.1 -3.2% Emerging Electrical Machinery & Apparatus $262.8 -0.5% Emerging Industrial Machinery & Equipment $259.3 2.1% Emerging Medical, Precision & Optical Instruments $178.7 2.3% Emerging Other Manufacturing $174.9 -3.4% Emerging Communication Equipment $170.3 -5.1% Emerging Textiles $160.8 -1.2% Emerging Motor Vehicles $156.6 -1.6% Emerging Basic Metals Manufacturing $128.9 -3.8% Emerging Recycling $70.5 -3.2% Emerging Apparel $46.7 -0.9% Emerging Leather & Leather Products $16.2 -0.7% Emerging Health & Social Work $9.5 -3.1% Emerging Office, Accounting & Computing Machinery $5.8 -4.5% Emerging Mining $1.7 0.4% Emerging Private Households Employees $0.1 10.3% Emerging

Utilities $3,071.0 -39.1% Mature Transportation Services $2,085.6 -43.9% Mature Wholesale Trade $1,880.8 -46.4% Mature

Transportation Equipment $742.6 -52.4% Low Priority Wood & Wood Products $193.5 -64.9% Low Priority

Total $36,020.8 -0.6% Star


Germany

Economic Outlook The German economy's sharp drop in demand in late 2008 and early 2009 has only been partly reflected in

deteriorating labor-market conditions. Our June forecast therefore predicts GDP growth to plunge from 1.0% (1.3% unadjusted) in 2008 to -6.0% (-6.1%) in 2009. Prospects for 2010 however, depend on whether global demand recovers sufficiently in mid-2009 to prevent redundancies from accelerating sharply during the second half of 2009.

The inflation outlook will remain benign in the foreseeable future due to the unwinding of commodity prices in May 2009. Average inflation will fall from 2.6% in 2008 to 0.3% in 2009, and only rebound mildly to 1.0% in 2010.

Monetary and fiscal policies will increasingly support the economy as 2009 proceeds. Two economic-stimulus packages were launched in November 2008 and in January 2009 to combat the recession, together worth between 1.5% and 2.0% of GDP respectively. Any further structural reforms apart from stricter financial market regulation are now unlikely to be tackled ahead of 2011.

BUSINESS TRAVEL SPENDING, GERMANY (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS GERMANY


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Education $185,748 2.8% $326.5 0.9% 6.6% -1.9% 11.0% 7.9% $150.01 Government $276,752 4.1% $1,452.3 4.0% 1.0% -8.3% 4.9% 1.4% $101.05 Real Estate $491,467 7.3% $2,836.3 7.9% 3.5% -14.2% 2.3% 0.4% $55.66 Social & Personal Services $248,064 3.7% $2,381.7 6.6% 2.5% -14.4% 3.1% 0.3% $36.61 Industrial Machinery & Equipment $335,340 5.0% $699.8 1.9% 9.1% -15.2% 1.6% 0.6% $21.98 Medical, Precision & Optical Instruments $74,278 1.1% $380.5 1.1% 9.4% -14.4% 3.8% 0.8% $16.42 Rubber & Plastic Manufacturing $98,492 1.5% $1,348.7 3.7% 6.1% -19.3% 2.0% 0.2% $13.20 Transportation Equipment $57,959 0.9% $359.0 1.0% 4.1% -13.2% 4.5% 0.7% $12.89 Paper & Paper Products $57,721 0.9% $669.6 1.9% 7.1% -18.5% 2.4% 0.2% $7.25 Mining $21,144 0.3% $1.4 0.0% 10.8% -15.4% 3.3% 1.5% $0.11 Private Households Employees $10,845 0.2% $0.1 0.0% 6.4% -1.8% 13.0% 10.0% $0.06 Leather & Leather Products $4,581 0.1% $13.3 0.0% 7.1% -12.5% -0.3% -2.0% -$1.28 Health & Social Work $343,211 5.1% $8.7 0.0% -8.5% -44.1% 22.8% -3.8% -$1.54 Apparel $10,326 0.2% $30.0 0.1% 3.5% -15.6% -0.5% -3.1% -$4.39 Office, Accounting & Computing Machinery $27,835 0.4% $48.3 0.1% 5.5% -22.1% -0.2% -3.8% -$8.41 Recycling $8,439 0.1% $44.3 0.1% 11.2% -30.7% 1.0% -4.8% -$9.69 Wood & Wood Products $32,566 0.5% $288.2 0.8% 3.6% -19.8% 2.0% -1.3% -$18.87 Hotels & Restaurants $95,491 1.4% $354.4 1.0% 0.1% -16.8% 1.1% -1.3% -$23.20 Textiles $20,035 0.3% $165.6 0.5% 2.3% -21.8% 0.0% -3.0% -$23.47 Research & Development Services $27,843 0.4% $199.4 0.6% 1.6% -15.2% -0.6% -3.5% -$32.22 Total $6,732,994 100% $36,098 100% 3.3% -18.0% 1.0% -1.7% -$2,993.99


BUSINESS TRAVEL WINNERS AND LOSERS GERMANY




(CAGR, 2009-2013)

Industry Status

Real Estate $2,836.3 0.4% Star Food Processing and Services $2,675.8 -1.2% Star Social & Personal Services $2,381.7 0.3% Star Government $1,452.3 1.4% Star Rubber & Plastic Manufacturing $1,348.7 0.2% Star Communications Services $1,021.9 -0.9% Star

Industrial Machinery & Equipment $699.8 0.6% Emerging Paper & Paper Products $669.6 0.2% Emerging Medical, Precision & Optical Instruments $380.5 0.8% Emerging Transportation Equipment $359.0 0.7% Emerging Hotels & Restaurants $354.4 -1.3% Emerging Education $326.5 7.9% Emerging Wood & Wood Products $288.2 -1.3% Emerging Mining $1.4 1.5% Emerging Private Households Employees $0.1 10.0% Emerging

Professional & Business Services $3,354.0 -3.8% Mature Utilities $3,176.4 -1.8% Mature Transportation Services $2,309.5 -1.8% Mature Equipment Rental & Leasing $1,662.7 -3.8% Mature Wholesale Trade $1,447.6 -3.3% Mature Banking & Finance $1,274.3 -5.1% Mature Fabricated Metal Products $1,091.8 -4.8% Mature Construction $1,044.8 -2.4% Mature

Electrical Machinery & Apparatus $830.4 -1.8% Low Priority Non-Metallic Mineral Products $710.7 -5.1% Low Priority Petroleum Refining $637.2 -3.4% Low Priority Chemicals & Chemical Products $513.1 -2.3% Low Priority Printing & Publishing $476.4 -5.0% Low Priority Motor Vehicles $447.1 -3.0% Low Priority Retail Trade $353.7 -2.4% Low Priority Agriculture, Hunting, Forestry, Fishing $353.0 -2.1% Low Priority Computer Service & Related Activities $329.0 -3.8% Low Priority Communication Equipment $265.9 -3.5% Low Priority Other Manufacturing $262.1 -4.6% Low Priority Basic Metals Manufacturing $252.2 -5.4% Low Priority Research & Development Services $199.4 -3.5% Low Priority Textiles $165.6 -3.0% Low Priority Office, Accounting & Computing Machinery $48.3 -3.8% Low Priority Recycling $44.3 -4.8% Low Priority Apparel $30.0 -3.1% Low Priority Leather & Leather Products $13.3 -2.0% Low Priority Health & Social Work $8.7 -3.8% Low Priority

Total $36,097.8 -1.7% Star


India

Economic Outlook Slightly weaker growth will characterize the Indian economy in moderation during the near term due to the global

financial crisis. Growth slowed substantially to 6.1% in fiscal 2008 and will slow further to 5.6% in fiscal 2009, well below trend growth.

Prudent monetary policy has ensured macroeconomic stability with a relatively competitive exchange rate, building reserves, and eased monetary policy to support domestic growth.

India's external finances have improved markedly in recent years with the IT industry and related services expanding rapidly. Bolstered by service exports and remittances, the current account will continue to incur only mild deficits, at less than 2.0% of GDP, in the medium term.

BUSINESS TRAVEL SPENDING, INDIA (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS INDIA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Construction $285,080 13.3% $1,255.9 9.0% 15.5% -8.4% 7.1% 6.8% $490.96 Transportation Services $158,131 7.3% $1,322.7 9.5% 9.8% -12.4% 6.3% 5.8% $429.82 Government $114,705 5.3% $788.7 5.7% 7.7% -1.8% 9.6% 8.5% $396.68 Utilities $43,650 2.0% $1,128.7 8.1% 2.0% -13.4% 6.1% 5.3% $329.80 Communications Services $52,865 2.5% $529.4 3.8% 12.0% -2.6% 11.6% 9.9% $318.86 Food Processing and Services $72,746 3.4% $1,086.0 7.8% 4.2% -12.1% 5.7% 4.6% $271.05 Real Estate $53,874 2.5% $407.4 2.9% 13.6% -6.5% 8.6% 8.4% $202.41 Wholesale Trade $130,096 6.0% $979.6 7.0% 10.2% -10.1% 3.8% 3.6% $191.74 Agriculture, Hunting, Forestry, Fishing $255,276 11.9% $1,459.4 10.5% 5.6% -8.3% 2.1% 2.2% $167.13 Rubber & Plastic Manufacturing $19,828 0.9% $355.7 2.6% 12.5% -13.6% 7.2% 6.4% $129.28 Social & Personal Services $24,746 1.2% $311.3 2.2% 8.0% -9.3% 8.1% 7.2% $128.89 Education $42,851 2.0% $98.7 0.7% 11.6% 1.3% 15.2% 14.2% $92.88 Petroleum Refining $114,557 5.3% $742.5 5.3% 23.9% -56.1% 26.2% 2.1% $82.90 Banking & Finance $69,734 3.2% $346.1 2.5% 8.4% -12.9% 5.4% 4.1% $76.74 Professional & Business Services $41,115 1.9% $385.7 2.8% 9.8% -9.9% 3.5% 3.7% $76.13 Textiles $25,932 1.2% $280.8 2.0% 7.9% -16.9% 5.3% 4.4% $67.90 Equipment Rental & Leasing $6,680 0.3% $203.0 1.5% 12.2% -9.6% 5.4% 5.7% $64.37 Paper & Paper Products $9,256 0.4% $140.7 1.0% 12.5% -13.4% 8.1% 7.0% $56.99 Electrical Machinery & Apparatus $17,852 0.8% $119.8 0.9% 13.9% -9.0% 7.2% 7.6% $52.91 Chemicals & Chemical Products $95,802 4.5% $254.8 1.8% 10.3% -21.6% 6.7% 3.8% $52.09 Total $2,151,475 100% $13,942 100% 8.8% -13.1% 6.6% 5.3% $4,071.63


BUSINESS TRAVEL WINNERS AND LOSERS INDIA




(CAGR, 2009-2013)

Industry Status

Transportation Services $1,322.7 5.8% Star Construction $1,255.9 6.8% Star Utilities $1,128.7 5.3% Star Food Processing and Services $1,086.0 4.6% Star Wholesale Trade $979.6 3.6% Star Government $788.7 8.5% Star Communications Services $529.4 9.9% Star Real Estate $407.4 8.4% Star Professional & Business Services $385.7 3.7% Star Rubber & Plastic Manufacturing $355.7 6.4% Star Banking & Finance $346.1 4.1% Star

Social & Personal Services $311.3 7.2% Emerging Textiles $280.8 4.4% Emerging Chemicals & Chemical Products $254.8 3.8% Emerging Equipment Rental & Leasing $203.0 5.7% Emerging Retail Trade $185.1 4.2% Emerging Transportation Equipment $170.3 4.2% Emerging Paper & Paper Products $140.7 7.0% Emerging Hotels & Restaurants $129.2 6.6% Emerging Electrical Machinery & Apparatus $119.8 7.6% Emerging Communication Equipment $108.5 4.8% Emerging Education $98.7 14.2% Emerging Printing & Publishing $97.2 3.6% Emerging Industrial Machinery & Equipment $79.7 9.6% Emerging Computer Service & Related Activities $56.0 6.3% Emerging Apparel $31.4 5.4% Emerging Motor Vehicles $30.5 3.7% Emerging Medical, Precision & Optical Instruments $23.8 9.2% Emerging Leather & Leather Products $12.5 5.4% Emerging Mining $2.3 6.0% Emerging Private Households Employees $0.0 16.6% Emerging

Agriculture, Hunting, Forestry, Fishing $1,459.4 2.2% Mature Petroleum Refining $742.5 2.1% Mature

Non-Metallic Mineral Products $277.8 2.6% Low Priority Basic Metals Manufacturing $183.4 3.5% Low Priority Research & Development Services $152.1 2.6% Low Priority Fabricated Metal Products $105.8 1.0% Low Priority Other Manufacturing $57.1 3.5% Low Priority Recycling $23.4 1.2% Low Priority Wood & Wood Products $16.1 -72.8% Low Priority Health & Social Work $1.8 1.7% Low Priority Office, Accounting & Computing Machinery $1.0 2.1% Low Priority

Total $13,941.7 5.3% Star


Indonesia

Economic Outlook Indonesia's economy grew 6.1% in 2008 thanks to good performance through the third quarter. The outlook for

2009, on the other hand, is much worse. We expect scaled-back forecast for the next two years due to capital flight, erosion of net exports due to falling external demand, and delayed implementation of investment plans.

By summer 2009, we expect to see the policy rate go decrease to about 6.75% due to the central bank's cutting of rates. With the economy slowing and inflation subsiding, we expect to see more of these rate cuts in the future.

A combination of weaker external demand and sharply lower commodity prices will lower export earnings by over 25% in 2009. The only upside is that commodity imports will also benefit from the price correction. Capital flows are also expected to enter a more uncertain period as portfolio and direct investments slow.

BUSINESS TRAVEL SPENDING, INDONESIA (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS INDONESIA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Agriculture, Hunting, Forestry, Fishing $158,169 18.1% $1,415.1 16.5% 14.3% -11.3% 7.1% 5.1% $399.12 Communications Services $36,074 4.1% $565.3 6.6% 19.3% -5.8% 12.9% 10.2% $351.44 Food Processing and Services $52,612 6.0% $1,229.1 14.4% 15.4% -17.2% 8.0% 4.6% $311.69 Government $46,241 5.3% $497.6 5.8% 14.5% -7.1% 12.6% 8.7% $256.65 Utilities $17,091 2.0% $691.6 8.1% 13.3% -15.0% 8.6% -35.8% $239.40 Rubber & Plastic Manufacturing $9,935 1.1% $278.9 3.3% 16.0% -15.6% 12.0% 8.8% $146.59 Construction $70,571 8.1% $486.5 5.7% 16.5% -17.4% 7.1% 4.8% $129.79 Wholesale Trade $47,579 5.4% $560.7 6.6% 15.4% -14.4% 5.9% -39.9% $109.64 Paper & Paper Products $7,490 0.9% $178.2 2.1% 17.2% -18.7% 13.4% 9.1% $96.90 Transportation Services $30,300 3.5% $321.8 3.8% 16.7% -19.7% 8.0% -45.4% $92.03 Real Estate $14,127 1.6% $167.2 2.0% 18.3% -12.9% 10.4% 8.4% $83.54 Wood & Wood Products $9,360 1.1% $169.9 2.0% 12.8% -20.1% 9.9% -51.4% $61.60 Hotels & Restaurants $22,472 2.6% $171.0 2.0% 14.3% -15.2% 9.3% 6.3% $61.42 Textiles $12,108 1.4% $205.2 2.4% 13.3% -17.8% 7.8% 5.3% $60.86 Social & Personal Services $7,258 0.8% $142.9 1.7% 13.9% -14.8% 10.4% 7.2% $59.20 Transportation Equipment $18,276 2.1% $232.1 2.7% 29.7% -18.9% 6.5% -49.3% $55.35 Education $12,858 1.5% $46.3 0.5% 18.0% -1.4% 20.5% 16.0% $50.96 Professional & Business Services $10,852 1.2% $159.3 1.9% 14.5% -13.1% 7.0% 4.7% $41.31 Chemicals & Chemical Products $23,052 2.6% $95.9 1.1% 13.5% -23.2% 10.4% 5.7% $30.78 Non-Metallic Mineral Products $7,415 0.8% $171.5 2.0% 14.0% -16.9% 4.8% 3.2% $29.72 Total $873,771 100% $8,551 100% 15.2% -14.6% 8.7% 5.9% $2,850.78


BUSINESS TRAVEL WINNERS AND LOSERS INDONESIA




(CAGR, 2009-2013)

Industry Status

Agriculture, Hunting, Forestry, Fishing $1,415.1 5.1% Star Food Processing and Services $1,229.1 4.6% Star Communications Services $565.3 10.2% Star Government $497.6 8.7% Star Construction $486.5 4.8% Star Rubber & Plastic Manufacturing $278.9 8.8% Star Textiles $205.2 5.3% Star

Paper & Paper Products $178.2 9.1% Emerging Non-Metallic Mineral Products $171.5 3.2% Emerging Hotels & Restaurants $171.0 6.3% Emerging Real Estate $167.2 8.4% Emerging Professional & Business Services $159.3 4.7% Emerging Social & Personal Services $142.9 7.2% Emerging Banking & Finance $101.1 3.6% Emerging Chemicals & Chemical Products $95.9 5.7% Emerging Retail Trade $95.8 4.8% Emerging Equipment Rental & Leasing $84.5 4.9% Emerging Other Manufacturing $64.1 3.1% Emerging Research & Development Services $63.0 3.8% Emerging Communication Equipment $51.1 3.4% Emerging Basic Metals Manufacturing $46.4 4.2% Emerging Education $46.3 16.0% Emerging Leather & Leather Products $43.1 6.5% Emerging Apparel $34.3 3.7% Emerging Electrical Machinery & Apparatus $31.1 6.9% Emerging Printing & Publishing $29.0 2.4% Emerging Motor Vehicles $28.1 2.4% Emerging Fabricated Metal Products $27.4 3.6% Emerging Computer Service & Related Activities $25.1 6.8% Emerging Industrial Machinery & Equipment $17.1 9.9% Emerging Recycling $13.0 1.8% Emerging Petroleum Refining $7.7 5.3% Emerging Medical, Precision & Optical Instruments $1.4 7.9% Emerging Health & Social Work $0.9 3.1% Emerging Mining $0.2 5.3% Emerging Office, Accounting & Computing Machinery $0.1 3.3% Emerging Private Households Employees $0.0 17.5% Emerging

Utilities $691.6 -35.8% Mature Wholesale Trade $560.7 -39.9% Mature Transportation Services $321.8 -45.4% Mature Transportation Equipment $232.1 -49.3% Mature

Wood & Wood Products $169.9 -51.4% Low Priority

Total $8,550.7 5.9% Star


Italy

Economic Outlook Italy has grown rapidly since the recession of 2001. It's domestic and export sectors have both performed well

during this period resulting in robust increases in business travel spending. Prospects for the near-term are unfortunately muted by expectations for a slower domestic recovery and the need for a sustainable economic recovery among its key trading partners.

