Business tourism will have a slow recovery
Persistent employee and business concerns hamper the segment's recovery, according to a Deloitte study
Today a Deloitte report has been published that reveals the current affairs of the business travel segment.
"While many travelers are ready to return to a constant travel schedule, ongoing health concerns and changing workplace priorities will influence the future of corporate travel. The changes adopted and the lessons learned during the pandemic, Combined with progress towards sustainability commitments, they are creating a new normal for corporate travel. However, the importance of in-person interaction for business success is clear, creating opportunities for the airline industry to continue to attract and serving business travelers, "said Anthony Jackson, Director of Deloitte Transactions & Business Analytics LLP and a leader in US airlines.
Main aspects to highlight:
- After more than a year of canceled meetings, conferences and trade shows, and closed workspaces, business travel will accelerate in the second half of 2021, but will remain well below pre-pandemic levels.
- Reopening and returning to work at the office will be a main trigger to restart corporate travel, although executives are cautious about the impact that continued uncertainty surrounding the pandemic will have on both returns. Only a third of companies expect to reach or exceed 50% of 2019 travel spending levels by the end of 2021.
- Although business leaders expect steady increases, corporate travel is unlikely to make a full recovery over the next year. Just over half (54%) of those surveyed expect their companies to reach 2019 levels by the fourth quarter of 2022.
- Until immigration policies of major U.S. trading partners allow for border crossings without the need for quarantine, U.S. corporate travel They will remain primarily domestic. And even when policies allow for greater ease of movement, the unpredictable and uneven nature of the pandemic across countries and regions will depress demand for international corporate travel.
- As travel returns, both cost containment and a corporate commitment to reducing carbon emissions will affect travel volume, as many companies see limiting travel frequency as a means of addressing both.
- Travel use cases that support customer relationships have been identified as the most critical to business success and the most dependent on in-person interaction. Visits to prospects and clients will lead the return of business trips.
Because it is important
While domestic leisure travel has taken off in recent months, corporate travel is facing a slower return due to a more complex set of considerations. Businesses find it difficult to ask employees to travel, and many of their customers, suppliers, and partners have yet to open their doors to employees, much less visitors. According to the new Deloitte report, "Return to a Transformed World: How the Pandemic Is Reshaping Corporate Travel," these conditions are temporary, as competition and growth imperatives drive business leaders to slowly increase their spending to maximize the value of face-to-face interaction.
The study is based on a survey of 150 US-based travel managers and executives with travel budget oversight conducted between May 28 and June 20, 2021, as well as interviews with executives of US companies whose Air spending in 2019 averaged $ 123 million.
Employee and customer reluctance to affect travel growth through 2022 Office
reopening, set to accelerate in the fall, will boost domestic business travel in Q4 2021, especially if accompanied by sustained improvement on vaccination and infection rates within the US However, travel managers expect employee and customer resistance to travel and face-to-face meetings to slow the return of corporate travel. Furthermore, the report notes that international travel cannot return on a large scale until health realities and border policies allow for greater ease of movement.
Taking into account these triggers and other potential drivers for travel returns, as well as business travel expense estimates through the end of 2022, Deloitte has developed quarterly corporate travel return projections.
Two scenarios account for the range of likely outcomes through the end of 2022. A strong recovery in business travel presupposes continued easing of border restrictions in much of the world. It also assumes continued progress in vaccination against COVID-19 and that there will be no prolonged or large-scale outbreaks in the US A weaker scenario explains slower improvement in public health and border opening, and more reluctance. among travelers.
- Deloitte projections, based on the survey and executive interviews, show that business travel in the US increases for the remainder of this year, from 10% to 15% of 2019 spending in the second quarter of 2021 to 25-35% of 2019 spending in the fourth quarter of 2021.
- While many conferences will return to live or hybrid formats later this year, roughly a third of companies (36%) say Q4 2021 travel spending will remain below 25% in 2019, and two-thirds (66%) say yes. be below 50%.
- By the second quarter of 2022, US business travel spending is expected to rise to 40-60% of 2019 spending as workers get past the end of the cold and flu season and a calendar emerges. most consistent of live and hybrid industry events.
- By the end of 2022, corporate travel in the US will reach 65-80% of 2019 levels, driven by greater clarity on the health situation, the current state of offices compared to remote work and support for pre-planned and last minute trips. This would represent more than four times the travel spending since the summer of 2021.
Sustainability and cost imperatives challenge the full return of corporate travel
When the pandemic crippled corporate travel, it generated hundreds of millions of dollars in cost savings for many companies. Now, as companies begin to get back on the road, they are rethinking their budgets and travel expenses by taking advantage of new business practices and prioritizing sustainability goals.
- Overall, 7 out of 10 companies plan to reduce travel frequency in an effort to boost bottom line.
- Almost half (45%) of companies will take more control of the booking process by requiring stricter adherence to their prescribed travel policies.
- 37% of companies expect their percentage of air bookings through company-approved booking platforms to increase in 2022 compared to 2019, and 45% expect the same for accommodation. Many plan to cut costs by choosing cheaper travel providers (37%) and negotiating better preferential rates (35%).
- In addition, 79% of the companies surveyed have a stated commitment to reducing carbon emissions or are working towards a commitment to do so. About half of the respondents (48%) plan to optimize their business travel policy to reduce their environmental impact over the next year.
- To curb travel-related emissions, companies will use lessons learned during the pandemic to limit the frequency of travel. The main ways that companies plan to improve their sustainable travel profiles are by holding internal meetings online (76%) and organizing meeting agendas to reduce the need to fly (67%).
- Additionally, meeting and collaboration technology platforms will continue to evolve the needs of businesses while mitigating the need for certain travel.
- About 60% of respondents expect their companies to spend less to attend trade shows and conferences in 2022 compared to 2019.