Business Travel Spend to Recover by 2024

While the recovery of business travel in 2021 has proceeded at a slower pace than predicted last year, global business travel spend is expected to surge in 2022 and fully recover by the end of 2024 — a year earlier than originally anticipated, according to a survey by the Global Business Travel Association (GBTA).

The results of the 13th annual BTI Outlook, GBTA’s study of business travel spending and growth covering 73 countries and 44 industries, found that after a sharp 53.8% year-over-year decline in spending to US$661 billion in 2020, global expenditures are predicted to rebound 14% in 2021 to US$754 billion. This recovery happened more slowly than forecast in the last BTI Outlook, which was published in February this year.

North America — the US in particular — led the recovery, with spend rebounding 27% year over year in 2021, with markets in Latin America, Middle East and Africa, and Asia-Pacific all picking up 15-20% growth.

Europe lagged behind the rest of the world, gaining 10% this year. The situation is worse in Western Europe, where expenditures for 2021 are expected to fall 3.8% from 2020 levels. According to GBTA, this stems from underperformance earlier in the year, but business travel demand in the region is set to outpace most other parts of the world, barring any further pandemic-related setbacks.

Despite this slow start, survey respondents are predicting a year-over-year spending surge of 38% in 2022 as travel’s recovery and pent-up demand kicks up a notch, potentially bringing global business travel spend back to more than US$1 trillion. This trend will continue in 2023, with spending rising 23% as more international and group travel returns.

By the end of 2024, the numbers are expected to make a full recovery to just above pre-pandemic levels at US$1.48 trillion.

This growth is forecast to slow in 2025 to a more modest 4.3% year over year, ending the year at US$1.5 trillion.

However, challenges remain on the road to recovery, with survey respondents pointing out factors such as persistent Covid-related threats and disruptions, supply chain issues, labour shortages, rising inflation, increased costs and lagging recovery in Asian markets as key risks for on-target recovery.

The GBTA said it is also yet to be determined how the broad adoption of remote working, long-term cuts or elimination of business trips and travel volume, and the increased focus on sustainability practices and policies might impact spending levels.

Suzanne Neufang, CEO of the GBTA, said: “Of any year we’ve issued the BTI Outlook forecast, this one was the most anticipated, and it’s no surprise. The business travel industry recognises there are factors, related to Covid-19 and beyond, that could impact the road ahead over the coming years. However, there is optimism overall as the industry, companies and travellers worldwide lean into recovery and the much-needed return to business travel.”

Different perspectives

This year’s index featured for the first time views from C-level finance professionals and business travellers.

In a poll of 40 CFOs across North America, Latin America, Asia-Pacific and Europe, 70% said they feel the overall economy in their country would be better in 2022 than it has been in 2021. Encouragingly, about half (52%) believe their company’s travel spend would reach 2019 levels in 2022.

When asked about the importance of business travel to their organisation, CFOs felt top return-on-investment factors are sales and business development (68%), internal business planning and strategy (50%), client account management (48%) and employee training and development (48%).

Meanwhile, among 400 global business travellers surveyed, 86% agreed they need to travel to accomplish their business goals. Eighty-one percent believe their volume of domestic travel will be greater or on par with pre-pandemic levels in 2022.

While more than half (54%) said they miss travelling for work and hope to do so more often in the future, 43% said they would not mind travelling less, whether they indicated they miss doing so or not.

Around four in five business travellers said their employer now requires Covid-19 vaccines for travel and in-person meetings.

Challenges Ahead

While global GDP growth is expected to reach 5.8% this year and 4.2% in 2022, downward revisions could be caused by another wave of Covid, further deceleration in the Chinese market, or a worsening of the energy shortage experienced in recent months.

The BTI Outlook lays out four conditions necessary for the full recovery of business travel:

• The global vaccination effort
• National travel policy
• Business traveller sentiment
• Corporate travel management policy

The GBTA said recovery is heavily dependent on the global vaccine rollout, employees’ return to the office and a normalisation of travel policies on both the corporate and national levels. Travel managers now also face the challenge of balancing duty of care with rising costs, sustainability priorities and new considerations on the ROI of business travel.

Source: Business Travel News