Overall business travel is unlikely to return to levels seen prior to the pandemic, according to a new study.
While full recovery to 2019 spending “appears likely” by late 2024 or early 2025, corporate travel “will likely be smaller” than it was prior to Covid-19 in real terms when adjusting for lost growth and inflation.
The Deloitte research, based on a survey of 334 travel managers and executives in the US and Europe, including 56 in the UK, found that spend in the combined markets is projected to surpass half of 2019 levels in the first half of 2023, and two-thirds by the end of the year.
The report said: “International trips continue to grow, as challenges decline for visiting parts of the world.
“US respondents expect international’s share of travel costs to jump from 21% in 2022 to 33% in 2023.
“European respondents expect 32% of 2023 spend to go to international trips within the continent, and 28% beyond.”
Attending live events appears poised to be a big growth driver, leapfrogging from the fifth biggest trigger for increased spend in 2022 to the top spot in 2023.
“More than half of travel managers in both the United States and Europe expect industry events to spur travel growth this year,” the Deloitte study found.
It added: “Many supplier contracts were frozen for two years or longer during the Covid-19 pandemic and began to be renegotiated in 2022.
“As buyers return to the negotiating table with lower expected trip volume, some report that some suppliers are pushing for higher rates.
“Hospitality providers are reportedly taking a stronger approach than airlines, and European suppliers are pushing harder than American ones.”
But the report by the accountancy giant warned: “Climate concerns will likely put a cap on corporate travel gains for several years to come.
“Four in 10 European companies and a third of US companies say they need to reduce travel per employee by more than 20% to meet their 2030 sustainability targets.
“And many are building this into their policies. Forty-three per cent of respondents (42% in the US and 45% in Europe) say they are in the process of implementing a structure to assign carbon-emission budgets to teams alongside financial budgets.”
However, “complications abound for consistent emissions tracking and for mandating such budgets”.
The report concluded: “Changes in how work gets done look likely to limit corporate travel’s upside and alter the stakes of trips taken.
“Sustainability commitments and requirements also are expected to limit corporate travel growth, but opportunity is apparent in the willingness among travel buyers to work side by side with suppliers as they seek ways to make travel greener.
“And all of this appears to be happening in the context of a delicate and shifting balance around cost, value and the strategic positioning of travel.
“For the travel suppliers and intermediaries that serve corporate clients, these emerging realities could create openings for smarter partnerships and collaborations that have the potential to unlock travel’s competitive advantages while minimising its downsides.”