The economy started to lose significant momentum from the later stages of 2007 and is set to remain very weak during 2009 and early 2010. The main obstacle to stronger long-term growth will be modest export performance, as Italian exports are expected to underperform the growth in the trade-weighted index of world demand for Italian products.

Total employment is set to fall after a stronger-than-expected performance in recent years. Uncertain business climate and uneven industrial production will continue to strangle industrial employment, as companies continue to tightly control their workforces amid the uncertain economic picture.

Fiscal policy will be modest in the next few years as the government strives to keep a lid on the country's public finances. Italy will remain under pressure to restrain public spending to reduce the general government budget deficit, which is expected to widen to 4.1% of GDP in 2009 and 4.5% of GDP in 2010.

BUSINESS TRAVEL SPENDING, ITALY (Millions of US$)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS ITALY


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $286,526 6.2% $3,683.5 6.5% 7.7% -13.9% 4.5% 1.9% $358.36 Education $123,483 2.7% $483.4 0.8% 7.4% -3.1% 11.0% 8.2% $233.92 Government $186,357 4.0% $2,178.5 3.8% 4.0% -8.6% 5.0% 1.9% $209.94 Rubber & Plastic Manufacturing $63,291 1.4% $1,930.5 3.4% 5.9% -17.3% 2.9% 1.1% $110.78 Industrial Machinery & Equipment $180,134 3.9% $837.4 1.5% 8.5% -13.8% 1.7% 1.6% $68.13 Social & Personal Services $122,457 2.7% $2,619.0 4.6% 3.8% -16.2% 2.9% 0.4% $55.90 Paper & Paper Products $31,168 0.7% $805.4 1.4% 5.9% -18.4% 4.1% 1.3% $52.45 Medical, Precision & Optical Instruments $26,917 0.6% $307.2 0.5% 8.4% -13.7% 3.5% 1.5% $23.25 Apparel $51,096 1.1% $331.1 0.6% 10.9% -8.3% 2.8% 0.6% $10.76 Transportation Equipment $33,557 0.7% $463.0 0.8% 2.3% -15.2% 3.7% 0.1% $3.48 Private Households Employees $21,040 0.5% $0.4 0.0% 8.9% -5.2% 13.4% 9.9% $0.24 Mining $14,709 0.3% $3.3 0.0% 13.3% -19.0% 2.6% 0.5% $0.09 Health & Social Work $189,733 4.1% $10.7 0.0% -6.3% -45.0% 21.5% -4.1% -$2.01 Office, Accounting & Computing Machinery $8,386 0.2% $32.4 0.1% 5.1% -22.7% -4.8% -6.2% -$8.86 Recycling $5,538 0.1% $64.7 0.1% 1.3% -27.1% 2.6% -3.4% -$10.18 Leather & Leather Products $37,505 0.8% $243.1 0.4% 8.6% -12.8% 0.4% -1.1% -$12.92 Communications Services $85,764 1.9% $1,460.1 2.6% 6.1% -14.4% 1.6% -0.2% -$15.97 Wood & Wood Products $23,770 0.5% $468.7 0.8% 3.7% -21.6% 2.5% -0.9% -$21.79 Motor Vehicles $59,760 1.3% $147.6 0.3% 4.9% -29.6% 0.9% -3.5% -$23.91 Electrical Machinery & Apparatus $54,155 1.2% $618.0 1.1% 6.7% -17.2% -0.1% -1.0% -$28.92 Total $4,601,475 100% $56,937 100% 4.9% -18.0% 1.3% -1.2% -$3,235.73


BUSINESS TRAVEL WINNERS AND LOSERS ITALY




(CAGR, 2009-2013)

Industry Status

Utilities $5,833.0 -0.7% Star Transportation Services $4,463.9 -1.1% Star Food Processing and Services $4,321.3 -1.0% Star Real Estate $3,683.5 1.9% Star Social & Personal Services $2,619.0 0.4% Star Government $2,178.5 1.9% Star Rubber & Plastic Manufacturing $1,930.5 1.1% Star Communications Services $1,460.1 -0.2% Star Hotels & Restaurants $1,360.6 -1.0% Star

Industrial Machinery & Equipment $837.4 1.6% Emerging Paper & Paper Products $805.4 1.3% Emerging Electrical Machinery & Apparatus $618.0 -1.0% Emerging Education $483.4 8.2% Emerging Wood & Wood Products $468.7 -0.9% Emerging Transportation Equipment $463.0 0.1% Emerging Apparel $331.1 0.6% Emerging Medical, Precision & Optical Instruments $307.2 1.5% Emerging Leather & Leather Products $243.1 -1.1% Emerging Mining $3.3 0.5% Emerging Private Households Employees $0.4 9.9% Emerging

Professional & Business Services $4,407.2 -3.0% Mature Wholesale Trade $3,379.5 -4.1% Mature Construction $2,248.4 -1.8% Mature Equipment Rental & Leasing $2,098.7 -3.6% Mature Fabricated Metal Products $2,025.6 -2.8% Mature Non-Metallic Mineral Products $1,690.2 -3.9% Mature Banking & Finance $1,608.8 -4.9% Mature

Petroleum Refining $1,080.6 -2.1% Low Priority Textiles $963.6 -1.2% Low Priority Retail Trade $807.0 -2.3% Low Priority Other Manufacturing $790.7 -2.7% Low Priority Agriculture, Hunting, Forestry, Fishing $749.5 -2.2% Low Priority Chemicals & Chemical Products $557.3 -1.2% Low Priority Computer Service & Related Activities $542.1 -3.1% Low Priority Printing & Publishing $538.7 -4.1% Low Priority Research & Development Services $328.1 -3.4% Low Priority Basic Metals Manufacturing $279.3 -2.6% Low Priority Communication Equipment $174.3 -3.9% Low Priority Motor Vehicles $147.6 -3.5% Low Priority Recycling $64.7 -3.4% Low Priority Office, Accounting & Computing Machinery $32.4 -6.2% Low Priority Health & Social Work $10.7 -4.1% Low Priority

Total $56,936.5 -1.2% Mature


Japan

Economic Outlook Japan's GDP fell precipitously in the fourth quarter of 2008 largely due to plunging overseas demand. There is no

reason for optimism in the near term: the slump in Europe and the United States will limit export demand, while low confidence causes households to save rather than spend.

The Japanese and global economies should hit bottom in mid-to-late 2009. Only in 2010, as the world economy strengthens, will Japan rebound on the back of surging exports.

Continued yen strength is the least of Japan's problems. In theory, the strong yen should hurt Japan's exports. But the main problem for exports is the decline in overseas demand. When the developed economies recover in 2009-10, Japan's exports will rebound quickly.

BUSINESS TRAVEL SPENDING, JAPAN (Millions of US$)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS JAPAN


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Social & Personal Services $1,534,570 14.7% $18,119.1 24.4% 15.1% 3.5% 7.2% 4.9% $4,861.70 Real Estate $660,786 6.3% $4,689.7 6.3% 1.9% 6.9% 7.5% 6.2% $1,646.18 Utilities $306,128 2.9% $7,429.7 10.0% -0.2% -2.1% 5.9% -34.6% $1,449.31 Government $406,657 3.9% $2,624.4 3.5% -0.3% 8.2% 7.3% 5.4% $794.69 Food Processing and Services $321,201 3.1% $4,500.6 6.1% -1.9% 2.9% 6.0% 2.6% $625.80 Wholesale Trade $637,065 6.1% $4,502.6 6.1% -0.6% -0.3% 3.1% -41.7% $517.99 Education $216,861 2.1% $468.7 0.6% 3.3% 26.8% 17.7% 15.8% $508.14 Transportation Services $401,665 3.8% $2,762.3 3.7% -0.7% -5.5% 5.4% -46.7% $434.19 Communications Services $184,285 1.8% $1,732.1 2.3% 1.7% 3.4% 5.2% 3.7% $347.55 Hotels & Restaurants $330,637 3.2% $1,508.9 2.0% -0.7% 1.1% 6.8% 3.9% $315.99 Construction $587,953 5.6% $2,431.2 3.3% -3.2% -3.7% 5.1% 2.0% $257.25 Rubber & Plastic Manufacturing $139,234 1.3% $2,344.6 3.2% 3.2% -10.5% 6.4% 2.1% $255.55 Petroleum Refining $272,330 2.6% $1,656.8 2.2% 9.3% -46.9% 27.2% 2.3% $203.22 Industrial Machinery & Equipment $314,078 3.0% $806.0 1.1% 4.9% -1.3% 6.0% 4.6% $202.33 Professional & Business Services $355,393 3.4% $3,129.6 4.2% -1.5% -0.5% 2.7% 1.0% $157.89 Equipment Rental & Leasing $63,295 0.6% $1,805.5 2.4% -0.9% -3.1% 4.7% 1.4% $132.10 Retail Trade $400,258 3.8% $608.6 0.8% -2.8% -1.2% 3.8% 2.6% $82.58 Transportation Equipment $51,449 0.5% $391.9 0.5% 0.5% 1.6% 7.8% -63.6% $80.75 Agriculture, Hunting, Forestry, Fishing $145,652 1.4% $781.5 1.1% 0.5% 5.6% 3.2% 1.9% $76.65 Electrical Machinery & Apparatus $106,217 1.0% $669.1 0.9% 0.8% -5.7% 5.3% 2.0% $69.10 Total $10,472,092 100% $74,299 100% 2.0% -1.8% 6.1% 3.3% $12,989.32


BUSINESS TRAVEL WINNERS AND LOSERS JAPAN




(CAGR, 2009-2013)

Industry Status

Social & Personal Services $18,119.1 4.9% Star Real Estate $4,689.7 6.2% Star Food Processing and Services $4,500.6 2.6% Star Professional & Business Services $3,129.6 1.0% Star Government $2,624.4 5.4% Star Construction $2,431.2 2.0% Star Rubber & Plastic Manufacturing $2,344.6 2.1% Star Banking & Finance $2,082.9 -0.2% Star Equipment Rental & Leasing $1,805.5 1.4% Star

Communications Services $1,732.1 3.7% Emerging Petroleum Refining $1,656.8 2.3% Emerging Hotels & Restaurants $1,508.9 3.9% Emerging Communication Equipment $1,183.6 0.4% Emerging Paper & Paper Products $1,146.9 0.2% Emerging Non-Metallic Mineral Products $984.4 -1.3% Emerging Computer Service & Related Activities $817.1 0.9% Emerging Fabricated Metal Products $816.0 -1.2% Emerging Industrial Machinery & Equipment $806.0 4.6% Emerging Agriculture, Hunting, Forestry, Fishing $781.5 1.9% Emerging Chemicals & Chemical Products $774.2 0.7% Emerging Printing & Publishing $707.0 -1.1% Emerging Basic Metals Manufacturing $682.0 -1.2% Emerging Electrical Machinery & Apparatus $669.1 2.0% Emerging Motor Vehicles $623.1 0.3% Emerging Retail Trade $608.6 2.6% Emerging Education $468.7 15.8% Emerging Other Manufacturing $320.7 -1.2% Emerging Research & Development Services $244.8 1.2% Emerging Medical, Precision & Optical Instruments $239.2 5.1% Emerging Textiles $166.7 0.4% Emerging Recycling $145.7 -0.6% Emerging Office, Accounting & Computing Machinery $113.7 -1.4% Emerging Apparel $75.4 1.2% Emerging Health & Social Work $14.4 1.5% Emerging Leather & Leather Products $12.9 0.1% Emerging Mining $2.3 4.4% Emerging Private Households Employees $0.2 12.5% Emerging

Utilities $7,429.7 -34.6% Mature Wholesale Trade $4,502.6 -41.7% Mature Transportation Services $2,762.3 -46.7% Mature

Transportation Equipment $391.9 -63.6% Low Priority Wood & Wood Products $182.9 -70.0% Low Priority

Total $74,299.2 3.3% Star


Netherlands

Economic Outlook IHS Global Insight now expects the Dutch economy to contract 3.2% in 2009. Tight credit-market conditions and

lower demand from abroad will limit overall growth in the near term. On the other hand, the economy will benefit from falling interest rates across the Eurozone.

As of right now, the labor-market situation has not deteriorated and the unemployment rate still remains very low. The turmoil in the global financial sector however, has hit consumer and business confidence and is set to negatively affect the labor market, consumption, investment, and exports in 2009.

Fiscal position is expected to deteriorate in 2009, following marked improvements in the past three years. The Dutch government has recently stated that it expects a budget deficit in excess of 3.0% of GDP in 2009. In addition, the government debt will rise sharply as a result of the Dutch government's intervention to prop up the banking sector.

BUSINESS TRAVEL SPENDING, NETHERLANDS (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS NETHERLANDS


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $91,008 5.4% $1,109.5 5.6% 6.3% -14.5% 4.2% 1.6% $90.66 Education $45,880 2.7% $170.3 0.9% 9.6% -3.0% 11.1% 7.5% $74.49 Government $95,965 5.7% $1,063.8 5.4% 5.0% -8.8% 4.9% 1.3% $70.37 Rubber & Plastic Manufacturing $10,793 0.6% $312.2 1.6% 6.3% -15.3% 3.6% 1.4% $22.33 Industrial Machinery & Equipment $32,201 1.9% $141.9 0.7% 9.5% -9.9% 3.7% 2.8% $20.99 Social & Personal Services $52,519 3.1% $1,065.2 5.4% 5.3% -16.5% 3.5% 0.2% $12.55 Medical, Precision & Optical Instruments $7,421 0.4% $80.3 0.4% 8.6% -12.2% 4.2% 1.4% $5.85 Motor Vehicles $13,852 0.8% $32.4 0.2% 5.0% -19.3% 2.9% 0.2% $0.24 Communications Services $38,166 2.3% $616.2 3.1% 7.2% -14.9% 2.4% 0.0% $0.24 Private Households Employees $3,307 0.2% $0.1 0.0% 9.4% -3.6% 13.8% 10.1% $0.04 Mining $43,135 2.6% $0.7 0.0% 15.5% -19.2% 3.1% 0.3% $0.01 Leather & Leather Products $489 0.0% $3.0 0.0% 6.6% -9.5% 0.5% -1.0% -$0.15 Apparel $1,155 0.1% $7.1 0.0% 7.4% -9.4% 0.9% -1.1% -$0.39 Hotels & Restaurants $28,154 1.7% $220.7 1.1% 2.9% -14.3% 2.6% -0.1% -$0.80 Paper & Paper Products $8,978 0.5% $220.0 1.1% 5.6% -18.4% 3.1% -0.1% -$1.09 Health & Social Work $93,203 5.5% $5.0 0.0% -5.2% -45.7% 20.8% -4.9% -$1.11 Electrical Machinery & Apparatus $6,441 0.4% $69.7 0.4% 5.6% -14.0% 1.4% -0.5% -$1.73 Transportation Equipment $9,094 0.5% $119.0 0.6% 0.5% -13.5% 3.9% -0.3% -$2.01 Recycling $1,839 0.1% $20.4 0.1% 8.7% -26.1% 3.6% -2.2% -$2.13 Office, Accounting & Computing Machinery $2,584 0.2% $9.5 0.0% -1.9% -19.3% -3.5% -5.4% -$2.31 Total $1,687,467 100% $19,771 100% 5.0% -17.4% 2.3% -1.1% -$1,031.17


BUSINESS TRAVEL WINNERS AND LOSERS NETHERLANDS




(CAGR, 2009-2013)

Industry Status

Utilities $2,320.4 -0.2% Star Transportation Services $1,136.3 -0.9% Star Real Estate $1,109.5 1.6% Star Social & Personal Services $1,065.2 0.2% Star Government $1,063.8 1.3% Star Petroleum Refining $654.2 -1.0% Star Communications Services $616.2 0.0% Star

Rubber & Plastic Manufacturing $312.2 1.4% Emerging Hotels & Restaurants $220.7 -0.1% Emerging Paper & Paper Products $220.0 -0.1% Emerging Education $170.3 7.5% Emerging Industrial Machinery & Equipment $141.9 2.8% Emerging Transportation Equipment $119.0 -0.3% Emerging Medical, Precision & Optical Instruments $80.3 1.4% Emerging Electrical Machinery & Apparatus $69.7 -0.5% Emerging Motor Vehicles $32.4 0.2% Emerging Leather & Leather Products $3.0 -1.0% Emerging Mining $0.7 0.3% Emerging Private Households Employees $0.1 10.1% Emerging

Professional & Business Services $2,114.6 -2.7% Mature Food Processing and Services $2,052.6 -1.4% Mature Wholesale Trade $1,310.5 -2.7% Mature Construction $840.7 -1.4% Mature Banking & Finance $739.1 -3.6% Mature Equipment Rental & Leasing $679.5 -2.4% Mature

Agriculture, Hunting, Forestry, Fishing $395.8 -2.2% Low Priority Chemicals & Chemical Products $379.5 -1.3% Low Priority Fabricated Metal Products $337.2 -4.8% Low Priority Computer Service & Related Activities $279.5 -2.9% Low Priority Printing & Publishing $269.3 -4.8% Low Priority Non-Metallic Mineral Products $245.8 -3.5% Low Priority Retail Trade $171.0 -1.6% Low Priority Other Manufacturing $154.8 -3.9% Low Priority Communication Equipment $130.3 -2.4% Low Priority Research & Development Services $95.7 -3.1% Low Priority Wood & Wood Products $80.4 -1.5% Low Priority Textiles $73.1 -1.2% Low Priority Basic Metals Manufacturing $43.7 -5.9% Low Priority Recycling $20.4 -2.2% Low Priority Office, Accounting & Computing Machinery $9.5 -5.4% Low Priority Apparel $7.1 -1.1% Low Priority Health & Social Work $5.0 -4.9% Low Priority

Total $19,770.9 -1.1% Mature


Russia

Economic Outlook The Russian economy will suffer a deep recession in 2009 and a weak recovery in 2010 thanks to the sharp

decline in world-market energy prices and tight credit markets worldwide

Shrinking net exports and a large net outflow of capital have put significant downward pressure on the rouble. The fundamental actions of the CBR are replaying the developments of the 1998 collapse of the rouble and are seriously threatening macroeconomic stability.

