The only narrative about the rebound in pandemic travel, which remains largely disputed about two and a half years later, fueling forecasts from all sides, is a return to business travel.
Like an avalanche of new predictions at the end of the summer of a full recovery of the company – again with no real consensus – the story has received a lot of attention that Google, once a giant sending people on the way, like Google has somewhat limited travel budgets that it has only called ‘key to business “travels.
For those doubting business travel, this was another proof that the industry will never be restored to its heyday. This is because, after a few tough years (and in some countries), the business travel industry looks dimly at the better times of 2019, asking: When will it be like this again?
More specifically, it looks back at the $ 1.4 trillion that was spent on business travel, based on calculations by the Global Business Travel Association.
We all know business travel is a high-margin game. Hotels, airlines and travel agents have suffered from the prolonged absence of better-paid corporate guests. The effect of those corporate dollars and generous reimbursements for local restaurants, conference rooms, taxi companies, and more in the wider ecosystem has also died down.
What About That $1.4 Trillion Question
The $ 1.4 trillion has appeared in the media, financial reports and investor presentations for several years. To see also : US and UK property market slowdown risks deeper global economic slump.
However, the magic number is more prominent lately as observers view the end of summer as a sort of cut-off point for the coronavirus, and new forecasts are trying to pinpoint exactly when this “recovery” will occur.
Earlier this year, many believed that the collapse would be a true test of business travel immunity, as some doom insiders said it would never return to its former vitality.
“Fall is the conference season – a time that has gained momentum after the pandemic as an increasingly dispersed workforce tries to make the most of travel by meeting with colleagues, industry colleagues and customers to meet business goals,” TripActions said in its Fall view of business trips.
The Global Business Travel Association predicts $ 1.4 trillion will return now in 2026; there is still way to go, given the (relatively) low base of $ 661 billion spent on business travel in 2020, when Covid-19 was at its global peak.
He believes that this is how it will play out: approximately $ 993 billion will be spent in 2022; It is projected to be $ 1.2 trillion in 2023; $ 1.3 trillion in 2024; $ 1.4 trillion in 2025; and $ 1.5 trillion in 2026.
Is Forecasting Even Relevant?
With so much global uncertainty affecting the travel business, including inflation, the war in Ukraine, hybrid work and more, are the forecasts still valid? Read also : Gov. Lamont and Lt. Gov. Bysiewicz Urge Businesses from States Restricting Women’s Rights to Relocate to Connecticut.
This foundation is still needed, but at the same time, a lot has changed and continues to change in the world of work, which by its nature affects business travel.
“Someone has to make predictions, I’m glad they do,” said Skift Katharina Navarro, travel manager at a large consulting firm and president of the Global Business Travel Association in France.
In fact, the return of business travel demand has long been one of the most difficult sectors for CEOs to predict.
“Honestly, if I go out and ask consultants about data points in the next three years, they’re all very hesitant. Nobody wants to say. But the forecast is a forecast. If it changes, I adapt, I correct my assumptions. I feel like too many people are saying nothing now, and that’s not helpful. ”
From a bird’s eye view, forecasts help suppliers gauge future demand and markets, and travel management companies manage resources. So yes, it does matter, for example, Latin America is predicted to grow 55 percent this year.
Lots of people in the industry pay attention to the association’s annual forecasts it uses with Rockport Analytics.
“Our view of the contribution to each country-sector combination has been established by analyzing trends in purchasing behavior for business travel in 44 sectors in 73 countries over more than 20 years. By modeling the trends in the level of business travel expenses per industry sales dollar (a measure of business travel productivity) over time, we are able to extend these factors into the future, ”he says.
Nobody else can be that specific or distinguish between business and recreational activities, the association says.
“Overall, size is the wave we’re riding in this space,” said Nick Vournakis, CWT executive vice president and chief account officer. “This is how the supply chain judges other companies, and that’s what they think.”
Where Are We Now?
With tourism slowing down after the holidays and schools and offices reopening, all eyes are on business travel data as a sneak peek of what’s to come. To see also : Business model innovation is the hottest thing in online travel. A natural rebound is expected as this pent-up demand continues.
According to Guy Snelgar, Global Director of Travel, Advantage Travel Partnership, positive trends in the first three quarters of 2022 provide a good basis for getting a clearer picture of 2023.
