Key findings from a new survey reveal over half of large-company executives agree that reducing business travel may represent short-term savings but will bring long-term negative impacts on revenue.
The survey is part of the Quarterly Business Travel Tracker, launched in April in a collaboration between U.S. Travel Association, J.D. Power and Tourism Economics.
Despite agreement that reducing business travel will be harmful to long-term sales, more than two-thirds of executives expect their company will spend less on business travel over the next six months compared to the same period in 2019. Further, half of companies still have policies in place restricting business travel.
U.S. Travel is encouraging these companies to prioritize a return to normal business travel operations. Companies that restrict or reduce business travel risk negative impacts to their bottom lines and losing a competitive advantage in the coming months, as the Quarterly Business Travel Index (BTI) projects that business travel activity will accelerate in the near term.
Quarterly Business Travel Index
The Business Travel Index projects a positive outlook for Q3, with an expected improvement to 84—up from 81 in Q2 (2019=100). The business conditions leading index, which measures the business environment for travel, shows moderate improvement, rising to 103 for Q3, up slightly from 102 in Q2.
This near-term positive outlook also aligns with U.S. Travel’s latest forecast, which shows that domestic business travel will experience strong growth in 2022 before tapering off in following years.
However, there are headwinds on the horizon that threaten growth. In the coming quarters, companies will make travel decisions in a business environment that is adjusting to increased interest rates and high inflation, as well as labor shortages and supply chain challenges. Elevated risks of recession are anticipated to result in some caution among corporate decision-makers, which would stifle business travel spending by some companies. Additionally, with more businesses setting aggressive goals to reduce their carbon footprint, companies may choose to reduce business travel to achieve net zero emissions.
Policies to restore business travel
U.S. Travel is advocating for federal policies to offset these threats and help accelerate the business travel sector’s recovery. In a recent letter to U.S. Treasury Secretary Janet Yellen, U.S. Travel called for the agency’s support on a tax extenders package that includes a temporary restoration of the entertainment business expense deduction and an extension of full expensing for business meals.
The federal government should also call workers back to the office and encourage these workers to return to the road for business travel. Further, U.S. Travel is advocating for the federal government to play an active role in drawing large, international meetings and events to the U.S. to spur business travel and increase global competitiveness. These policies are key priorities for U.S. Travel’s Meetings Mean Business Coalition.