Lower oil prices will have a major impact on the revenue side. Not only will fiscal revenues fall below target because of the slowing economy, but recent injections of liquidity into the banking system will reinforce inflationary pressures.

BUSINESS TRAVEL SPENDING, RUSSIA (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS RUSSIA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Education $60,492 2.2% $141.4 0.8% 15.7% -12.4% 10.3% 5.9% $47.28 Private Households Employees $510 0.0% $0.0 0.0% 26.8% -14.4% 12.0% 7.5% $0.00 Mining $203,103 7.4% $4.6 0.0% 18.9% -28.3% 1.6% -2.1% -$0.46 Health & Social Work $73,173 2.6% $2.5 0.0% 3.6% -52.6% 20.6% -7.1% -$0.75 Leather & Leather Products $1,877 0.1% $7.3 0.0% 25.2% -21.7% -3.5% -5.0% -$1.64 Apparel $4,163 0.2% $16.1 0.1% 25.7% -20.9% -2.6% -4.8% -$3.53 Office, Accounting & Computing Machinery $5,792 0.2% $13.4 0.1% 29.2% -29.7% -6.8% -8.8% -$4.95 Medical, Precision & Optical Instruments $12,307 0.4% $83.8 0.4% 36.7% -24.0% 3.2% -1.3% -$5.13 Industrial Machinery & Equipment $30,809 1.1% $85.5 0.5% 22.9% -23.3% 0.8% -1.2% -$5.17 Motor Vehicles $16,680 0.6% $24.6 0.1% 15.4% -35.1% -0.7% -5.5% -$6.09 Textiles $3,142 0.1% $34.5 0.2% 11.8% -26.7% -3.2% -5.3% -$8.23 Electrical Machinery & Apparatus $11,329 0.4% $77.2 0.4% 23.0% -26.5% 0.0% -3.4% -$12.36 Other Manufacturing $7,081 0.3% $51.3 0.3% 14.5% -30.7% -1.6% -6.1% -$13.95 Government $162,524 5.9% $1,134.3 6.1% 13.4% -15.2% 3.0% -0.2% -$14.10 Hotels & Restaurants $22,958 0.8% $113.3 0.6% 19.0% -25.2% 0.8% -2.8% -$15.00 Recycling $7,089 0.3% $49.5 0.3% 23.0% -43.5% 2.2% -7.7% -$16.25 Communication Equipment $11,011 0.4% $75.0 0.4% 24.9% -30.8% -4.5% -6.1% -$20.17 Wood & Wood Products $10,042 0.4% $118.2 0.6% 20.3% -30.7% 1.2% -65.1% -$21.32 Computer Service & Related Activities $17,117 0.6% $99.0 0.5% 11.9% -24.7% -2.2% -5.0% -$22.28 Paper & Paper Products $12,349 0.4% $190.5 1.0% 19.6% -28.6% 2.0% -2.6% -$23.48 Total $2,761,596 100% $18,676 100% 16.3% -28.0% 0.3% -3.9% -$3,400.20


BUSINESS TRAVEL WINNERS AND LOSERS RUSSIA




(CAGR, 2009-2013)

Industry Status

Utilities $3,314.3 -3.3% Star Food Processing and Services $1,607.6 -4.0% Star Communications Services $1,336.6 -2.5% Star Government $1,134.3 -0.2% Star Construction $1,002.1 -4.3% Star Transportation Services $819.6 -4.2% Star Agriculture, Hunting, Forestry, Fishing $735.2 -3.7% Star Real Estate $693.0 -1.2% Star Professional & Business Services $664.3 -5.5% Star

Social & Personal Services $390.6 -2.9% Emerging Retail Trade $377.8 -4.3% Emerging Equipment Rental & Leasing $356.0 -3.7% Emerging Rubber & Plastic Manufacturing $245.7 -4.6% Emerging Paper & Paper Products $190.5 -2.6% Emerging Transportation Equipment $187.1 -2.7% Emerging Education $141.4 5.9% Emerging Hotels & Restaurants $113.3 -2.8% Emerging Computer Service & Related Activities $99.0 -5.0% Emerging Industrial Machinery & Equipment $85.5 -1.2% Emerging Medical, Precision & Optical Instruments $83.8 -1.3% Emerging Electrical Machinery & Apparatus $77.2 -3.4% Emerging Textiles $34.5 -5.3% Emerging Motor Vehicles $24.6 -5.5% Emerging Apparel $16.1 -4.8% Emerging Leather & Leather Products $7.3 -5.0% Emerging Mining $4.6 -2.1% Emerging Private Households Employees $0.0 7.5% Emerging

Wholesale Trade $1,896.8 -5.8% Mature Petroleum Refining $807.1 -5.8% Mature Banking & Finance $506.1 -6.2% Mature

Non-Metallic Mineral Products $437.9 -8.7% Low Priority Basic Metals Manufacturing $360.5 -9.0% Low Priority Research & Development Services $259.4 -6.5% Low Priority Fabricated Metal Products $163.9 -9.2% Low Priority Wood & Wood Products $118.2 -65.1% Low Priority Chemicals & Chemical Products $111.5 -7.3% Low Priority Printing & Publishing $81.0 -6.9% Low Priority Communication Equipment $75.0 -6.1% Low Priority Other Manufacturing $51.3 -6.1% Low Priority Recycling $49.5 -7.7% Low Priority Office, Accounting & Computing Machinery $13.4 -8.8% Low Priority Health & Social Work $2.5 -7.1% Low Priority

Total $18,676.1 -3.9% Star


South Korea

Economic Outlook The dramatic drop in fourth quarter GDP means that Korea should be near a bottom. Further declines should be

small but will result in layoffs throughout the first half of the year, as well as falling corporate profits. Korea's high level of competitiveness should, however, prevent a further downward spiral.

Trade balances are projected to rise, as import contracts recognize lower commodity prices and the weak won improves the terms of trade. This paradoxically will cause the won to appreciate, albeit slowly.

The unemployment rate will rise in the near term but should be limited. But, if the labor market has become more flexible—or if memories of the Asian Crisis are strong—then firms could lay off large numbers of workers, causing a repeat of the year-long 1998 contraction.

BUSINESS TRAVEL SPENDING, SOUTH KOREA (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS SOUTH KOREA


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Utilities $57,474 2.6% $2,526.6 10.1% 11.0% -24.5% 31.4% -33.5% $724.06 Real Estate $81,832 3.6% $1,052.0 4.2% 7.3% -18.6% 31.1% 6.8% $411.67 Transportation Services $114,982 5.1% $1,652.1 6.6% 9.5% -27.8% 28.1% -39.5% $379.71 Government $83,131 3.7% $971.8 3.9% 7.4% -14.3% 29.3% 5.9% $319.78 Food Processing and Services $66,848 3.0% $1,696.6 6.8% 2.7% -26.7% 30.5% 3.4% $311.22 Communications Services $51,334 2.3% $873.9 3.5% 11.2% -19.6% 29.6% 6.3% $309.81 Social & Personal Services $52,196 2.3% $1,116.3 4.5% 9.7% -24.9% 29.1% 4.7% $286.04 Construction $165,413 7.4% $1,238.9 4.9% 5.4% -23.3% 28.3% 4.1% $274.59 Rubber & Plastic Manufacturing $39,992 1.8% $1,219.9 4.9% 12.8% -33.6% 32.9% 4.1% $271.69 Education $66,119 2.9% $258.9 1.0% 13.7% -9.7% 39.6% 13.5% $227.71 Petroleum Refining $114,986 5.1% $1,267.1 5.1% 14.3% -61.3% 56.0% 2.8% $186.85 Communication Equipment $137,517 6.1% $1,569.2 6.3% 11.9% -30.6% 24.9% 2.3% $185.06 Transportation Equipment $45,168 2.0% $623.2 2.5% 6.7% -22.7% 33.7% -49.8% $178.40 Industrial Machinery & Equipment $81,871 3.7% $380.6 1.5% 17.0% -23.3% 32.6% 7.3% $160.59 Professional & Business Services $51,212 2.3% $816.9 3.3% 7.9% -20.7% 25.9% 3.3% $144.38 Chemicals & Chemical Products $133,796 6.0% $605.0 2.4% 11.1% -31.7% 31.2% 3.8% $123.44 Wholesale Trade $52,644 2.3% $674.0 2.7% 5.8% -25.2% 27.5% -49.8% $122.38 Agriculture, Hunting, Forestry, Fishing $51,309 2.3% $498.7 2.0% 5.7% -17.0% 26.6% 4.4% $121.16 Electrical Machinery & Apparatus $43,832 2.0% $500.2 2.0% 16.4% -25.9% 30.0% 4.4% $120.70 Hotels & Restaurants $55,556 2.5% $459.2 1.8% 6.2% -24.8% 28.3% 3.7% $92.71 Total $2,242,885 100% $25,051 100% 8.4% -27.8% 30.0% 3.9% $5,351.13


BUSINESS TRAVEL WINNERS AND LOSERS SOUTH KOREA




(CAGR, 2009-2013)

Industry Status

Food Processing and Services $1,696.6 3.4% Star Communication Equipment $1,569.2 2.3% Star Petroleum Refining $1,267.1 2.8% Star Construction $1,238.9 4.1% Star Rubber & Plastic Manufacturing $1,219.9 4.1% Star Social & Personal Services $1,116.3 4.7% Star Real Estate $1,052.0 6.8% Star Government $971.8 5.9% Star Banking & Finance $910.6 1.5% Star Communications Services $873.9 6.3% Star Professional & Business Services $816.9 3.3% Star Non-Metallic Mineral Products $644.0 0.1% Star Chemicals & Chemical Products $605.0 3.8% Star

Fabricated Metal Products $574.9 -0.5% Emerging Basic Metals Manufacturing $523.0 0.9% Emerging Electrical Machinery & Apparatus $500.2 4.4% Emerging Agriculture, Hunting, Forestry, Fishing $498.7 4.4% Emerging Hotels & Restaurants $459.2 3.7% Emerging Paper & Paper Products $414.2 3.1% Emerging Industrial Machinery & Equipment $380.6 7.3% Emerging Textiles $372.2 2.7% Emerging Research & Development Services $323.9 1.9% Emerging Education $258.9 13.5% Emerging Motor Vehicles $257.4 1.3% Emerging Printing & Publishing $208.8 0.9% Emerging Retail Trade $135.2 2.9% Emerging Medical, Precision & Optical Instruments $124.4 5.8% Emerging Other Manufacturing $121.4 0.4% Emerging Computer Service & Related Activities $118.8 3.6% Emerging Equipment Rental & Leasing $76.3 2.3% Emerging Apparel $52.4 7.8% Emerging Recycling $45.0 0.2% Emerging Office, Accounting & Computing Machinery $28.0 0.1% Emerging Leather & Leather Products $24.9 3.1% Emerging Health & Social Work $3.5 1.6% Emerging Mining $1.4 6.1% Emerging Private Households Employees $0.0 14.7% Emerging

Utilities $2,526.6 -33.5% Mature Transportation Services $1,652.1 -39.5% Mature Wholesale Trade $674.0 -49.8% Mature

Transportation Equipment $623.2 -49.8% Mature Wood & Wood Products $89.7 -67.0% Low Priority

Total $25,051.0 3.9% Star


Spain

Economic Outlook The economy is set to contract in 2009 and 2010. Real GDP is projected to contract 4.2% (revised up from a

4.4% fall) in 2009 and 1.2% (up from a 1.5% fall) in 2010 after a 1.2% gain in 2008, according to the June forecasts. The outlook for 2009 remains gloomy, reflecting the continued steep falls in industrial production, retail sales, and business and construction activity in the first four months of 2009.

Private consumption is expected to contract in 2009 and 2010 as households rein in their spending when faced with rising unemployment and the need to lower their excessive debt levels.

Spanish construction activity is set to contract sharply. The Spanish housing market is being enveloped by oversupply. We do accept that the conditions are in place for a prolonged and steep slump in residential construction.

The government is struggling to revive the economy, which has been derailed by the troubled housing market, record-high consumer indebtedness, and the global credit squeeze. Consequently, the government has pledged to spend 70 billion euro on economic- and financial-stimulus measures.

BUSINESS TRAVEL SPENDING, SPAIN (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS SPAIN


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Education $81,457 2.7% $172.7 0.9% 10.9% -1.4% 13.7% 9.7% $102.31 Government $132,431 4.4% $838.6 4.3% 7.4% -5.8% 1.6% 2.1% $91.54 Communications Services $67,565 2.3% $623.1 3.2% 9.1% -11.4% 3.3% 1.6% $50.43 Real Estate $182,304 6.1% $1,269.5 6.5% 9.9% -16.4% 1.2% 0.4% $27.86 Rubber & Plastic Manufacturing $28,349 1.0% $468.4 2.4% 7.8% -17.3% 2.2% 1.1% $25.91 Social & Personal Services $109,450 3.7% $1,268.0 6.5% 7.9% -17.8% 2.2% 0.4% $23.52 Industrial Machinery & Equipment $50,221 1.7% $126.5 0.6% 11.5% -14.0% 1.3% 2.1% $14.06 Transportation Equipment $20,349 0.7% $152.1 0.8% 5.5% -12.4% 4.1% 1.6% $12.58 Medical, Precision & Optical Instruments $7,064 0.2% $43.7 0.2% 9.5% -12.5% 3.5% 2.3% $5.37 Private Households Employees $4,780 0.2% $0.0 0.0% 12.0% -7.4% 12.6% 9.8% $0.03 Mining $10,052 0.3% $1.6 0.0% 19.8% -21.8% -0.3% -1.1% -$0.09 Health & Social Work $125,288 4.2% $3.8 0.0% -3.5% -44.3% 23.6% -2.8% -$0.50 Paper & Paper Products $18,909 0.6% $264.7 1.4% 7.7% -19.8% 1.3% -0.1% -$0.90 Office, Accounting & Computing Machinery $1,739 0.1% $3.6 0.0% -8.3% -22.8% -6.8% -7.3% -$1.15 Research & Development Services $1,334 0.0% $11.5 0.1% 11.7% -15.0% -2.1% -2.8% -$1.55 Leather & Leather Products $6,796 0.2% $23.9 0.1% 3.4% -11.8% -1.4% -1.4% -$1.57 Communication Equipment $5,760 0.2% $35.6 0.2% 0.3% -18.4% -2.6% -1.6% -$2.77 Apparel $10,448 0.4% $36.7 0.2% 7.8% -12.7% -1.3% -1.8% -$3.20 Recycling $6,271 0.2% $39.7 0.2% 5.2% -29.6% 0.4% -4.0% -$7.26 Motor Vehicles $73,160 2.5% $97.9 0.5% 5.9% -26.9% 1.3% -1.9% -$8.89 Total $2,982,442 100% $19,487 100% 7.3% -18.7% 0.1% -1.4% -$1,307.41


BUSINESS TRAVEL WINNERS AND LOSERS SPAIN




(CAGR, 2009-2013)

Industry Status

Food Processing and Services $1,930.4 -1.7% Star Utilities $1,746.6 -1.0% Star Construction $1,687.6 -3.7% Star Transportation Services $1,482.5 -1.1% Star Real Estate $1,269.5 0.4% Star Social & Personal Services $1,268.0 0.4% Star Professional & Business Services $1,221.4 -2.6% Star Government $838.6 2.1% Star Hotels & Restaurants $796.8 -0.7% Star Communications Services $623.1 1.6% Star Equipment Rental & Leasing $480.1 -3.7% Star Rubber & Plastic Manufacturing $468.4 1.1% Star

Agriculture, Hunting, Forestry, Fishing $444.7 -2.2% Emerging Banking & Finance $438.7 -3.6% Emerging Petroleum Refining $434.2 -2.9% Emerging Paper & Paper Products $264.7 -0.1% Emerging Retail Trade $222.2 -2.5% Emerging Chemicals & Chemical Products $180.3 -1.6% Emerging Education $172.7 9.7% Emerging Electrical Machinery & Apparatus $168.7 -2.1% Emerging Computer Service & Related Activities $162.5 -1.7% Emerging Transportation Equipment $152.1 1.6% Emerging Industrial Machinery & Equipment $126.5 2.1% Emerging Textiles $119.2 -1.9% Emerging Motor Vehicles $97.9 -1.9% Emerging Medical, Precision & Optical Instruments $43.7 2.3% Emerging Apparel $36.7 -1.8% Emerging Communication Equipment $35.6 -1.6% Emerging Leather & Leather Products $23.9 -1.4% Emerging Research & Development Services $11.5 -2.8% Emerging Health & Social Work $3.8 -2.8% Emerging Mining $1.6 -1.1% Emerging Private Households Employees $0.0 9.8% Emerging

Wholesale Trade $761.8 -49.8% Mature Non-Metallic Mineral Products $606.3 -5.0% Mature Fabricated Metal Products $501.4 -4.3% Mature

Printing & Publishing $217.6 -4.8% Low Priority Other Manufacturing $181.9 -4.7% Low Priority Wood & Wood Products $124.3 -64.4% Low Priority Basic Metals Manufacturing $95.9 -4.1% Low Priority Recycling $39.7 -4.0% Low Priority Office, Accounting & Computing Machinery $3.6 -7.3% Low Priority

Total $19,486.7 -1.4% Star


Sweden

Economic Outlook The economy has been in recession since the third quarter of 2008, the main development being markedly

weaker export sales that were hurt by falling US and Eurozone demands. Meanwhile, domestic spending is likely to cool substantially, stemming from weaker business investment.