“We see big differences in business travel forecasts this fall and winter,” commented Scott Davies, CEO of the UK’s Travel Management Institute. “While some organizations are trying to limit travel to levels well below 2019 due to economic uncertainty and rising costs, many companies are catching up by traveling extensively to support both internal and customer engagement.”
TripActions identified a “similar seasonal increase” in business travel, despite concerns about the macroeconomic environment. The corporate start-up travel agency saw a six-fold increase in the number of business travel bookings with a start date between September 1 and November 19, 2022, compared to the same booking window and travel start date last year.
Following Labor Day in the United States, it said it broke its biggest record for bookings and travel expenses, with a 28 percent increase from week to week.
“There was a lot of consternation about the idea of September as a demarcation line because it’s the end of the holiday in the West. We see a huge seasonality, where there is usually a natural decline in business travel in July and August and a rebound from September to November, ”added CWT’s Vournakis.
“We don’t expect this calendar year to behave any differently than this one, but the idea that there will be a massive exodus on business travel from September 1, I’m not sure we’ll see it happen.”
Instead, he predicts a healthy recovery with a growth curve that will be slow but consistent: “We tend to recover, it won’t be steeper.”
The Difficult Task of Forecasting
Not all think the same. “Most of the annual travel budget for 2022 has already been concentrated in the first and second quarters of 2022, leaving a difficult third and fourth budget for the full year of projected expenses,” warned Paul Tilstone, managing partner at consulting firm Festive Road.
However, if there is only one way, now is probably the best time to consider how business travel is measured. The challenge will be to anticipate what types of companies will travel, how they do it and above all why in the era of the Great Connection, where work, travel and life in general.
The future of work trends and the nascent generation of digital nomads – long-term travelers who live and work anywhere and have the potential to be the small and powerful type of traveler – is a vast topic in itself.
However, collecting new information, even the latest trends, can help the travel industry adapt, react and recover, probably more than charting from larger companies.
The more urgent topic is examining the size of businesses that are currently traveling for newer purposes. They were off the radar before the pandemic, but if larger companies limit travel in the long run, for reasons of sustainability or otherwise, they will become a force to be reckoned with. (At the extreme micro level, what is the significance of the partnership of the next generation hospitality company Selina with the Fiverr freelance network?)
“The bottom line is that earlier this year we saw a quicker return to travel from the small and medium-sized market, but we are now seeing an equal recovery in slope and pace in the corporate space,” said CWT’s Vournakis. “In fact, some of our biggest customers are ahead of their 2019 journeys.”
Small businesses likely benefited from fewer regulations and corporate restrictions. But as inflation and energy prices are rising, there is likely to be a pendulum swing this year. “There is more caution in managing the inflationary pressures that come with this resurgence in travel demand. You’ll see more sensitivity to it in the lower end of the market compared to the higher end, ”added Vournakis.
But size does matter, and Ramp for card and expense management, which has raised $ 1.4 billion since its founding in 2019 and is seeing massive growth in travel, is calling for a change.
“Everyone in the business travel industry has always talked about travel management for small and medium-sized enterprises. It never worked, ”said Skift Ben Alderman, head of Finance, Tourism and Accounting Partnerships.
“Nobody has had any success because it just doesn’t matter if they spend $ 50,000 or $ 100,000 a year on travel to deal with it.”
The Ramp expense platform allows firms to set rules, and Alderman said spending was a lagging indicator, but policy was the leading indicator. In June this year, customers reduced by an average of 25 percent. allocated budgets for employee travel for the future, which may indicate that more people traveled and the employer just wanted to control the situation; travel, as a percentage of card spending, is growing at a double-digit rate.
Now it’s worth following more of these trends on the fly. “Data from large corporations is herd behavior,” said Alderman. “Everyone tends to do the same things, so you have similar opinions and ratings from the big travel management companies. Very rarely does American Express Global Business Travel turn around and say anything entirely different from CWT. It just doesn’t happen.
It is worth following the behavior of small and medium-sized enterprises, he said, as they are such a huge part of the economy.
“Traditional travel rules have been thrown away since Covid,” he added due to irregular travel expenses. “In the micro SME space, people just had to go back there and the policy they took in the draw from two years ago made no sense anymore.”
Units, Not Volumes
It is also time to improve the methodology.
One seasoned travel manager working for a large consulting firm specializing in the pharmaceutical sector said that looking back to 2019, it fails to recognize that companies come in all shapes and sizes today. In some cases, the missing three years of growth must be taken into account. The pandemic strangled most companies, but many sectors prospered during those dark years, especially pharmaceutical and software companies.
