The Global Business Travel Association recently released its latest GBTA BTI Outlook – Western Europe report, a semi-annual analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain, which form the majority of business travel in the region and serve as a good barometer of the health of the entire European business travel market. The report includes the GBTA BTI; an index of business travel spending that distills market performance over a period of time.

The report’s numbers were largely positive, indicating improved economies and optimism for the five countries individually and as a whole. We asked Joseph Bates, vice president of research for the GBTA Foundation, what he found most surprising in the report.

“For me, the biggest surprise is the concern about deflation,” he said, noting that while the U.S. federal reserves pumped trillions of dollars into the economy to prevent a collapse, many European countries opted instead for austerity measures and cutbacks. With improved economies, deflation has now become a concern. “It could cause a downward spiral,” Bates explained. “People might expect things to be cheaper next month.”

For meeting and event planners, Bates said that the biggest takeaway from the report is that the economies of Europe are recovering—and that this is a good time for an international event. “You can get good deals, and that will continue for a while,” he said. “But as the economies improve, looking ahead, we may see prices increase and deals become more sparse. So now is a good time to start planning meetings for the rest of 2014 and 2015. Book those venues now while you’re able to get a good deal.”

Key findings of the report include:

*Business travel spending among the five markets is expected to hit $186.5 billion (€137 billion) in 2014, a 5.1 percent growth over 2013. The projected rate of growth is expected to increase in 2015 as spending picks up another 6.5 percent growing to $198.6 billion (€157 billion).

*The outlook for four of the five markets included in the analysis (Germany, the UK, France and Spain) were all revised upward from the expectations in the second-half GBTA BTI Outlook – Western Europe 2013. Italy, Bates noted, has been improving as expected, whereas the other four countries have recovered at a faster—and unexpected—pace. “It’s a good story for the other four markets,” he added.

*Improved business confidence and expectations for stronger economic growth and employment growth contributed to stronger expectations for both domestic and international outbound business travel in Western Europe. In other words, Bates noted, good news is leading to good news. “In a recession, the opposite happens,” he said. “Bad news inspires less confidence and  causes a decline. We’re entering a period in Europe where people are starting to believe that things are improving, and that builds upon itself.”

*While the North – South divide still exists and Germany and the UK seems poised again lead the way in business travel spending for the rest of the region, France, Italy and Spain now appear to be showing solid signs of recovery. “Each country has its own unique makeup in terms of how its economy is structured,” Bates noted. “Great Britain has an economy more heavily influenced by the financial sector, so what we see there is that the financial services area is doing well. That helps pull their economy out of the doldrums. In Germany, they have very heavy manufacturing sector with a lot of activity in exports to the U.S., Europe and China, so things are going well in that regard. The reason that France, Spain and Italy have had a more difficult time is that they’re not as exposed internationally, so when good things happen in the U.S., it doesn’t affect those countries as quickly and as much as Germany or the UK. They rely on their own trade, so they’ve been slower to recover.”

*Perhaps most significantly, 2014 is expected to be first year since 2010 that sees all five business travel markets included in the analysis experience gains in business travel spending. This actually extends beyond the five markets, Bates noted, as more European nations manage their sovereign debt problem. That debt, he said, hurt numerous national economies and stalled recovery. “It took a number of years to balance the books,” he said, but now the markets are poised for more growth.

“Continued signs of strength and progress in the European economy and gathering momentum suggest that 2014 will be a transition year,” Catherine McGavock, GBTA’s regional director for Europe in a statement. Crucially, she feels that the 2012-2013 recession appears to be over and that the European economy is on a more solid footing. “While challenges remain, this is very positive news and bodes well for business travel growth as business confidence rises across the region,” she added.

Outlook Positive, But Challenges Remain

Of course risks to this fragile recovery and a more promising forecast are ever-present. The sovereign debt crisis is far from over, oil prices are always a danger given the potential for Middle East supply interruptions and emerging markets currency risk has also recently show the potential for financial shocks. A new worry is the concern over current rates of disinflation giving way to deflation which can lead households and businesses to delay purchases in anticipation of lower future prices causing aggregate spending to drop.

Country-Level Business Travel Outlooks

Germany The German economy continues to remain one of the most robust in all of Europe. GBTA expects business travel spending to grow 7 percent in 2014 and really pick up the pace in 2015 with 10.6 percent growth—an unprecedented rate for a market as developed as Germany’s.

Spending on domestic business travel is on the rise with expected growth of 7.2 percent in 2014 and another 12.2 percent in 2015.

After rebounding with 5.3 percent growth in 2013, GBTA expects international outbound travel spending to increase 6.3 percent in 2014.

United Kingdom GBTA expects strong performance in UK business travel over the next two years with total business travel spending near $43 billion USD (£25.7 billion) in 2014, up 4.4 percent from 2013. Spending will continue to pick up pace in 2015, advancing 5.1 percent to $45.2 billion USD (£27 billion).

Domestic spending is poised for strong growth in 2014 and 2015, with projected growth of 5.0 percent and 6.9 percent respectively.

International outbound business travel is projected to grow 3.2 percent in 2014 and 1.7 percent in 2015.

France GBTA forecasts total business travel spending will finally turn positive in 2014 after two years of decline growing 5.4 percent to $37 billion USD (€26.8B) and will see similar gains in 2015, expanding 5.5 percent to $39 billion USD (€30.6B).

Domestic business travel spending continues is expected to pick up momentum over 2014 and 2015 with growth projected at 3.6 percent and 7.1 percent respectively.

Snapping back from negative spending in 2013, international outbound spending is expected to grow aggressively in 2014 at 8.8 percent, before it will moderate in 2015 with 2.6 percent growth to $13.5 billion USD (€9.8B).

Spain Spanish business travel spending has fallen on an annual basis for 10 consecutive quarters, but after finally beginning to grow in the second quarter, GBTA expects a 4 percent rise in 2014 followed by another 5 percent increase in 2015 to $18.4 billion USD (€14.4B).

Domestic business travel will pick up 2.5 percent in 2014 and quicken the pace in 2015, growing 5.2 percent

Spending on international outbound will leap forward 10 percent in 2014 and moderate to 4.2 percent growth in 2015.

Italy GBTA expects the first quarter of 2014 will be the last quarter of annual spending declines forecasting 2.8 percent growth followed by another 2.8 percent growth in 2015 to $32 billion USD (€25.2B).

After falling in 2013, spending on domestic business travel in Italy will grow 2.4 percent in 2014 with similar projected gains of 2.3 percent in 2015.

Spending on international outbound business travel is projected to rise even more steeply than domestic spending with gains of 6.5 percent in 2014 and another 6.7 percent in 2015.