Interest rates are set to fall more quickly than previously anticipated and concerns about inflation becoming too low remain significant. The Riksbank also stressed that the repo rate is likely to remain very low in 2009 and early 2010, probably held at its current level of 0.5%.

The fiscal balance is expected to deteriorate markedly in 2009 and 2010. The government is now expecting deficit of 3.1% of GDP in 2009 which is projected to widen to 5.1% of GDP in 2010 before falling back to 4.2% in 2011.

BUSINESS TRAVEL SPENDING, SWEDEN (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS SWEDEN


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $71,507 7.8% $871.7 8.6% 4.1% -13.9% 12.9% 4.3% $206.55 Social & Personal Services $32,588 3.6% $660.9 6.5% 5.0% -19.3% 12.5% 2.9% $101.99 Education $35,666 3.9% $132.4 1.3% 8.3% -5.6% 21.7% 11.3% $93.63 Government $40,129 4.4% $444.9 4.4% 1.5% -11.4% 13.0% 3.6% $87.06 Transportation Services $70,473 7.7% $1,026.9 10.1% 4.6% -21.2% 11.3% 1.5% $79.88 Utilities $19,529 2.1% $814.1 8.0% 3.8% -19.0% 11.3% 1.8% $76.02 Communications Services $19,105 2.1% $308.4 3.0% 3.6% -14.3% 11.0% 2.9% $47.59 Paper & Paper Products $19,467 2.1% $477.0 4.7% 5.4% -25.1% 12.3% 1.9% $46.27 Food Processing and Services $24,458 2.7% $588.7 5.8% 1.6% -18.8% 11.1% 1.3% $40.06 Industrial Machinery & Equipment $36,498 4.0% $160.9 1.6% 9.7% -16.9% 12.4% 4.4% $38.94 Rubber & Plastic Manufacturing $6,601 0.7% $190.9 1.9% 5.1% -24.0% 13.5% 2.8% $28.47 Medical, Precision & Optical Instruments $8,100 0.9% $87.7 0.9% 5.9% -14.7% 14.9% 5.6% $27.63 Wood & Wood Products $14,001 1.5% $261.8 2.6% 7.6% -25.0% 11.6% 1.2% $15.79 Construction $41,860 4.6% $297.3 2.9% 5.8% -19.3% 8.4% 0.7% $10.49 Hotels & Restaurants $14,444 1.6% $113.2 1.1% 3.0% -18.7% 10.7% 1.7% $9.98 Transportation Equipment $5,176 0.6% $67.7 0.7% 0.6% -16.9% 11.7% 2.1% $7.31 Chemicals & Chemical Products $22,400 2.5% $96.0 0.9% 5.4% -23.7% 11.4% 1.3% $6.20 Electrical Machinery & Apparatus $6,759 0.7% $73.1 0.7% 6.2% -21.9% 9.4% 1.2% $4.56 Agriculture, Hunting, Forestry, Fishing $12,620 1.4% $116.3 1.1% 2.5% -14.0% 8.2% 0.6% $3.53 Petroleum Refining $17,022 1.9% $177.9 1.8% 15.9% -58.6% 35.2% 0.2% $1.39 Total $911,623 100% $10,147 100% 4.2% -20.0% 10.9% 1.5% $788.64


BUSINESS TRAVEL WINNERS AND LOSERS SWEDEN




(CAGR, 2009-2013)

Industry Status

Transportation Services $1,026.9 1.5% Star Real Estate $871.7 4.3% Star Utilities $814.1 1.8% Star Social & Personal Services $660.9 2.9% Star Food Processing and Services $588.7 1.3% Star Paper & Paper Products $477.0 1.9% Star Government $444.9 3.6% Star Communications Services $308.4 2.9% Star Wood & Wood Products $261.8 1.2% Star

Rubber & Plastic Manufacturing $190.9 2.8% Emerging Industrial Machinery & Equipment $160.9 4.4% Emerging Education $132.4 11.3% Emerging Hotels & Restaurants $113.2 1.7% Emerging Chemicals & Chemical Products $96.0 1.3% Emerging Medical, Precision & Optical Instruments $87.7 5.6% Emerging Electrical Machinery & Apparatus $73.1 1.2% Emerging Transportation Equipment $67.7 2.1% Emerging Mining $1.6 2.9% Emerging Leather & Leather Products $1.6 1.2% Emerging Private Households Employees $0.0 13.1% Emerging

Professional & Business Services $719.9 -0.3% Mature Wholesale Trade $485.3 -1.1% Mature Construction $297.3 0.7% Mature Computer Service & Related Activities $260.7 -0.1% Mature Equipment Rental & Leasing $251.0 -0.9% Mature Fabricated Metal Products $247.1 -1.4% Mature

Research & Development Services $225.3 -0.8% Low Priority Banking & Finance $193.1 -2.7% Low Priority Petroleum Refining $177.9 0.2% Low Priority Communication Equipment $152.3 0.0% Low Priority Non-Metallic Mineral Products $139.5 -1.6% Low Priority Printing & Publishing $129.2 -3.3% Low Priority Agriculture, Hunting, Forestry, Fishing $116.3 0.6% Low Priority Basic Metals Manufacturing $99.9 -1.5% Low Priority Retail Trade $87.7 -0.1% Low Priority Motor Vehicles $87.2 -0.4% Low Priority Other Manufacturing $58.0 -2.2% Low Priority Textiles $20.9 0.6% Low Priority Recycling $9.1 -1.6% Low Priority Office, Accounting & Computing Machinery $3.8 -3.6% Low Priority Health & Social Work $3.5 -1.2% Low Priority Apparel $2.4 -0.1% Low Priority

Total $10,147.0 1.5% Star


Turkey

Economic Outlook The macroeconomic stability that the country maintained in the immediate aftermath of the sharp worsening of the

global economic crisis has begun to crack, lending urgency to the final negotiations regarding potential International Monetary Fund (IMF) support.

A loss of export demand from the European Union (EU) and the Middle East has sent domestic production spiraling downward with most of the overall economic downturn occurring in the first half of 2009. GDP contraction will continue on through the rest of the year and throughout most of 2010 as well.

Although momentum toward convergence has slowed, economic reforms and policy decisions aimed at aligning the Turkish economy with EU standards will continue.

BUSINESS TRAVEL SPENDING, TURKEY (Millions of US$)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS TURKEY


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Real Estate $70,065 5.8% $684.8 6.3% 20.9% -23.1% 2.6% 1.0% $33.92 Education $23,355 1.9% $69.5 0.6% 12.9% -14.3% 10.4% 7.4% $29.86 Paper & Paper Products $5,817 0.5% $114.3 1.0% 11.4% -27.0% 4.7% 0.8% $4.58 Industrial Machinery & Equipment $16,279 1.4% $57.5 0.5% 13.1% -25.7% 2.0% 1.1% $3.25 Electrical Machinery & Apparatus $10,547 0.9% $91.5 0.8% 16.6% -25.3% 2.4% 0.4% $1.85 Medical, Precision & Optical Instruments $205 0.0% $1.8 0.0% 12.1% -23.4% 3.9% 1.2% $0.11 Private Households Employees $460 0.0% $0.0 0.0% 20.3% -15.6% 13.1% 9.4% $0.00 Mining $21,614 1.8% $3.0 0.0% 26.8% -31.1% 0.7% -1.6% -$0.23 Health & Social Work $30,542 2.5% $1.3 0.0% -3.2% -51.6% 21.4% -4.4% -$0.26 Wood & Wood Products $1,880 0.2% $28.2 0.3% 10.6% -30.1% 3.1% -0.2% -$0.30 Office, Accounting & Computing Machinery $475 0.0% $1.4 0.0% 5.6% -30.4% -6.1% -7.0% -$0.42 Leather & Leather Products $1,654 0.1% $8.2 0.1% 10.0% -21.7% -0.9% -2.1% -$0.81 Transportation Equipment $693 0.1% $7.3 0.1% 2.3% -28.9% 1.4% -2.5% -$0.88 Social & Personal Services $13,271 1.1% $215.8 2.0% 9.0% -25.6% 2.4% -0.1% -$1.59 Recycling $1,451 0.1% $12.9 0.1% 6.0% -38.3% 2.7% -3.9% -$2.32 Rubber & Plastic Manufacturing $9,551 0.8% $221.5 2.0% 11.3% -29.2% 2.7% -0.3% -$3.09 Apparel $8,925 0.7% $44.0 0.4% 9.5% -22.3% -0.4% -1.9% -$4.11 Communication Equipment $3,535 0.3% $30.7 0.3% 4.2% -31.5% -4.1% -3.2% -$4.65 Motor Vehicles $17,242 1.4% $32.4 0.3% 11.8% -44.1% 1.0% -5.8% -$8.32 Other Manufacturing $6,060 0.5% $55.9 0.5% 4.7% -31.0% -0.1% -3.3% -$8.69 Total $1,205,016 100% $10,890 100% 9.2% -28.6% 0.7% -2.3% -$1,216.45


BUSINESS TRAVEL WINNERS AND LOSERS TURKEY




(CAGR, 2009-2013)

Industry Status

Communications Services $1,037.5 -1.3% Star Utilities $870.4 -1.3% Star Real Estate $684.8 1.0% Star Government $513.8 -1.0% Star

Rubber & Plastic Manufacturing $221.5 -0.3% Emerging Social & Personal Services $215.8 -0.1% Emerging Hotels & Restaurants $170.6 -1.3% Emerging Paper & Paper Products $114.3 0.8% Emerging Electrical Machinery & Apparatus $91.5 0.4% Emerging Education $69.5 7.4% Emerging Industrial Machinery & Equipment $57.5 1.1% Emerging Apparel $44.0 -1.9% Emerging Wood & Wood Products $28.2 -0.2% Emerging Mining $3.0 -1.6% Emerging Medical, Precision & Optical Instruments $1.8 1.2% Emerging Private Households Employees $0.0 9.4% Emerging

Agriculture, Hunting, Forestry, Fishing $990.5 -4.3% Mature Food Processing and Services $826.6 -2.3% Mature Wholesale Trade $676.9 -4.8% Mature Transportation Services $652.3 -2.4% Mature Petroleum Refining $644.4 -3.0% Mature Professional & Business Services $583.1 -4.5% Mature Banking & Finance $362.9 -3.8% Mature Equipment Rental & Leasing $314.3 -3.1% Mature Non-Metallic Mineral Products $307.9 -4.4% Mature

Construction $244.7 -2.3% Low Priority Research & Development Services $232.1 -5.0% Low Priority Textiles $193.5 -3.5% Low Priority Retail Trade $147.7 -3.3% Low Priority Chemicals & Chemical Products $122.5 -2.8% Low Priority Fabricated Metal Products $88.4 -3.9% Low Priority Computer Service & Related Activities $85.9 -4.4% Low Priority Basic Metals Manufacturing $83.5 -3.4% Low Priority Printing & Publishing $59.1 -3.3% Low Priority Other Manufacturing $55.9 -3.3% Low Priority Motor Vehicles $32.4 -5.8% Low Priority Communication Equipment $30.7 -3.2% Low Priority Recycling $12.9 -3.9% Low Priority Leather & Leather Products $8.2 -2.1% Low Priority Transportation Equipment $7.3 -2.5% Low Priority Office, Accounting & Computing Machinery $1.4 -7.0% Low Priority Health & Social Work $1.3 -4.4% Low Priority

Total $10,890.3 -2.3% Mature


United Kingdom

Economic Outlook GDP plunged by 1.9% quarter-on-quarter (q/q) and 4.1% year-on-year (y/y) in the first quarter of 2009, following

contraction of 1.6% q/q in the fourth quarter of 2008 and 0.7% q/q in the third. The first-quarter q/q and y/y declines were both the sharpest for nearly 30 years.

On a more positive note, the rate of contraction has slowed substantially in the second quarter, and it is possible that the economy could even be close to stabilizing. Economic activity is benefiting from the monetary and fiscal-policy stimulus that was enacted. We now project GDP to contract 3.7% in 2009 and to edge up 0.3% in 2010.

Inflation will be brought down by more weak economic activity, rising spare capacity, deepening pay moderation, and favorable base effects. We are forecasting inflation to average 1.5% in 2009 and 1.3% in 2010.

BUSINESS TRAVEL SPENDING, UNITED KINGDOM (Millions of US$)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS UNITED KINGDOM


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Government $255,651 5.2% $2,205.3 5.2% 4.6% -16.6% 12.4% 4.6% $551.24 Education $204,200 4.2% $589.9 1.4% 8.6% -13.9% 17.7% 9.6% $341.13 Social & Personal Services $225,968 4.6% $3,566.3 8.4% 4.7% -24.3% 8.6% 1.8% $334.19 Real Estate $297,681 6.1% $2,823.9 6.6% 6.5% -26.1% 7.8% 1.3% $184.19 Communications Services $119,512 2.4% $1,501.4 3.5% 4.1% -22.0% 7.6% 1.6% $122.85 Utilities $138,737 2.8% $4,500.7 10.6% 3.2% -26.5% 6.4% 0.2% $56.11 Transportation Equipment $41,065 0.8% $418.1 1.0% -1.8% -23.2% 10.1% 2.1% $44.86 Medical, Precision & Optical Instruments $25,250 0.5% $212.6 0.5% 4.8% -22.1% 9.8% 2.9% $32.79 Rubber & Plastic Manufacturing $36,431 0.7% $820.0 1.9% 1.3% -30.8% 7.7% 0.8% $32.53 Hotels & Restaurants $146,924 3.0% $896.2 2.1% 2.4% -26.4% 5.6% 0.3% $13.34 Industrial Machinery & Equipment $74,981 1.5% $257.2 0.6% 5.1% -29.2% 6.6% 0.9% $11.40 Private Households Employees $1,866 0.0% $0.0 0.0% 8.4% -14.4% 18.4% 11.1% $0.02 Mining $105,552 2.2% $3.0 0.0% 12.9% -31.5% 7.5% 0.1% $0.02 Leather & Leather Products $1,765 0.0% $8.4 0.0% 1.1% -22.5% 5.9% -1.4% -$0.59 Agriculture, Hunting, Forestry, Fishing $48,079 1.0% $344.8 0.8% 1.7% -22.3% 5.3% 0.0% -$0.82 Health & Social Work $342,839 7.0% $14.2 0.0% -5.6% -50.2% 32.5% -1.5% -$1.01 Apparel $6,005 0.1% $28.7 0.1% 0.8% -19.6% 6.6% -0.8% -$1.19 Recycling $2,493 0.1% $21.5 0.1% 1.4% -35.5% 6.8% -2.7% -$2.79 Office, Accounting & Computing Machinery $8,825 0.2% $25.2 0.1% -10% -29.6% 1.3% -4.0% -$4.60 Chemicals & Chemical Products $124,814 2.5% $416.5 1.0% 4.7% -31.4% 6.7% -0.4% -$8.98 Total $4,904,291 100% $42,567 100% 3.1% -27.3% 6.3% -0.2% -$480.00


BUSINESS TRAVEL WINNERS AND LOSERS UNITED KINGDOM




(CAGR, 2009-2013)

Industry Status

Utilities $4,500.7 0.2% Star Social & Personal Services $3,566.3 1.8% Star Transportation Services $3,039.1 -0.2% Star Real Estate $2,823.9 1.3% Star Food Processing and Services $2,473.0 -0.4% Star Government $2,205.3 4.6% Star Communications Services $1,501.4 1.6% Star

Hotels & Restaurants $896.2 0.3% Emerging Rubber & Plastic Manufacturing $820.0 0.8% Emerging Education $589.9 9.6% Emerging Transportation Equipment $418.1 2.1% Emerging Chemicals & Chemical Products $416.5 -0.4% Emerging Agriculture, Hunting, Forestry, Fishing $344.8 0.0% Emerging Industrial Machinery & Equipment $257.2 0.9% Emerging Medical, Precision & Optical Instruments $212.6 2.9% Emerging Mining $3.0 0.1% Emerging Private Households Employees $0.0 11.1% Emerging

Professional & Business Services $4,901.9 -1.5% Mature Banking & Finance $2,374.2 -3.9% Mature Construction $2,081.3 -2.7% Mature Wholesale Trade $1,881.5 -2.3% Mature Equipment Rental & Leasing $1,668.1 -2.5% Mature

Computer Service & Related Activities $879.9 -1.3% Low Priority Printing & Publishing $629.0 -3.7% Low Priority Retail Trade $618.4 -1.1% Low Priority Petroleum Refining $504.3 -1.6% Low Priority Fabricated Metal Products $491.8 -3.8% Low Priority Non-Metallic Mineral Products $489.7 -4.3% Low Priority Paper & Paper Products $453.7 -1.4% Low Priority Other Manufacturing $294.4 -3.3% Low Priority Electrical Machinery & Apparatus $238.8 -1.6% Low Priority Research & Development Services $228.3 -1.4% Low Priority Wood & Wood Products $205.8 -3.4% Low Priority Textiles $157.8 -1.2% Low Priority Motor Vehicles $122.2 -5.6% Low Priority Communication Equipment $92.4 -4.9% Low Priority Basic Metals Manufacturing $87.8 -4.4% Low Priority Apparel $28.7 -0.8% Low Priority Office, Accounting & Computing Machinery $25.2 -4.0% Low Priority Recycling $21.5 -2.7% Low Priority Health & Social Work $14.2 -1.5% Low Priority Leather & Leather Products $8.4 -1.4% Low Priority

Total $42,567.3 -0.2% Star


United States

Economic Outlook The economy remains on track to bottom out soon—at least in output terms. We expect the rate of contraction in

GDP to slow in the current quarter (to minus 2.8%), before GDP edges higher in the second half of the year. A rapid recovery is not in prospect, though, after such an extreme financial shock.

