Passengers are waiting for flights with their luggage at Heathrow airport in London
The cost of business travel, from hotels to airfares, is expected to rise through 2023 as demand recovers more than two years after the Covid pandemic began, according to an industry report published on Wednesday.
Business travel air traffic is expected to rise by almost 50% this year over 2021, after two years of sharp decline, according to a report by travel management company CWT and the Global Business Travel Association. Next year, fees are set to rise by more than 8%, the organizations said.
Airline and hotel executives have been excited about the return to business travel after Covid-19 and measures to limit its spread, such as travel restrictions, have forced companies to suspend many business trips.
While leisure travel has rebounded from the lows of the 2020 pandemic, business travel has lagged behind, depriving hotels and airlines of an important source of revenue. Business travelers or their employers are often less price sensitive than leisure travelers and are more likely to book overpriced rooms or airline tickets.
American Airlines said last month that domestic business travel revenue, which accounted for nearly a third of its 2019 passenger revenue, was 110% higher than three years ago, before the pandemic.
That’s despite concerns about a slowing economy, labor shortages in the travel industry and other headaches, and some major corporations looking for ways to cut spending.
“The anecdotal feedback we’re getting going into the fall is that people need to travel more,” said Chris Nassetta, CEO of Hilton Worldwide, on a July 27 earnings call. “Even though people are worried about where the macro environment is going, they have to run the businesses. And in fact, the more they worry, the more they realize that they have to get out there and make sure that they . hustling.”
Globally, hotel rates are likely to surpass 2019 levels next year, the industry report said.
Big events such as industry conferences have also returned, such as the Farnborough International Airshow, last month. But prices are rising and the cost per attendee is set to rise 25% this year from 2019, the report said.
