- Several forecasts see business travel expenditures growing substantially in 2022, but don’t see recovery to pre-pandemic levels for several years
- Many industries rely on business travel for a major portion of revenues, including transportation, hotels, tourism, and restaurants
- Numerous variables will impact business travel trends, including the expanded use of remote options and sustainability commitments
Summary by Dirk Langeveld
Business travel is expected to grow substantially next year, according to several economic forecasts. However, it is not expected to recover to pre-pandemic levels until 2024 as both near-term and long-term factors are impacting how often companies are sending workers on trips.
While many businesses anticipated that they would accelerate their resumption of in-person operations in the fall of this year, this schedule was complicated by a surge in COVID-19 cases brought on by the Delta variant. The Global Business Travel Association found that business travel has recovered more slowly than expected in 2021. After global expenditures on business travel declined 53.8 percent to $661 billion in 2020, GBTA expects that spending will grow 14 percent to $754 billion by the end of this year – including a 27 percent increase in business travel in the United States.
Another forecast, from the World Travel & Tourism Council in association with McKinsey, is anticipating a 26 percent gain in business travel expenditures compared to 2020. Earlier this year, Deloitte released a quarter-by-quarter forecast saying companies are likely to start exploring the option of expanding business travel as the end of 2021 approaches, in-office work is resumed, and travel restrictions are eased.
Deloitte says that while less than one-fifth of businesses say they have recovered to pre-pandemic travel spending, nearly nine out of 10 believe they will be spending at 75 percent of pre-pandemic levels by the end of 2022. However, nearly half don’t believe their business travel spending will return to pre-pandemic levels by this point.
This expectation is reflected in the forecasts of other organizations as well. GBTA expects that business travel expenditures will increase 38 percent in 2022 due to pent-up demand. The World Travel & Tourism Council forecasts a 34 percent boost in global business travel, with travel reaching two-thirds of pre-pandemic levels in this year.
Full recovery is generally not expected until 2024. GBTA forecasts a 23 percent increase in business travel spending in 2023, with expenditures reaching $1.48 trillion (exceeding the pre-pandemic level of $1.4 trillion) in 2024 and holding steady at $1.5 trillion in 2025. This recovery would be slightly faster than expected, as the organization initially forecast that spending would reach pre-pandemic levels in 2025.
The U.S. Travel Association also pegs 2024 as the earliest point when business travel will recover from the impact of the pandemic. This organization says leisure travel is likely to recover more quickly than business travel.
Business travel dropped precipitously after the start of the COVID-19 pandemic due to lockdowns and a major shift to remote work. This trend is also contributing to a drop in revenues for several industries dependent on people traveling for work, including transportation, hotels, restaurants, and tourist destinations. The World Travel & Tourism Council determined that while business travel represented only 21.4 percent of global travel in 2019, these travelers also accounted for more spending at their destinations than leisure travelers.
Deloitte says businesses dependent on business travelers should use the recovery period to strengthen their relationships with these customers, but also anticipate that business travel may undergo a pronounced shift in the coming years. The U.S. Travel Association says many larger companies have been reducing their travel budgets as they turn more to virtual gatherings and conferences, both out of safety concerns and as a cost-cutting measure. This shift will likely result in small and midsize companies making up a larger share of business travel spending.
Sustainability goals could also play a major role in company decisions on business travel. As more businesses make commitments to reduce their greenhouse gas emissions, they will be more likely to decrease their use of air travel.
Several other factors could also impact how quickly business travel reaches pre-pandemic levels. These include additional COVID-19 spikes, supply chain disruptions, labor shortages, travel restrictions, vaccine requirements for travel or conferences, and inflation or rising travel costs.
Indeed, the emergence of a new COVID-19 variant in Africa is raising new concerns and has prompted new travel restrictions in a bid to curtail a renewed spread of the virus. While scientists are still determining the risks of the Omicron variant, including whether it is more contagious or better able to break through vaccine protections, some organizations have already adjusted their travel or event plans in response.