We expect to see jobs declining for the rest of the year, but progressively less rapidly. And a retreat in the unemployment rate—now 9.4%—requires not just that jobs grow, but that they grow faster than the labor force.

Inflation is not a danger now, but could become one eventually. The more difficult problem will be for the federal government to deal with the budget deficit. The stimulus package, financial bailout costs, and recession will take the federal budget deficit to US$1.5 trillion in 2009 and US$1.2 trillion in 2010.

BUSINESS TRAVEL SPENDING, UNITED STATES (Millions of US$)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

98 99 00 01 02 03 04 05 06 07 08E 09F 10F 11F 12F 13F


BUSINESS TRAVEL SPENDING METRICS UNITED STATES


Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Government $2,232,754 8.3% $21,351 8.2% 3.1% 9.0% 4.7% 4.1% $4,701.21 Real Estate $2,329,407 8.6% $24,496 9.4% 4.4% -10.4% 2.5% 1.9% $2,440.43 Education $1,062,217 3.9% $3,402 1.3% 7.1% 9.7% 11.1% 11.0% $2,326.07 Social & Personal Services $1,029,765 3.8% $18,016 6.9% 2.4% -6.6% 2.5% 2.2% $2,080.94 Communications Services $934,632 3.5% $13,016 5.0% 3.6% -2.5% 1.3% 2.4% $1,603.01 Utilities $512,684 1.9% $18,437 7.1% 2.3% -12.7% 3.9% 1.3% $1,267.13 Food Processing and Services $748,649 2.8% $15,543 5.9% -0.3% -5.9% 0.9% 0.9% $734.46 Transportation Equipment $222,807 0.8% $2,515 1.0% -2.4% -3.1% 4.2% 3.4% $462.69 Rubber & Plastic Manufacturing $208,478 0.8% $5,202 2.0% 2.2% -15.6% 1.9% 1.3% $346.74 Hotels & Restaurants $741,708 2.8% $5,015 1.9% 1.5% -7.7% 1.5% 1.2% $310.38 Medical, Precision & Optical Instruments $91,646 0.3% $855 0.3% 0.4% -1.8% 3.4% 4.4% $204.17 Industrial Machinery & Equipment $309,917 1.2% $1,178 0.5% 2.7% -12.6% 0.6% 1.1% $67.83 Electrical Machinery & Apparatus $110,513 0.4% $1,032 0.4% -0.1% -7.5% -1.1% 1.2% $61.51 Paper & Paper Products $168,900 0.6% $3,570 1.4% 1.0% -17.9% 1.3% 0.2% $27.94 Private Households Employees $18,683 0.1% $0.3 0.0% 3.6% 6.2% 13.5% 12.3% $0.23 Leather & Leather Products $4,461 0.0% $24 0.0% -1.0% -8.9% -0.9% -1.5% -$1.74 Mining $626,334 2.3% $26 0.0% -43% -20.3% -4.4% -1.9% -$2.39 Health & Social Work $1,693,585 6.3% $78 0.0% -7.8% -38.1% 22.4% -1.6% -$6.12 Apparel $23,276 0.1% $123 0.0% -3.3% -7.4% -1.4% -1.2% -$7.48 Transportation Services $843,098 3.1% $9,261 3.5% 1.2% -12.7% 0.5% 0.0% -$21.77 Total $26,936,874 100% $261,362 100% 1.9% -10.3% 1.1% 0.3% $4,161.10


BUSINESS TRAVEL WINNERS AND LOSERS UNITED STATES




(CAGR, 2009-2013)

Industry Status

Real Estate $24,496.0 1.9% Star Government $21,350.5 4.1% Star Utilities $18,436.6 1.3% Star Social & Personal Services $18,015.7 2.2% Star Food Processing and Services $15,542.9 0.9% Star Communications Services $13,016.0 2.4% Star Transportation Services $9,260.7 0.0% Star

Rubber & Plastic Manufacturing $5,201.7 1.3% Emerging Hotels & Restaurants $5,015.4 1.2% Emerging Paper & Paper Products $3,570.4 0.2% Emerging Education $3,401.8 11.0% Emerging Agriculture, Hunting, Forestry, Fishing $3,330.3 -0.2% Emerging Transportation Equipment $2,514.8 3.4% Emerging Industrial Machinery & Equipment $1,178.5 1.1% Emerging Electrical Machinery & Apparatus $1,031.6 1.2% Emerging Medical, Precision & Optical Instruments $855.5 4.4% Emerging Private Households Employees $0.3 12.3% Emerging

Professional & Business Services $18,384.5 -1.5% Mature Research & Development Services $15,224.7 -2.4% Mature Wholesale Trade $14,270.0 -1.5% Mature Banking & Finance $13,712.9 -3.1% Mature Equipment Rental & Leasing $11,921.9 -2.6% Mature Construction $6,739.5 -3.6% Mature Petroleum Refining $6,709.0 -0.7% Mature

Printing & Publishing $4,416.3 -4.5% Low Priority Fabricated Metal Products $3,446.3 -2.9% Low Priority Computer Service & Related Activities $3,359.3 -1.1% Low Priority Communication Equipment $2,710.1 -2.9% Low Priority Retail Trade $2,704.4 -0.6% Low Priority Chemicals & Chemical Products $2,520.0 -0.6% Low Priority Non-Metallic Mineral Products $2,414.6 -4.3% Low Priority Recycling $1,582.8 -2.3% Low Priority Wood & Wood Products $1,359.6 -1.9% Low Priority Textiles $929.2 -1.2% Low Priority Motor Vehicles $788.5 -4.5% Low Priority Other Manufacturing $765.4 -2.7% Low Priority Basic Metals Manufacturing $653.6 -7.6% Low Priority Office, Accounting & Computing Machinery $280.5 -7.0% Low Priority Apparel $123.4 -1.2% Low Priority Health & Social Work $78.0 -1.6% Low Priority Mining $25.6 -1.9% Low Priority Leather & Leather Products $23.7 -1.5% Low Priority

Total $261,362.3 0.3% Star


U.S Business Travel Market

The business travel market in the U.S. is of particular importance to this entire research effort. As we have learned in the previous section, the U.S. comprises about 28% of all global business travel spending. It is the proverbial 800 pound gorilla. Secondly, for many NBTA members -be they suppliers, corporate, or travel management companies - the U.S. is their largest market. Finally, from a data collection standpoint, there is more available to help measure and describe the U.S. travel market.

IHS Global Insight estimates that U.S. business travel market reached $261 billion in 2008, down about 3% from the year before. Domestic business travel dominates, comprising 85% of total.

Outbound international, at $38 billion, makes up the difference. As a key input and controllable expense for the typical business, travel fully participates in business cycles. Leading into and during recessions, business travel feels the pinch of cost control measures. During periods of expansion, business travel grows in lockstep with expanding revenue and margin. Unfortunately, we currently find ourselves in the deepest part of the second worst post-war recession on record. Our 2008 and 2009 business travel measures reflect current and future weakness -more on this topic in the next section.

U.S. Business travel increased each year during the period 2003-2007, and then the party abruptly ended. The official

beginning of the current recession was December 2007. Many parts of the economy slogged along for another 8-9 months before housing and credit markets began to unravel. Businesses were already beginning to rationalize business


travel by Q4 2008, but when the economy hit a brick wall in September, the business travel faucet was tightened dramatically. Moreover, the media began to vilify certain types of travel, especially meeting and convention trips to more popular destinations. These factors conspired to push 2008 business travel spending down by 3%, with a further decline of 10% expected in 2009.

Business travel spending reacts to a number of underlying forces (among others) including: (1) changes in the number of trips taken, (2) changes in trip budgets, (3) changes in travel prices, and (4) changes in the typical length of a trip. Business travel spending can be interpreted as the residual outcome of the interplay of all of these measures of travel activity.

U.S. business travel volume is charted below. The numbers include all types of business trips including day trips. In the first chart, domestic business travel is depicted. We have separated transient business from group meeting & convention trips, the former comprising the majority (about 60-65%) of trips.

US domestic business travel volume fell to an estimated 694 million Person-Stays in 2008, down 12.5% from the year before. A Person-Stay recognizes that a business trip often includes multiple destinations or stays. As such, Person-Stays is closer to the concept of a hotel room night. Given the constraints placed on travel by employers during the year, as well as the previously-mentioned "vilification" factor, Group Meeting & Convention Person-Stays fell by 14.5% in 2008.

The second chart describes outbound international business travel. These trips are more difficult to typify, but with the help of sources such as the U.S. Department of Commerce's Office of Travel & Tourism Industries, the Bureau of

U.S. Domestic Business Travel Volume

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

2003 2004 2005 2006 2007 2008

Dom

esic

Per

son-

Stay

s in

Mill

ions

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Yr-to

-Yr %

Group & Convention Transient BusinessYr-to-Yr % Group & Convention (right) Yr-to-Yr % Transient (right)

Source: D.K. Shifflet & Associates, IHS Global Insight


US Domestic Business Travel Spendingby Category

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2003 2004 2005 2006 2007 2008e

in M

illio

ns o

f Cur

rent

US$

All OtherFoodOther Ground TransportAirRental CarRoom

Economic Analysis, and StatsCan, IHS Global Insight is able to estimate this component of U.S. business travel.

The D.K. Shifflet & Associates ongoing panel database of domestic US travel not only provides accurate measures of the level of business travel, it also allows us to describe the behavior of these travelers. A complete profile of the U.S. business traveler is provided in a separate section of this report.

IHS Global Insight has also developed measures of business travel spending across a number of dimensions. First, we provide a look at travel spending by major category, focusing on those that comprise the lion share of the trip budget and reimbursed by the traveler's employer. Again, all business trips are included regardless of the length of stay or trip purpose.

Source: D.K. Shifflet & Associates, IHS Global Insight


Most of the categories descriptions are self-evident, except perhaps "All Other". Since we are attempting to capture all trip spending, regardless of trip purpose, length or employee reimbursement, a category was added to include entertainment, shopping, insurance, and other miscellaneous trip expenditures.

Next, we view business travel from the perspective of the company (industries) that sponsor the trip. The chart below identifies U.S. business travel spending on both domestic and outbound international trips by major industry sector. The level of business spending is both a function of the size of the industry and the extent to which business travel is a critical input.

As we have mentioned in the Global Business Travel Analysis section of this report, industries use business travel differently and at varying levels. Professional & Business Services require business trips to sell, fulfill, and manage the services they offer to their clients. Business travel is obviously an integral part of their production recipe. Mining, on the other hand, uses travel much less intensely, particularly when compared to the industry's total revenue.


U.S. BUSINESS TRAVEL & TRAVEL-INTENSITY:

For the Top 20 Industries Ranked on 2008 Travel Spending

From a supplier, buyer, travel manager, and travel management company point of view, this analysis can help to prioritize market segments for opportunity and risk. Consider:

Large sectors tend to engage in more business travel spending, regardless of its share of total costs

Sectors with high intensity rates (Business Travel Spend Per Dollar of Revenue) view travel as a critical input and would be more likely to listen to proposals for productivity or cost savings

Industries that are highly concentrated with a smaller number of large players tend to have greater central control of procurement and cost management

Sectors with widely dispersed markets and/or supply chains will require more business travel to maintain and grow their businesses.

The best market segments are those that are large (Wholesale Trade), have a high travel-intensity factor (Prof & Business Services), and tend to be highly concentrated

Source: IHS Global Insight, US Bureau of Economic Analysis, D.K. Shifflet & Associates


The travel intensity rates for your industry sector can be used to benchmark your own company against the industry-wide averages. Are you traveling less than the average? If so, is there room to grow business travel to improve sales, operations, training, or customer service?

Finally, IHS Global Insight breaks out US business travel by job function of the traveler. Job function is another business travel market segment that is used to penetrate markets. Using data from the US Bureau of Labor Statistics,

D.K. Shifflet & Associates, the DOC's Office of Travel & Tourism Industries, and IHS Global Insight, our project team has been able to estimate business travel volume and spending by job function.

U.S. BUSINESS TRAVEL VOLUME & SPENDING BY OCCUPATION Includes both Domestic & International Outbound Trips

Source: IHS Global Insight, US Bureau of Labor Statistics, D.K. Shifflet & Associates, NBTA

The occupations that float to the top of the ranking of business trip volume should not surprise those that serve the industry. Sales, financial, and management occupations take the lion share of trips and spend the majority of T&E budgets. Keep in mind that jobs designated as Sales or Management above includes every industry. Consequently, retail auto sales people, telephone sales technicians, and real estate agents, for example, are included in "Sales and related occupations". This helps to explain both the relatively low annual salary number and relatively high percentage of total business trips and spending associated with this category. Although beyond the scope of the current research project, this data could be further broken out by industry. This would provide for a more precise break-out of job functions within.

Taken together, all Sales & Management occupations took an estimated 226 millions trips in 2008. This represents half of all trips. The percentage of travel spending is essentially the same in the table. In reality, we would expect that even more of the spending would be executed by these occupations. Anecdotally, they take longer trips (distance and duration) and tend to stay in more expensive accommodations. Without data to specifically measure these differences,


IHS Global Insight was forced to apply the overall average spend-per-trip to every occupation on the list. This would be an excellent topic for follow-up research.

The next section of the report documents our view of the prospects for business travel in the immediate future and beyond. IHS Global Insight has built an econometric model to forecast business travel volume and spending on a quarterly basis. The projections of business travel through 2013 are driven by a number of external factors including economic drivers, oil prices, hotel rates, and relative industry performance (and their travel intensity). The section includes a story-behind-the-numbers that helps to frame our view of business travel for the next few years.


U.S. Business Travel Forecast

U.S. MACROECONOMIC OUTLOOK

Executive Summary

The recession remains severe, but a bottom is in sight, at least for output if not employment. We expect GDP to begin to grow—albeit slowly—in the second half of the year.

Recovery is expected to be slow, since credit conditions will stay tight. The economy still contracts 3.0% during 2009, before growing 1.4% in 2010. The unemployment rate reaches 10.3%.

Deflation fears have receded. Inflation remains a risk for the future, but not an imminent threat. Headline CPI inflation is in negative territory and wage inflation is falling, not rising.

Bond yields have backed up as fears for the economy have diminished. But we think that it is too soon for a major bear market in bonds. Governments and central banks are trying to unfreeze lending markets, but credit conditions will ease only slowly.

The market is too weak to allow GM and Chrysler to survive in current form, and we assume that their negotiations with stakeholders and the government will end in some form of pre-packaged bankruptcy, from which smaller and leaner entities will emerge. In the case of Chrysler, survival in any form will be contingent upon a deal with Fiat.

The U.S. Federal Reserve (Fed) has cut its federal funds target to a range of 0.0–0.25%. We assume that this target stays in place for all of 2009, and that the Fed begins to tighten only in the fourth quarter of 2010.

Real federal defense purchases rose 7.2% in calendar year 2008, but we expect a smaller 4.6% increase in 2009 and a 1.3% decline in 2010 as the new administration scales back defense commitments.

The Forecast in Brief The economy remains on track to bottom out soon—at least in output terms. We expect the rate of contraction in GDP to slow in the current quarter (to minus 2.8%), before GDP edges higher in the second half of the year. But a rapid recovery is not in prospect, after such an extreme financial shock. Economists may be able to declare the recession technically "over" some time in the third quarter, but it will not feel that way for the unemployed, with the unemployment rate peaking at 10.3% in the first half of 2010.

The May employment report offered perhaps the most solid sign yet that the downturn is slowing. It showed a much more moderate rate of job loss in private services, suggesting that firms were very quick to react to the downturn at the turn of the year, so no longer need to keep slashing jobs. We do expect to see jobs declining for the rest of the year, but progressively less rapidly. And a retreat in the unemployment rate—now 9.4%—requires not just that jobs grow, but that they grow faster than the labor force. That remains a distant prospect.


The bleakest part of the jobs report was the still-heavy loss of workers in manufacturing, suggesting that the inventory adjustment in the goods sector remains severe. The inventory cycle will be the key to the growth profile in 2009. Inventories took more than 2 percentage points out of first-quarter GDP growth, but it would be foolish to imagine that this adjustment is complete. Inventory/sales ratios have barely begun to adjust, and we expect inventories to be a drag on growth again in the second quarter. Only in the second half of the year, as the rate of inventory decline slows, will the inventory cycle become a plus for growth. At that point, real GDP begins to expand even though final sales are still declining.

Business investment is still falling, but less steeply. We expect second-quarter equipment spending to tumble 15.6%, another sharp drop, but less than half the 33.5% plunge in the first quarter. We expect growth to resume by the end of the year. For 2009 overall, we foresee a 19.0% drop in equipment spending, followed by a 7.1% increase in 2010.