“We quadrupled in the time of the pandemic,” he said, preferring to remain anonymous. “While most people can look at their return to travel levels and monitor them on business trips, I didn’t want to do that and just figured out a number. Of course, we have seen a pace of growth (travel) due to the fact that our company is much larger than it used to be in terms of employment. “
While travel spending increased, it removed the growth element and calculated the percentage of employees who traveled in the first two quarters of 2019, compared to the same quarters in 2022. Instead, how many traveled, how many people traveled?
As a result, his company’s actual ‘return to travel’ rate was 45.5 percent in 2019, which means that half as many employees traveled on business.
A New Era of Accountability
In the long run, travel managers anticipate a change in the way they perform their work to reflect this change in work.
Justifying a destination in more detail is becoming more common, and Google is one of the newest mega-companies to restrict and ensure that travel is more “critical” than social.
As prices rise, new data comes in and we focus on explaining the reasons for any increases.
“As we approach the end of the year, we are currently negotiating with our suppliers,” said Navarro. “We are trying to understand the impact of inflation on different categories. Finance commonly understands that prices are going up, but the impact of orders is to mitigate as much as possible to see how much of our program we can consolidate ”.
I want to better understand the breakdown. In the case of air, for example, how much is a fuel component, how much does work contribute. “In the case of airlines, I see more centralized data. This is comparable between airlines, but for hotels it is very different depending on the ownership structure, brand or location. I see hesitation and opposition. You have to be careful, some providers have tried to ease the burden on increases in the last few years. I am sure about the prices I have at the moment, but I don’t want to lose my competitive edge. “
A recent article in USA Today predicted that hotel fees would start to fluctuate, with daily cleaning fees expected to be the next big charge. The previous confusion was about spa fees, which are also expected to return.
Accountants are responsible for this. Skift argued that “corporate travel is now in the tight grip of CFOs,” but one travel manager, working for a US television production company, said it was not so controlled. With travel programs that are not fully recovered, he comes across much more frequently due to his constant hesitation to travel.
“In the case of employees, the awareness is that they do not have to travel,” he said. “We agree that this is the right level of spending. Travelers are generally more careful and the disruption continues. There are simply no trips to internal meetings and the directors meet quarterly or annually. ”
Don’t Call It a Recovery
This natural correction seems to take a long time. Another travel manager, based in Europe and working for a recruiting firm, said his company’s management coordinated ahead of time and linked meetings.
“I’m not sure business travel will see the growth the industry is counting on,” he said. “It’s going to be slow burning, it’s not a quick return to reality after a few months as we thought at the beginning.”
Navarro believes that in the future, travel managers will work in two currencies: the ticket price and the carbon footprint of the ticket. Microsoft is already charging itself an internal penalty based on the carbon footprint of its journey. With increased scrutiny, more companies may find that their travels will have to reduce faster than expected.
“We won’t necessarily see it in 2023, but the idea that there may be carbon budgets to accompany travel budgets isn’t that far off,” agreed CWT’s Vournakis. “It is very possible that more progressive corporations that lean towards this will have clear carbon budgets from 2024.”
Tilstone’s snapshot, like many others, is that the remainder of 2022 will not set a demand plan for the future, and 2023 is also expected to remain in constant motion as companies that have moved remotely make sure of what value will bring you face to face contact, and when your journey adds value.
“I struggle with the word” recovery. ” Recovery means we go back to where we were before. They were not. We are entering a new way of traveling and travel management with a greater emphasis on sustainability, ”said Navarro. “This is not a recovery, it is a redesign of the industry.”
Her sentiments reflect the feelings of workforce strategist Mattison, who told delegates at the Global Business Travel Association convention: “I speak to many leaders. Sometimes there is a subtle and sometimes not so subtle ethos or mindset: “We’ve been through this (Covid) and now we can get back to normal,” said workforce strategist Seth Mattison at the Global Business Travel Association convention in San. Diego in August.
“I hate being heralds of bad news, but there’s nothing to go back to. This world is gone. Why? Because we have changed as people and we have changed as a society. We’ve changed the way we work and create value for our customers. ”
In his opinion, travel managers now play such an important role in shaping the experiences of their colleagues.
“And guess what, the future of work is changing the future of business travel. We have a chance to rethink, design and re-imagine what it might look like, ”he said.
