Business travel spend set to reach two-thirds of pre-pandemic level by 2022

By Charlotte Turner |

Worldwide business travel spending looks set to rise by more than a quarter this year and reach two thirds of pre-pandemic levels by 2022, according to the World Travel & Tourism Council (WTTC).

 

The forecast has been issued inside a new WTTC report in collaboration with McKinsey & Company called ‘Adapting to Endemic Covid-19: The Out-look for Business Travel’.

 

It draws on research, analysis and in-depth interviews with travel & tourism business leaders to enable organisations to prepare for corporate travel in the post-pandemic world.

 

“Business travel was disproportionately affected by Covid-19 and has been slower to resume,” confirmed the WTTC. “Given that business travel is vital for many sectors of the global economy, it is important that all stakeholders join forces to find solutions to aid its recovery.”

 

ROOM FOR OPTIMISM

Julia Simpson, WTTC CEO & President, said: “Business travel is starting to pick up. We expect to see two thirds back by the end of 2022.

“Business travel was disproportionately affected by Covid-19 and has been slower to resume,” confirmed the WTTC. “Given that business travel is vital for many sectors of the global economy, it is important that all stakeholders join forces to find solutions to aid its recovery.”

“Business travel was disproportionately affected by Covid-19 and has been slower to resume,” confirmed the WTTC. “Given that business travel is vital for many sectors of the global economy, it is important that all stakeholders join forces to find solutions to aid its recovery.”

“Business travel has been seriously hit but our research shows room for optimism with Asia Pacific and Middle East first off the starting blocks”.

 

According to the new report, global business travel spend is expected to rise by 26% this year and will be followed by a further rise of 34% in 2022.

 

“But this comes in the wake of a 61% collapse in business travel spend in 2020, following the imposition of extensive travel restrictions with considerable regional differences in the bounce back around the world,” highlighted the WTTC.

 

ADJUSTMENTS IN REVENUE MODELS REQUIRED

To speed up the recovery of business travel, the report recommends businesses adjust their revenue models, expand geographic focus, and improve digital services.

Jane Sun, CEO of Ctrip.com was beamed in from China during the TFWA World Exhibition opening conference last week in Cannes.

Jane Sun, CEO of Ctrip.com was interviewed by Hard Talk presenter Stephen Sackur at last week’s TFWA World Exhibition opening conference in Cannes.

WTTC data shows that the revival in business travel is being led by the Middle East, where business spending is set to rise by 49% this year, stronger than leisure spending at 36%, followed by a 32% rise next year.

 

In Asia-Pacific business spending is set to rise by 32% this year, and 41% next year, while in Europe a rise of 36% can be expected this year, stronger than leisure spending at 26%, followed by a 28% rise next year.

 

In Africa spending is expected to rise by 36% this year, slightly stronger than leisure spending at 35%, followed by a 23% rise next year.

 

And finally in the Americas business spending is expected to rise by 14% this year, and by 35% in 2022.

Back to business: 3,408 delegates descended on Cannes for the TFWA World Exhibition last week.

Back to business: 3,408 delegates descended on Cannes for the TFWA World Exhibition last week.

LOSSES OF $4.5 TRILLION IN 2020

Last year, the travel & tourism sector suffered losses of almost US$4.5 trillion, said WTTC and more than 62 million people lost their jobs. Domestic visitor spending decreased by 45%, while international visitor spending fell by an unprecedented 69.4%.

 

Demand for business travel has been slower to recover than leisure and corporate policies continue to influence business travel demand according to national travel restrictions.

 

The Covid-19 pandemic has also been a catalyst for change, driving the move to digital and so changing the supply for possible business travel as hybrid events become the new norm.

 

The operating environment has also become more opaque, with a greater need for clarity around the rules and regulations necessary to allow unimpeded international travel.

 

BUSINESS TRAVEL ‘ESSENTIAL’ TO RECOVERY OF GLOBAL TOURISM 

The report emphasises the continuing importance of business travel and the spend it generates for global economic growth.

 

Analysis shows that in 2019, most major countries depended on business travel for 20% of their tourism, 75 to 85% of which was domestic.

 

Although business travel represented only 21.4% of global travel in 2019, it was responsible for the highest spending in many destinations, making it essential for the recovery of the entire travel sector and for its many stakeholders.

 

Business travel is an important part of the service offering for airlines and high-end hotels and essential for generating much of their revenues.

 

Before the pandemic, business travel accounted for around 70% of all global revenue for high-end hotel chains while between 55 and 75% of airline profits came from business travellers, who made up around 12% of passengers.

 

BOOM IN CHINA

Jane Sun, Trip.com CEO, said: “In China, business travel is booming very fast. Trip.com Group’s corporate travel business is actually one of our fastest growing segments, so people still need to see each other to conduct a business and close the deals.

 

“We remain positive that once business is back to normal, we expect even stronger growth compared to the pre Covid level.”

 

Chris Nassetta, Hilton President & CEO, said: “A return to business travel will be critical in our industry’s recovery from the pandemic.

 

“We’re continuing to see incremental progress and this report illustrates just how important business travel is to the global economy. Travel and tourism will continue to drive progress for millions around the world – especially as people begin traveling again.”

 

WTTC believes while business travel will return, its uneven recovery will have important implications across the global Travel & Tourism sector, making private public partnerships even more important in the months and years ahead.

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