On the business structures side, the outlook is mixed. Total structures spending—aside from drilling activity—will probably increase in the current quarter, but the gains will be narrowly concentrated in oil refining and power generation. The trend for commercial construction such as retail developments, offices, and hotels remains downward. We expect declines in private nonresidential building to resume in the third quarter of 2009 and extend through the third quarter of 2010.

In the state and local government sector, revenue growth is slowing or even negative, while financing has become more expensive. Real state and local government purchases began to decline in the fourth quarter of 2008. We expect them to roughly stabilize by midyear, but only because of federal support for current and capital spending that we estimate at $171 billion over calendar years 2009 and 2010.

The full fiscal stimulus package is valued at around $787 billion over 10 years, and we assume that $561 billion of this is injected during the first two calendar years. The stimulus adds about 0.8 percentage point to 2009 GDP growth and 1.3 percentage points to 2010 growth, and creates or saves just under 2.5-million jobs by the fourth quarter of 2010. But the peak-to-trough decline in employment is still more than 7 million.

The stimulus package, financial bailout costs, and recession will take the federal budget deficit to $1.5 trillion in 2009 and $1.2 trillion in 2010. Failure to act on the deficit does not necessarily mean that inflation would surge—but would guarantee that interest rates go much higher.

The global recession has hit exports hard. They plunged at a 28.7% annual rate in the first quarter. Although there are now signs that world trade is beginning to stabilize, we do not expect the U.S. recovery to be export-led. Apart from China, which has injected massive fiscal stimulus, the recovery should come more slowly to the rest of the world. This means that the trade gap will widen later this year, as imports pick up before exports. The dollar has started to weaken again as

its safe-haven bid has diminished. We still see its long-term trend as downwards. The current-account deficit should fall about 40% in 2009 ($264 billion), almost entirely because of a $230-billion plunge in the bill for imported oil.

Rising commodity prices have eased fears of deflation, and there is now talk of inflation risks as some investors are viewing the magnitude of monetary and fiscal stimuli with alarm. We think that some commodity prices—notably oil—have moved in advance of the fundamentals, and see some correction as likely. But even without such a correction, we see too much excess capacity in product markets and, especially, in the labor market for an inflation spiral to take hold any time soon. By the third quarter of 2009, we expect headline CPI inflation to be minus 2.4% year-on-year, largely


on lower energy costs. We expect core consumption price inflation to soften and bottom out at 0.9% in the second quarter of 2010, just below the bottom of the Federal Reserve's 1–2% comfort zone.

Bond yields have moved much higher, into the 3.75–4.00% range for 10-year Treasuries, on a combination of reduced safe-haven demand, indigestion over heavy bond issuance, worry over future budget deficits, and concern over long-term inflation risks. Although we do see bond yields heading substantially higher over the long term, we think it is too early for a major bear market to begin, since we see the economy as still weak and inflation as a distant rather than an immediate threat.

But both the Fed and the federal government need "exit strategies" to keep bond market vigilantes at bay. The Federal Reserve is not yet ready to take its foot off the accelerator, but it is thinking about how and when to withdraw its unprecedented stimulus. Markets are beginning to price in a Fed interest rate hike later in 2009, but we believe that is far too early, and do not expect higher rates until deep into 2010. But we do not doubt the Fed's resolve to act as necessary. The more difficult problem will be for the federal government to deal with the budget deficit.

BUSINESS TRAVEL OVERVIEW

There is no joy in Mudville. Overall, there are few positives to report about travel and travel spending in mid-2009. Travel throughout the world is taking a hit as the global recession impacts households and business alike. The U.S. is not immune from this decline and with only "a bottom is in sight" to report about the recession and employment still falling, we do not expect a business travel recovery over the short term.

Among the primary drivers of business travel are employment and corporate profits, with travel prices adding to the overall picture. The forecast for the first two are highly negative with employment declines through mid-2010 and corporate profit recovery with a similar timeline. Moreover, these improvements will come more from the cost side than growth

in top-line revenue.

Business travel trips have been on a decline since reaching a post-9/11 high in 2004. The decline between 2005 and 2007 has been slight, possibly reflecting the effect of large increases in travel prices during that period. Only since the third quarter of 2008 has the number of trips fallen off a cliff. The collapse of Lehman Brothers and the ensuing government management of many high-profile, travel oriented industries and firms has put a break on business travel. Add in the AIG effect and its impact on group travel and business travel has taken several shots to the gut over the past couple of quarters.

The one positive to report, for businesses and travelers alike, is that, after several years of increases, travel prices peaked in 2008. For business still sending employees on travel, the deals in 2009 have never been better with hoteliers, airlines and other tourism providers cutting prices to keep occupancy

Source: IHS Global Insight, US Bureau of Labor Statistics


levels up. Interestingly, many companies are actually booking more spot deals at the moment, choosing to go outside their negotiated rates in order to take advantage of this aggressive price cutting environment. In addition, the year-over-year gas prices are still down about 40%, even with the recent rise.

It is expected that the structural decline in the number of trips from the latest recession will be quite similar to the number of business trips that disappeared after 9/11, when about 10% of all business trips disappeared. New technologies – like video conferencing – are certainly a contributor of these losses.

Over the longer term, this recession is the worst of the post-war era. Economic recovery is expected to be slow and drawn-out. The longer term forecast for visitors shows a similar lengthened recovery. IHS Global Insight does not expect business travel trips to show any recovery until the outer reaches of the forecast. After reaching 550 million person trips prior to 9/11 and only recovering to about 513 million trips in 2004, the number of business travel trips is expected to drop to and stay at a level of about 430 million trips through the forecast period.


Prospects for increases in business travel spending are slightly better than the outlook for travel volume. This is primarily due to recovering travel inflation. By mid-year 2010, IHS Global Insight expects to see average daily room rates (ADRs), air fares, rental car, and gasoline prices beginning to edge up. This will push business travel spend growth by an average of about 3-4% per year between 2011 and 2013.

The last table in this section is a repeat from the Top 20 Global Travel Markets Outlook section pertaining to U.S. business travel forecast by industry. Prospects for recovery and growth are illustrated in the right-hand columns, both from an immediate term and longer-term (through 2013) perspective. The sectors in the chart are ranked based upon our expectations for increases in the level of business travel spending between 2008 and 2013.


U.S. BUSINESS TRAVEL SPENDING BY INDUSTRY

UNITED STATES Total Sales Business Travel Spending

Industry 2008

(mn US$) % of Total

2008 (mn US$)

% of Total

1998-2008

CAGR

2009 %ch

2010 %ch

2009-2013

CAGR

2009-2013Change

(mn US$)

Government $2,232,754 8.3% $21,351 8.2% 3.1% 9.0% 4.7% 4.1% $4,701.21 Real Estate $2,329,407 8.6% $24,496 9.4% 4.4% -10.4% 2.5% 1.9% $2,440.43 Education $1,062,217 3.9% $3,402 1.3% 7.1% 9.7% 11.1% 11.0% $2,326.07 Social & Personal Services $1,029,765 3.8% $18,016 6.9% 2.4% -6.6% 2.5% 2.2% $2,080.94 Communications Services $934,632 3.5% $13,016 5.0% 3.6% -2.5% 1.3% 2.4% $1,603.01 Utilities $512,684 1.9% $18,437 7.1% 2.3% -12.7% 3.9% 1.3% $1,267.13 Food Processing and Services $748,649 2.8% $15,543 5.9% -0.3% -5.9% 0.9% 0.9% $734.46 Transportation Equipment $222,807 0.8% $2,515 1.0% -2.4% -3.1% 4.2% 3.4% $462.69 Rubber & Plastic Manufacturing $208,478 0.8% $5,202 2.0% 2.2% -15.6% 1.9% 1.3% $346.74 Hotels & Restaurants $741,708 2.8% $5,015 1.9% 1.5% -7.7% 1.5% 1.2% $310.38 Medical, Precision & Optical Instruments $91,646 0.3% $855 0.3% 0.4% -1.8% 3.4% 4.4% $204.17 Industrial Machinery & Equipment $309,917 1.2% $1,178 0.5% 2.7% -12.6% 0.6% 1.1% $67.83 Electrical Machinery & Apparatus $110,513 0.4% $1,032 0.4% -0.1% -7.5% -1.1% 1.2% $61.51 Paper & Paper Products $168,900 0.6% $3,570 1.4% 1.0% -17.9% 1.3% 0.2% $27.94 Private Households Employees $18,683 0.1% $0.3 0.0% 3.6% 6.2% 13.5% 12.3% $0.23 Leather & Leather Products $4,461 0.0% $24 0.0% -1.0% -8.9% -0.9% -1.5% -$1.74 Mining $626,334 2.3% $26 0.0% -43% -20.3% -4.4% -1.9% -$2.39 Health & Social Work $1,693,585 6.3% $78 0.0% -7.8% -38.1% 22.4% -1.6% -$6.12 Apparel $23,276 0.1% $123 0.0% -3.3% -7.4% -1.4% -1.2% -$7.48 Transportation Services $843,098 3.1% $9,261 3.5% 1.2% -12.7% 0.5% 0.0% -$21.77 Total $26,936,874 100% $261,362 100% 1.9% -10.3% 1.1% 0.3% $4,161.10


Risks and Alternatives The economy appears to have passed the inflection point that separates a free-fall from a downturn that has a bottom in sight. Indeed, consumer spending is stabilizing, and housing is showing signs of stabilizing. Confidence has risen, and this has helped boost the S&P 500.

We are not out of this yet, however. The economy is still hemorrhaging jobs. Conditions in the commercial real estate market are deteriorating. Housing prices are still falling, and delinquency rates are still rising. And output in the rest of the world is still contracting.

Will we see real green shoots of recovery emerging, or are the recent positive signals a false dawn?

In the pessimistic scenario, the remaining problems combine to throw the economy off the tracks again. This scenario assumes lower consumer spending, weaker business investment, slower foreign growth, and weak underlying productivity growth. It is a scenario with an even deeper recession in the near term, and slow growth afterward.

In the optimistic scenario, Federal Reserve and Treasury policies turn the economy around sharply in the second half of this year. With credit once again flowing, domestic consumer and business demands are rekindled, along with global demand. The U.S. economy still experiences a serious recession, but it is milder than in the baseline forecast, and strong growth resumes from the third quarter of 2009 onward.

False Dawn (20% Probability): The pessimistic scenario is more than a recession, but not quite a depression (some economists call this gray area a "slump"). The simulation assumes that the financial crisis worsens, sending the economy into its deepest downturn since the Great Depression. Credit markets remain clogged, both domestically and across the world. Without access to credit, domestic spending contracts and the housing market falls into an even deeper hole.

The pessimistic scenario assumes that the downward spiral in financial markets continues into 2010. The Treasury-eurodollar (TED) spread is still more than 100 basis points in the third quarter of 2009 (normally, it is less than 70 basis points. The spread between 30-year fixed mortgage rates and the 10-year Treasury note yield also remains wider than normal through 2010.

Oil prices are lower over the short run in this scenario because world demand is falling. As a result, bottom-line inflation is lower. Core inflation is also lower because demand is so weak. The low inflation readings give the Federal Reserve leeway to keep interest rates in the 0.0–0.25% target range—just as in the baseline—during 2009 and 2010. But when the economy gets off the mat, inflation starts creeping up because of rising energy prices, a slowdown in productivity, a weaker dollar, and because the Fed responds to the crisis by creating too much money. The Fed responds to rising prices by steadily raising interest rates. But its response is a bit too little, too late, and inflation continues to climb. Eventually, core inflation stabilizes—but at nearly a full percentage point above the baseline rate.

In this scenario, the housing recession drags on. The median price of existing homes falls 12% below the baseline in 2010. Home sales are also much lower. Housing starts began to turn around from record-low levels—just as in the


baseline--but the rebound is sluggish, as starts drop from 900,000 units in 2008 to 546,000 in 2009 (compared with 556,000 in the baseline) and 701,000 in 2010 (compared with 865,000 in the baseline). The weakness in housing undermines consumer confidence. This, along with the drop in wealth associated with falling home prices and a slowdown in job growth, causes consumers to retrench sharply. Hit especially hard are light-vehicle sales, which fall to 8.8-million units in 2009 (versus 9.8 million in the baseline).

Capital spending is also weaker, as firms respond to a bleaker outlook by scuttling long-term projects. Business fixed investment drops over nine straight quarters. Foreign economic growth is lower, which cuts into export growth. Indeed, real GDP among the United States' major-currency trading partners falls over seven quarters, starting in the second quarter of 2008 (this category does not include China). As a result, exports deduct 2.0 and 0.2 percentage points from GDP growth in 2009 and 2010, respectively.

Over the longer term, GDP growth remains slower than in the baseline, mainly because productivity advances only 1.4% on average over the next 10 years, compared with 1.8% in the baseline. Inflation is higher because of the slower productivity gains and a weaker dollar, and because the Fed, after allowing inflation to creep past its comfort band (so that it eventually rises above 2.5%), decides to stabilize it at that higher level, rather than risk another recession by bringing it down.

In this scenario, real GDP contracts 3.3% in 2009 and 0.9% in 2010 (compared with a 2.8% drop and a 1.5% gain, respectively, in the baseline). Employment drops for 11 straight quarters (the economy loses 8.9-million jobs), manufacturing output falls over 11 straight quarters, and real GDP drops for seven straight quarters, starting with the third quarter of 2008. Unlike the previous two recessions, those of 1991 and 2001, this one takes a heavy toll. Peak to trough, real GDP drops 5.1%—not quite enough to be called a depression (defined as a 10% peak-to-trough drop in real GDP), but much worse than the losses during the 1973–75 and 1981–82 recessions. Unlike those recessions, however, the economy emerges from this downturn weaker, and facing more troubles ahead.

Green Shoots Sprout (20% Probability): In the optimistic scenario, the rapid response of the Federal Reserve to the crisis in financial markets, coupled with the Treasury's "rescue" plan, Congress' stimulus package, and help from central banks abroad work, limit the downside. The recession is still a nasty one, though. There is no additional economic stimulus above the level in the baseline, but the primary difference is that the wheels of stimulus start to achieve traction more quickly, producing growth of 3.1% in the third quarter.

In addition, the standard optimistic scenario assumption of stronger total factor productivity growth is also in place. Total factor productivity, a measure of how technological progress augments economic growth, is enhanced by reinvigorated innovation in the technology sector. This allows lower inflation and stronger income growth over the long term—but in the short term, a stronger economy means that inflation is higher in the optimistic scenario than in the baseline (particularly in commodities). Headline CPI accelerates to 2.9% y/y in the third quarter of 2010, as opposed to 1.8% in the baseline.


The stronger sales pace during 2009 in the optimistic scenario requires less of an inventory reduction than in the baseline, with demand recovery trimming inventories back to desirable levels. Final sales fall 1.7% in 2009 in the more optimistic scenario, as opposed to a 2.3% drop in the baseline.

With credit again flowing late this year, business fixed investment rebounds 6.5% in 2010, after suffering a severe 16.6% contraction in 2009. This compares with a steeper 18.3% drop during 2009 in the baseline forecast, and a 0.1% decline during 2010. The downturn in residential investment is also less severe in the optimistic scenario, with housing starts beginning to recover during the second half of 2009 and averaging over 596,000 units for the year, compared with a much weaker baseline level of roughly 556,000 units. This recovery is also reflected in house prices, as the FHFA housing price index posts a slimmer 5.5% drop in 2009 in the optimistic scenario.

The optimistic scenario also assumes faster growth in the rest of the world, and a dollar that is initially weaker than the baseline, but later on is stronger. The dollar helps GDP early in the forecast period, but restrains it later on, as relatively weaker foreign currencies encourage import growth.

Finally, we assume slightly higher energy prices in the near term due to stronger global demand, but lower prices in the longer term due to a more optimistic assumption about supply. Oil prices remain in the low $70s per barrel over the rest of 2009, rather than holding at $60/barrel in the baseline, and then gradually rise to the low $80s by the end of 2014.

On net, these assumptions produce a much brighter economic outlook than the dismal pictures painted by the baseline and pessimistic scenarios. After falling 0.6% in the second quarter (compared with a 2.1% decline in the baseline forecast), real GDP undergoes a sharp turnaround, climbing 3.1% and 3.5% in the third and fourth quarters of 2009. Real GDP does even better in 2010, rising 3.1%, after shrinking 2.0% in 2009. The unemployment rate peaks near its present level (in the mid-9% range) and falls to 6.6% by late 2014.

Inflation implications of the milder recession in the optimistic scenario are modest. Consumer prices fall less than in the baseline and rebound more sharply at first, but by 2011 lower oil prices and improved productivity growth bring inflation down below its baseline pace. In short, the optimistic alternative sees more-muted cycle dynamics, and a quicker turn in the cycle than the baseline.


BUSINESS TRAVEL UNDER ALTERNATIVE SCENARIOS

80

90

100

110

120

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

Optimistic Pessimistic Forecast

Total Business Trips(Millions)


-14-12-10-8-6-4-2024

2005Q1 2006Q3 2008Q1 2009Q3 2011Q1 2012Q3


Business Travel Trips(Percent)

-14-12-10-8-6-4-2024

2005Q1 2006Q3 2008Q1 2009Q3 2011Q1 2012Q3


Business Travel Trips(Percent)

-20-16-12-8-4048

1216

2007Q1 2008Q1 2009Q1 2010Q1 2011Q1


Business Travel Spending(Percent)

-20-16-12-8-4048

1216

2007Q1 2008Q1 2009Q1 2010Q1 2011Q1


Business Travel Spending(Percent)

In the pessimistic scenario, the slump created by the continued backup in the financial markets, the lower consumer spending and weaker business investment result in business trips declining by over 10%, year-over-year, in each quarter through the remainder of 2009. Declines in business trips continue through mid-2011, as GDP growth continues to be negative. Annual business trips decline to under 400 million, down over 20% from the 503 million business trips in 2007.

For the first time in many years, quarterly business trips in the 4th quarter of 2010 fall below the 100 million level and fall as low as 95 million in the 4th quarter of 2013, towards the end of the forecast period as the economy comes out of the slump into a protracted period of weakness.

In the optimistic scenario, employment declines end and GDP growth becomes positive in the 3rd quarter of 09. This rebound in the economy in the second half of 2009 means the declines in business trips moderate towards the end of the year and start to show very small positive growth in early 2010, leveling off at about 445 million business trips, over 10% higher than in the pessimistic scenario and a shade under 4% higher than the

expected forecast of business trips.

While trips have been showing a slight downward trend over the past 3-4 years, business travel spending increases, year-over-year, were as high as 10.6% in the second quarter of 2007. Only since the middle of 2008 has business travel spending declined with the bottom falling out in the 4th quarter of 2008. In the forecast of business travel spending, double digit declines last through the third quarter of 2009 with the increases in spending, year-over-year, finally happening in the first quarter of 2010. While these increases are small – ranging from 0.5 to 1.1 percent, they show the rebound in travel prices once the deals of 2009 have passed.

Pessimistically speaking, the elongated slump means business travel spending declines continue through the beginning of 2011 but, beyond that, the increase in spending quickly rises above the other two scenarios as travel prices increase. Travel prices are on the increase in this scenario as prices in general and increasing and there is a bigger increase energy prices with the declines in the dollar. Spending is increasing by over 4%, year-over-year, by 2012 mainly due to the increase in prices as business trips are continuing to decline.

Looking at the optimistic scenario, the recovery in the economy translated into business travel spending jumping by over 4% in the first quarter of 2010 in comparison to the first quarter of 2009. Business travel spending, year-over-year, moderates to the 2.5 to 3% range as slight increases in trips along with a more normal inflationary period reflect the recovering economy. In this scenario, energy prices are increasing but increasing productivity and supplies keep those increases moderate.


BUSINESS TRAVEL WITH OIL PRICES OF $100 PER BARREL

With transportation costs making up, on average, almost 40% of the cost of a business trip, any changes in this expense would be expected to have an impact on business travel. The final scenario run by IHS Global Insight put $100 a barrel of oil into the model and examines the impact of this change on business travel.

The understandable concern is that, as the cost of traveling goes up, the amount of travel will decrease. Oil price spikes cut into nominal household consumption in 2008 and the share of consumption represented by gasoline has not been this high since the early 1980s. In nominal terms, gasoline consumption as a percentage of total consumption jumped from 1.9% in 1998 to 2.4% in 2003 and to an even higher 3.9% in 2008. In real terms, however, gasoline’s share of total consumption has been steadily declining from 3.4% in 1980 to 2.2% in 2008.

Historically, the relationship between oil prices and world travel is not clear cut. Total world arrivals have grown steadily despite the volatility in oil prices. This may be partially due to oil being an input for businesses that serve the traveler and those businesses ability to mitigate and react to oil price changes in other ways besides price. Our analysis indicates that changes in the oil price will only slightly affect travel and tourism.

All else being equal, a 1% increase in the price of oil will decrease total world arrivals by 0.12%. With per barrel prices of around $67 to $69 at this time, a jump to $100 a barrel would indicate a jump of around 43%. An increase of 43% in the price per barrel of oil would result in about a 5% reduction in travel spending. To put this in context, IHS Global Insight is forecasting a year-over-year change in business travel, as the result of the ongoing recession, of about 15% in the second quarter of 2009. In this case, an economic recession with annual growth rates dropping about 5% annually (Real GDP) has three times the negative impact of a 40% increase in the price of oil. Increases in oil prices exert a negative influence on travel to be certain, but it takes time for changes in crude prices to flow through to airline fares. Depending upon the level of airfare increases, travelers may either internalize the increase or take it out of other trip spending categories (e.g. stay in a 3 star rather than 4 star hotel). In either case, they will continue to travel. Moreover, the historic data suggests that some or all of the increase in crude may never make their way through to airfares.

Parsing the data to examine certain geographic areas and their reaction to increases in oil prices:

• Owing to the prevalence of short-haul travel, oil prices have little effect on arrivals in Western Europe.

• Oil prices have the greatest influence in Eastern Europe and Latin America, where destinations are farther apart and incomes are generally lower.

• Oil’s effect on arrivals in North America and the Middle East fall somewhere in between. Travel distances are farther, but the regions are helped by higher incomes.

-40%

-20%

0%

20%

40%

60%

80%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Perc

ent c

hang

e fr

om a

yea

r ago

Price of imported oil, leftTotal world arrivals, right


0.04%

0.08%

0.07%

0.18%

0.59%

0.04%

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7%Percent change in arrivals

Western Europe

North America

Middle East

Latin America

Eastern Europe

Africa

A 1-percent increase in oil prices decreases arrivals to each region by...


Business Travel Survey

As part of the evaluation of business travel, IHS Global Insight administered a short telephone questionnaire to either the chief financial officer or the controller of a sample of U.S. companies in each major industry category.

The questionnaire contained a battery of volumetric questions concerning T&E and then shift to the topic of travel management. The travel management questions would address issues such as: (1) internal-vs.-outsource execution, (2) budget or number of employees dedicated to the function, (3) location of the function in the corporate hierarchy, etc. Lastly, a series of business demographic questions would be asked to determine the exact industry, size, and location of the responding business in order to help anchor and generalize the overall results.

IHS Global Insight and its survey partner, LHK Associates, interviewed 447 random companies from around the United States across all industries in April and May of 2009. IHS Global Insight selected these industries in order to provide a representative cross section of the economy, linking together industries that exhibited similar business travel tendencies in the input/output dataset.

The majority of these companies surveyed were private companies.

Is your Company a Public Company

Frequency Percent CumulativeFrequency

Cumulative Percent

Yes 20 4.47 20 4.47

No 427 95.53 447 100.00

The companies interviewed were selected to cover all industries.

Industry Frequency Percent CumulativeFrequency

CumulativePercent

Administration & Other 36 8.05 36 8.05

Construction & Mining 35 7.83 71 15.88

Education & Health Care 35 7.83 106 23.71

Entertainment, Recreation & Accommodations

35 7.83 141 31.54


Industry Frequency Percent CumulativeFrequency

CumulativePercent

FIRE 50 11.19 191 42.73

Information 51 11.41 242 54.14

Manufacturing 50 11.19 292 65.32

Professional & Scientific Services 50 11.19 342 76.51

Retail Trade 35 7.83 377 84.34

Utilities & Transport 35 7.83 412 92.17

Wholesale Trade 35 7.83 447 100.00

The interviews requested interviews with company's Chief Financial Officer or Comptroller to get the person who is most knowledgeable about a companies total business travel and entertainment budgets and expenditures.

The firms interviewed ranged from the small, with one employee, to the very large, with 8,000 employees. The average firm in the survey had just over 50 employees.

Employment

Size


CumulativePercent

Less than 9 67 14.99 67 14.99

10 to 24 93 20.81 160 35.79

25 to 49 53 11.86 213 47.65

50 to 99 79 17.67 292 65.32

100 to 499 115 25.73 407 91.05

Greater than 500 40 8.95 447 100.00

Company revenues ranged from $500 to $200 billion, with an average of $7 million


Revenue

Size

Frequency Percent Cumulative Frequency

CumulativePercent

Less than $1 million 201 44.97 201 44.97

$1 to $9.99 million 103 23.04 304 68.01

$10 to $49.99 million 83 18.57 387 86.58

Greater than $50 million 60 13.42 447 100.00

Companies spent anywhere from $100 to $248 million on business travel in 2007. Averaging the companies T&E expenses, the surveyed companies are going to spend about 5% less on business travel in 2008 than they did in 2007 – down to an average of just under $1 million.

Examining the travel expenses across industries, Professional and Business Services (PBS in the graph below), spent more than $11,300 per employee on business travel, according to the survey results. Retail Trade (TRET) and Construction (CON) industries each spent about $7,100 per employee on travel & entertainment expenses. Utilities (TUTI) and Education and Health Services industries constituted the lowest T&E spending per employee, both industries coming in at under $1,000. Overall, companies in the survey averaged around $4,850 in T&E spending per employee.

T&E Expenses per Employee

120.38

734.36

1,129.49

1,868.61

3,298.14

3,562.25

4,275.22

5,281.25

5,325.13

7,079.20

7,143.43

11,345.68

0 2,000 4,000 6,000 8,000 10,000 12,000

TUTIEHS OTS FIRE

TWSTINF

TRANMANULHS

CON TRETPBS

Indu

stry

Spending per Employee


Another way to look at travel and entertainment spending is by looking at T&E spending as a percentage of revenue, as done in the following graph. Companies in industries like Utilities, with its low spending per employee, spent very little on T&E in our survey. Other industries where companies reported very little T&E spending in comparison to revenue included Wholesale Trade (TWST), with 0.6% of revenue spent on travel and entertainment, Other Services (OTS), Mining (MIN) and Construction (CON). Interestingly, the Construction industry spends over $7,000 per employee on travel and entertainment but that is still a small percentage of overall revenue.

On the other end, companies in the Transportation industry (TRAN) and Professional and Business Services (PBS) spent a much larger percentage of their revenue on travel and entertainment – over 5.5%. Professional and Business Services companies not only spend the highest amount per employee but also a large chunk of their revenue on travel and entertainment, no doubt spending time meeting with client and prospecting for new business.

In the middle ground of T&E spending per revenue dollar are companies in industries in Finance (FIRE), Leisure and Hospitality (LHS), Education and Health Services (EHS), Information (INF) and Retail Trade (TRET).

T&E Expenses as a Percentage of Revenue

5.7%

5.6%

3.9%

3.9%

3.6%

3.4%

3.0%

1.9%

1.6%

1.5%

1.2%

0.6%

0.0%

0% 1% 2% 3% 4% 5% 6%

TRANPBS

TRETINF

EHS LHS FIRE

MANUCON

MIN OTS

TWSTTUTI

Indu

stry

T&E % of Revenue

When asked about their 2009 travel and entertainment spending, by a margin of almost 5 to 1, companies say they will be lowering business travel expenses in 2009.


Your travel and entertainment expenses in 2009 will be:


CumulativePercent

Greater than 2008 34 7.61 34 7.61

Less than 2008 153 34.23 187 41.83

Same 260 58.17 447 100.00

Of those firms who say their T&E expenses will be greater than 2008 in 2009, almost half of the companies stated that increases in business, either domestic or international, were the cause of the growth. About 15% said training expenses were the reason for the T&E increase while 30% felt travel inflation was the cause behind T&E expenses rising.

Those companies that plan on increasing T&E expenses in 2009 do not plan on breaking the bank on T&E. Over half plan on increasing T&E by 10% or less and less than 25% plan on increasing T&E by more than 25%.

Over 40% of the firms whose T&E will be declining in 2009 stated the reason T&E is dropping is in response to tightening economic/business conditions. Another 24% are cutting T&E due to cost containment measures with sales declines and lower travel costs coming in as the next two cited reasons for lower T&E expenses in 2009.

Of those decreasing T&E expenses, over 80% of the reductions will be between 10 and 50%, with over 30% of the firms planning on reducing T&E by over a third. These firms had $872 million in T&E expenses in 2008 and a reduction of 20% would mean almost $175 million less in T&E spending in 2009 by these firms ALONE.

Who handles the travel arrangements??


CumulativePercent

Outside Travel Management Vendor 33 7.38 33 7.38

Internal Travel Managers 41 9.17 74 16.55

Individual Employees 364 81.43 438 97.99

Don't Know 6 1.34 444 99.33

Refused to Answer 3 0.67 447 100.00

In our survey, only about 17% of our companies have some sort of travel management handling travel arrangements, with the majority of companies allowing individual employees to arrange travel themselves.


Not surprisingly, the largest two employment size classes include over 55% of the firms who employ outside travel management functions. However, those with internal travel staff remained pretty constant across employment sizes. Interestingly, even in the largest employment size class, the percentage of firms whose own employees or admin staff makes their own travel arrangements was over 70% according to the survey.

Similar patterns were found examining the revenue size classes.

Examining travel management by industry, three industries have the overwhelming percentage of outside travel vendors – Manufacturing, Profession & Scientific Services and Information. There is less of a pattern examining the firms whose travel management functions are in-house. Percentage-wise, Manufacturing and Education & Health Services are the most likely to have travel management functions in-house. Only Manufacturing and Professional & Scientific Services have over 30% of their travel managed.

When asked if their company has instituted a cost containment plan for T&E expenses for 2009, just over a quarter replied in the affirmative.

Has your Company Instituted a Cost Containment Plan for 2009


CumulativePercent

Yes, we have a cost containment plan 117 26.17 117 26.17

No cost containment plan 327 73.15 444 99.33

Don't know 2 0.45 446 99.78

Refused answer 1 0.22 447 100.00

Of those companies with a cost containment plan, about 20% expect to get 0 to 5% savings out of their plan. Another 16% expect between 6 and 10% savings with a total of 70% of those firms instituting cost containment plans expected up to a 25% savings from their plan.


Cost Containment Savings

Savings Percentage Frequency Percent CumulativeFrequency

CumulativePercent

0 to 5% 23 19.66 23 19.66

6 to 10% 19 16.24 42 35.90

11 to 19% 9 7.69 51 43.59

20 to 25% 31 26.50 82 70.09

26 to 49% 8 6.84 90 76.92

Greater than 50% 27 23.08 117 100.00

Overall, the finding from the travel survey boost the results that have been presented in previous sections as the results from the random survey when some metrics are compared, relay confidence in our previous analysis.


The Economic Impact of U.S. Business Travel

In addition to quantifying and forecasting the U.S. business travel market, the economic impact of the industry has also been analyzed. Previously, the U.S. Business Travel Market was reviewed, which included not only the domestic business travel market, but also the outbound international business travel spend. When determining the economic impact of the U.S. business travel market, the analysis must include a slightly different data set. The domestic market spending is the same, but instead of including the domestic outbound travel spend, the analysis includes the spending of those business travelers to the U.S. who originated from international markets. As the domestic market dominates in both scenarios, the total market size is similar for each classification.

The total economic impact of travelers is separated into three distinct parts: direct, indirect, and induced. The direct impacts represent the value added of those sectors that interact directly with the visitor. The indirect impact represents the benefit to suppliers to those direct sectors. This would include, for example, U.S. based food suppliers to a restaurant. The induced impact adds the impact of tourism-generated wages as they are spent in the economy. The image of the iceberg represents the various impacts of tourism. Those industries that are part of the direct tourism sector represent the impact that is visible, i.e., above the surface of the water. But below the surface, traveler spending generates wages, employment, and taxes in a host of supporting industries. Although these are not seen, they are critical to understanding the full economic impact of tourism in the United States.

The following chart defines some of the terms used in the economic impact analysis.

Economic Impact The value added derived from the travel spending,\; the direct impact represents the GDP contribution of the industry

Income Impact The wages and proprietor income paid out to individuals in support of the business travel industry

Employment Impact The total employees supported by the business travel spending; the direct impact provides a comparable value to other traditional industry employment data

Direct Effect The direct effect represents impact of those sectors that interact directly with the visitor, such as a hotel worker

Indirect Effect The indirect effect represents the benefit to suppliers to those direct sectors. This would include, for example, domestic food suppliers to a restaurant

Induced Effect The induced effect adds the impact of tourism-generated wages as they are spent in the U.S. economy

Value Added Value added of an industry is equal to the sum of wages, taxes, profits, and capital depreciation

Indirect & Induced

Direct

Levels of Tourism Economic Impact


THE TOP LINE: TOTAL U.S. BUSINESS TRAVEL INDUSTRY SPENDING

The following table and chart represent the U.S. business travel spend. As described previously, this includes all spending on travelers on business that occurs within the U.S., encompassing all domestic spending and the spending of international business travelers within the U.S.

2008 %

Entertainment 31.6 -1.0

Accommodation 55.4 0.0

Transportation 101.1 1.6

Food 47.4 -0.9

Shopping 29.1 -0.3

Total 264.6 0.3

2008 saw a slight increase in total business travel spend, as the significant downturn in the fourth quarter was offset by steady growth prior to that, especially in the international market, which was up 18.5% for the year and finished 2008 at $37.6 billion. The domestic market, at $227 billion, was down 2% for the year.

The major categories shown above are aggregations of the details used to generate the economic impacts. In generating the following impact results, the five major categories were split into 19 specific spending industries to best represent the true end market for the business travel dollar.

(Value in billion $) Entertainment12%

Accommodation21%

Transportation38%

Food18%

Shopping11%


ECONOMIC IMPACT OF THE U.S. BUSINESS TRAVEL INDUSTRY

The following table highlights the top-line results from the economic impact study of the U.S. business travel industry.

Direct Indirect Induced Total

Travel Expenditures 264.6

Economic Impact 133.1 91.4 93.9 318.4

Labor Income 76.7 56.0 55.0 187.7

Employment (Millions) 2.16 1.01 1.20 4.37

Taxes 79.5

The direct economic impact, at $133 billion, represents just over 50% of the U.S. business travel expenditures.

The table below highlights the comparison the impact results from 2008 to 2007.

2008 2007 %

Economic Impact

Direct

Total

133.1

318.4

132.8

318.0

0.2

0.1

Labor Income

Direct

Total

76.7

187.7

76.5

187.3

0.2

0.2

Employment (millions)

Direct

Total

2.16

4.37

2.24

4.51

-3.2

-3.0

Taxes 79.5 81.5 -2.4

The 0.3% increase in 2008 travel expenditures resulted in a 0.1% increase in total economic impact. The resulting wages paid out increased 0.2%. While wages increased 0.2% for the year, the employment supported by those wages fell 3%. This was due to the fact that the average annual wage paid to business travel supported employees increased by 4%.

(Value in billion $ unless otherwise noted)

(Value in billion $ unless otherwise noted)


VALUE ADDED IMPACT OF THE U.S. BUSINESS TRAVEL INDUSTRY

As shown previously, the total economic impact of the U.S. business travel industry in 2008 was over $318 billion, with the direct impact surpassing $133 billion. The economic impact model enables the value added to be broken out by industry to determine which industries are realizing the direct, indirect and induced benefits from business travel. The chart below highlights the major industry categories benefiting from business travel.

* Industry groupings shown represent nearly 80% of the $318B in total impact

The $133 billion direct economic impact is slightly above 50% of the total U.S. business traveler spend. As this is a representation of the value added from that spending, the specific ratio of spending to value add varies by industry. Some industries, like many in the entertainment field or hotels, generally generate over 60% value add compared to spending. However, some major business travel spending categories result in much lower ratios, including air transportation at less than 40%, and retail categories ranging from 12% to 33%. While the value add ratio for air transportation is fairly low, the importance of the business traveler to the overall industry should not be overlooked. The $23.5 billion in value add, and the $63.4 billion in economic output each make up around 39% of the total value add and output of the entire air transportation industry, including passenger and cargo traffic. It should be noted that the total U.S. business travel industry is larger than the GDP of all but 25 countries.

One note about the chart above is that while the largest economic impacts will be to the core business travel businesses like hotels and transportation, the data illustrates the fact that certain industries either not directly involved in business travel or with a much lower focus, see significant economic benefits because of the business travel industry. As can be noticed by the plum colored sections of the bars, the Professional and Business Services sector (denoted by Bus. Services) and Finance, Insurance & Real Estate (denoted by FIRE) receive significant economic benefits as suppliers to the tourism industry. In fact, the $40.5 billion indirect impact to these two industries is nearly equal to the total impact from the entire transportation industry.

Economic Impact of Business Travel by Industry* - 2008

05,000

10,00015,00020,000

25,00030,00035,000

40,00045,000

Lodg

ing

Tran

spor

tatio

n

FIR

E

Bus

. Ser

vice

s

Reta

il Tr

ade

Food

& B

ev

Man

ufac

turi

ng

Ent

erta

inm

ent

Valu

e A

dded

- M

illio

ns o

f $ Induced Indirect Direct


INCOME IMPACT OF THE U.S. BUSINESS TRAVEL INDUSTRY

As shown previously, the total income impact of the U.S. business travel industry in 2008 was nearly $188 billion, with the direct impact nearly $77 billion. The chart below highlights the major industry categories benefiting from business travel.

Labor Income Impact of Business Travel by Industry - 2008

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Bus

. Ser

vice

s

Tran

spor

tatio

n

Lodg

ing

Food

& B

ev

FIR

E

Reta

il Tr

ade

Edu.

& H

ealth

Ent

erta

inm

ent

Labo

r Inc

ome

- Mill

ions

of $ Induced

Indirect Direct

The $188 billion in compensation is distributed much differently than the economic impact, as business services, owing to its relatively higher compensation rates, generates the largest total impact.

The average annual wage for all business travel supported employees in 2008 was nearly $43,000, with the average annual direct wage topping $35,400. The total annual wage is an increase of 4% compared to 2007, while the direct wage is up nearly 5%.


EMPLOYMENT IMPACT OF THE U.S. BUSINESS TRAVEL INDUSTRY

The total employment supported by 2008 business traveler expenditures was over 4.37 million, with the direct employment over 2.16 million. The chart below highlights the major industry categories benefiting from business travel supported employment.

Employment Impact of Business Travel by Industry - 2008

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Food

& B

ev

Lodg

ing

Bus

. Ser

vice

s

Tran

spor

tatio

n

Reta

il Tr

ade

Ent

erta

inm

ent

FIR

E

Edu.

& H

ealth

Mill

ions

of E

mpl

oyee

s Induced Indirect Direct

The impact of employment is much more dependent on those industries that directly touch the business traveler, with the main direct impact related industries making up five of the top 6 categories. There is still a significant effect on those industries with less of a direct focus, as the professional business services industry realizes an indirect employment benefit that is nearly as large as the total employment impact in the entertainment industry.

As stated previously, the travel industry is really a composition of many other industries, but the economic impact model enables the industry to be compared to traditional industry classifications. The table below shows the U.S. business travel industry in relation to the other major industry classifications on an employment basis.


Rank Industry Employment

(Millions)

2007-2008

Growth % of U.S.

1 Health Care & Social Assistance 15.82 2.8% 11.5%

2 Retail Trade 15.35 -1.1% 11.2%

3 Accommodation & Food Services 11.49 0.3% 8.4%

4 Durable Manufacturing 8.47 -3.8% 6.2%

5 Admin., Support, Waste Mgmt., Etc. 8.06 -4.3% 5.9%

6 Professional, Scientific & Technical 7.83 2.2% 5.7%

7 Construction 7.21 -5.5% 5.3%

8 Finance & Insurance 6.01 -1.9% 4.4%

9 Wholesale Trade 5.96 -0.9% 4.4%

10 Nondurable Manufacturing 4.95 -2.3% 3.6%

11 Transportation & Warehousing 4.50 -0.8% 3.3%

12 Educational Services 3.04 3.3% 2.2%

13 Real Estate, Rental & Leasing 2.13 -1.9% 1.6%

14 Arts, Entertainment & Recreation 1.97 0.0% 1.4%

15 Other 11.75 0.0% 8.6%

Government 22.50 1.2% 16.4%

Total Nonfarm 137.05 -0.4% 100%

Business Travel 2.16 -3.2% 1.6%

As shown in the table above, if business travel were its own industry, it would be the 13th largest industry by employment in the United States. Additionally, nearly 1 in 30 U.S. workers owes his job to the business travel industry (including direct and induced employment).


TAX IMPACT OF THE U.S. BUSINESS TRAVEL INDUSTRY

As stated previously, the $265 billion in U.S. business traveler expenditures in 2008 was broken out into 19 industry categories. The input/output model used for the economic impact study also generates the tax impact of the spending in these categories. The federal government, as well as the state and local governments, derive significant taxes from companies, households, and the travelers themselves. Businesses and households pay income, sales, and excise taxes. Travelers pay travel-specific taxes along with general sales taxes. In 2008, the total tax impact of the U.S. business travel was $79.5 billion, with $44.7 billion going to the federal government and the remaining $35 billion allocated to state and local governments. The chart below details the tax impact of the U.S. business traveler.

Tax Revenues from Business Travel 2008 (Million)

Federal Government

Corporate Income 11,063.3

Personal Income 14,796.2

Social Security & Other Taxes 18,794.0

Federal Total 44,653.5

State and Local Government

Corporate Profits Tax 3,237.4

Personal Income 5,331.8

Sales 12,025.7

Licenses & Fees 231.4

Property Taxes 10,769.4

Other Taxes 3,385.9

State and Local Total 34,981.7

Total 79,507.2

In 2008, there were 117.5 million households. If the business travel industry were removed from the marketplace, the government would need to collect an additional $380 per household to maintain its current level of receipts. At the state and local level, each household would be required to generate an additional $298 annually in order for the state and local governments to maintain their current level of receipts. In total, the business travel industry generates $678 in total tax dollars for every household in the country.


U.S. Business Traveler Profile OVERVIEW

One of the primary objectives of this research initiative is to build a comprehensive set of measures that provide, among other things, an understanding of business travel activity in its totality, one that can be used by travel managers, travel buyers, and travel suppliers to develop market, procurement, and resource strategies. We have also endeavored to provide a better understanding of the micro level, the business travelers themselves.

The next section of this report contains the results of the latest IHS Global Insight U.S. Business Traveler profile. The demographic, spending, and behavioral patterns presented below are compiled from an ongoing mail panel of over 600,000 U.S. households managed by D.K. Shifflet & Associates (www.dksa.com). The rich database of trip activity was mined for only those trips whose purpose was identified as business. The respondent results are collected within three months of the completed trip(s). This resulted in over 32,000 business trips from which to build the cross tabulations presented below.

The result is a true current behavioral profile of American business travelers. Moreover, historical perspective is also provided for many of the demographic and behavioral attributes so that one can monitor how business travel has been changing over time. Travel managers, buyers, and suppliers can use this profile to better understand the nature and needs of their ultimate clients –the American business traveler. Travel programs and policies can be adjusted to to better accommodate current behavior. For travel suppliers, the business traveler profile can be used to develop new or improve current travel products and services, as well as to help distinguish the unique needs of the business traveler from his/her leisure travel counterparts.

Note that the source for all tables and charts in this section is D.K. Shifflet & Associates (www.dksa.com).

American business travelers are typically between the ages of 35 and 54 years old. They are married (76%), and have no children living in their households (60%). They most likely work in a managerial or professional position (35%) and make an average yearly income of $78,700.

Business travelers will usually drive to their destinations (60%). The most common destination of the business traveler is Los Angeles (3.79%), New York (3.05%), San Francisco (2.77%), or Chicago (2.64%). The specific purpose of a business trip is quite broad, but is typically transient business (62%) involving sales/purchasing (11%) or group business involving seminars/training (15%). The business traveler will make a reservation (83%) to stay at a high-end or mid-level hotel (28% and 31%) usually pays with a credit card (63%).

A business traveler will spend an average of $465 during their stay, mostly on transportation (37%) and food (20%). Their trip will usually lasts three days or less (87%) when they will leave to go home to Los Angeles (5.3%), New York (3.9%), or Dallas-Fort Worth (2.4%). A typical business trip will be average of 343 miles from a business traveler's origin.


THE TOP LINE: PERSON-STAYES AND SPENDING

Business travelers logged nearly 440 million person-stays in 2008, a 12.7% decline over 2007.

Business travel has been hit hard by the recession as companies substitute technology for travel to cut expenses.

Last year marked the fourth consecutive year of decline for business travel and this travel segment will recover very slowly as the economy crawls out of recession and in to recovery.

BUSINESS TRAVEL PERSON-STAYS

100

200

300

400

500

600

20082005200219991996-16%

-12%

-8%

-4%

0%

4%

Person-Stays (mn) Percent Change

While travel volume has been declining, rising prices have continued to push business travel spending up.

The last declines in business travel spending were in the 2001-2003 period when the industry took double hits from 9/11 and the SARS outbreak.

Moderation in price growth (and declines in the case of fuel) will begin to limit growth in business travel spending.

BUSINESS TRAVEL SPENDING

0

50

100

150

200

250

20072004200119981995-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

Spending (bn$) Percent Change


Business travel is widely distributed across major US metropolitan areas with no single destination capturing more than 4% of total domestic business travel.

As one would expect, the country's top financial centers (LA, NYC and Chicago) capture three of the four top destinations.

Orlando and Chicago are popular group travel destinations and capture disproportionately large shares of group business travel relative to their total business travel shares.

TOP BUSINESS TRAVEL DESTINATIONS BY DMA, 2007

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

LA NYC SanFran

Chicago DC Dallas Orlando Philly Atlanta SanDiego

Perc

ent (

%)

U.S. Business U.S. Group Business U.S. Transient Business

Day trips are the predominant trip length for business travelers. Nearly 60% of transient business trips are one-day trips.

Group business has the longest trip length, with over 40% of these trips lasting one to three nights and 12% lasting four or more nights.

BUSINESS TRAVELER AVERAGE LENGTH OF STAY, 2007

0

10

20

30

40

50

60

Day Trip 1-3 Nights 4-7 nights 8+ nights

Perc

ent (

%)

U.S. Business

U.S. GroupBusinessU.S. TransientBusiness


BUSINESS TRAVEL BY MODE OF TRANSPORTATION

Road trips are the dominant mode of transportation for business trips, accounting for over 70% of all types of business trips.

Among trips taken by air, group business takes the largest share at just over 20%. These trips tend to be a bit further from home and auto travel would not be practical.

TRIPS BY MODE OF TRANSPORTATION, 2007

01020304050607080

Air Auto OtherPe

rcen

t (%

)


Not surprisingly, auto trips tend to be under 300 miles in length. Trips longer than 300 miles tend to lean toward air travel.

People tend to drive farther for group business than for other business trip purposes. This may be a function also of the fact that group business trips tend to be a bit longer in length than transient trips which are predominantly day trips.

AUTO BUSINESS TRIPS BY DISTANCE, 2007

0

10

20

30

40

50

60

100 milesor less

101-300miles

301-500miles

501-700miles

701-1000miles

1001+miles

Perc

ent (

%)


It is not surprising that only a small share of business trips by air are 300 miles or less. However, it is interesting that the distribution of trips over this length is not evenly distributed.

It would appear that there are two types of trips taken by air: those that are regional (301-750 miles) and very long-distance trips (over 1000 miles). The in-between trip distance of 750-1000 miles gets a much smaller share of trips.

AIR TRIPS BY DISTANCE, 2007

05

1015202530354045

300 miles orless

301-750 miles 751-1000 miles 1001+ miles

Perc

ent (

%)



BUSINESS TRAVEL SPENDING PROFILE

There are several factors at play that influence average per-trip spending across the top origin markets.

What is the industry mix of each origin, and where are the key end-markets for these industries? If they're close by, spending will tend to be lower than if they are more widely dispersed.

What is clear is that group business has the highest average per-trip spending for all origin markets. These trips tend to be both longer in duration and farther from home, driving up expenses.

AVERAGE PER-TRIP SPENDING BY ORIGIN MARKET, 2007

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

LA NYC Chicago Dallas Philly SanFran Sacra-mento

Atlanta DC Boston

Total Business Group Transient

Rising prices across the board have led to an increase in average trip spending over the last several years compared to the earlier part of the decade. Moderating prices this year and next will ease the price-induced upward pressure on spending.

Travelers attending conventions will on average spend the most per trip while sales/purchasing trips tend to incur the least travel expense.

AVERAGE SPENDING BY TRIP PURPOSE, TOTAL BUSINESS

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Convention Training Consulting Inspect/Audit

Const'n/Repair

Sales/Purchasing

Gov't/Military

Other

2002-2004

2005-2007


Transportation costs account for the highest share of business travel spending at 37%.

Food and accommodation account for another 39% of average trip spending.

Shopping, entertainment and miscellaneous spending account for the remaining 24%.

SPENDING DISTRIBUTION BY CATEGORY, TOTAL BUSINESS, 2007

37%

19%

20%

11%

8%5%

Transportation Food RoomShopping Entertainment Miscellaneous

BUSINESS TRAVEL ACCOMMODATIONS

Travelers for group business spend the most nights in paid accommodations in a year, with nearly 25% spending between 8 and 14 nights.

Transient business travelers travel more frequently, however, and top the charts at 20% of travelers spending 29 or more nights a year in paid accommodations.

ANNUAL NIGHTS IN PAID ACCOMMODATIONS, 2007

0

5

10

15

20

25

None 1-3nights

4-7nights

8-14nights

15-21nights

22-28nights

29+nights

Perc

ent (

%)



Since lodging accounts for nearly 20% of the average business travelers trip spending, where travelers stay can have a significant impact on average trip spending.

Those travelers staying in high-end hotels spend nearly double on an average trip than a traveler staying in an economy hotel.

AVERAGE TRIP SPENDING BY ACCOMMODATION TYPE

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Non-Paid(Net)

Paid (Net) High-EndHotel

Mid-LevelHotel

EconomyHotel

Other

2002-2004 2005-2007

Business travelers make reservations for their trips and only 17% of travelers will leave for their trip without making a reservation.

Travel agents get the smallest share of reservations while corporate travel departments get the largest.

Deals can be found by going directly to hotel websites and this is also a popular option.

METHOD OF RESERVATION, 2007

0

5

10

15

20

25

30

None 800-number

Direct Corp.Travel Dep't

TravelAgent

HotelWebsite

OtherWebsite

Other

Perc

ent (

%)



WHO IS THE TYPICAL BUSINESS TRAVELER?

Nearly 50% of business travelers are between 35 and 54 years of age.

The remaining 50% is nearly evenly distributed between travelers between 18 and 34 years and over 55 years.

BUSINESS TRAVELER AGE DISTRIBUTION, 2007

49%

26%25%

18-34 Years

35-54 Years

55 Years andOlder

The Gen X and Baby Boom generations form the bulk of business travelers, together accounting for nearly 80% of business travelers in 2007.

The Millennials are early on in their careers at this point and thus make up the smallest share of business travelers.

GENERATIONAL DISTRIBUTION OF BUSINESS TRAVELERS, 2007

05

1015202530354045

Millennials (1981-Present)

GenX (1965-1980)

Boomers (1946-1964)

Silent (1930-1945)

Perc

enta

ge (%

)

Median household income is not very evenly distributed across business travelers. There are large shares at the top and bottom of the scale and smaller shares in the middle.

34% of business travelers make over $100,000 while 33% make less than $50,000. The remaining 33% make between $50,000 and $100,000.

MEDIAN HOUSEHOLD INCOME DISTRIBUTION OF BUSINESS TRAVELERS, 2007

33%

18%15%

34% Under $50,000

$50,000-$74,999

$75,000-$99,999

$100,000 or Higher


Only 40% of business travelers have children living at home. The remaining 60% have no children living in their household.

BUSINESS TRAVELERS WITH CHILDREN LIVING IN HOUSEHOLD 2007

0

10

20

30

40

50

60

70

No Children 5 yearsold or

younger

6-9 yearsold

10-12years old

13-17years old

Perc

ent (

%)

business travel market metrics a global analysis of business

Documents

business travel forecast

business travel overview

business travel survey

global business travel

business travel market

s business travel market

global travel markets

business travels contribution