Friday, June 14, 2024

Business travel spend set to reach two thirds of pre-pandemic levels by 2022: WTTC

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 comes in a major new WTTC report in collaboration with McKinsey & Company called ‘Adapting to Endemic Covid-19: The Outlook for Business Travel’.

It draws on research, analysis and in-depth interviews with Travel & Tourism business leaders to enable organizations to prepare for corporate travel in the post-pandemic world. Business travel was disproportionately affected by Covid-19 and has been slower to resume. 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.

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 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, the modest boost for business travel with global business travel spend rising 26 per cent this year will be followed by a further rise of 34 per cent in 2022. But this comes in the wake of a 61 per cent 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.

To speed up the recovery of business travel, the report recommends businesses adjust their revenue models, expand geographic focus, and improve digital services. The shared challenge of restoring business travel will also depend on ongoing collaboration and partnerships across the private and public sectors and nurturing new relationships.

Considering this year and next, WTTC data shows which regions around the world are leading the revival in business travel, led by the Middle East:

Middle East – Business spending is set to rise by 49 per cent this year, stronger than leisure spending at 36 per cent, followed by a 32 per cent rise next year

Asia-Pacific – Business spending is set to rise by 32 per cent this year, and 41 per cent next year

Europe – Set to rise by 36 per cent this year, stronger than leisure spending at 26 per cent, followed by a 28 per cent rise next year

Africa – Spending is set to rise by 36 per cent this year, slightly stronger than leisure spending at 35 per cent, followed by a 23 per cent rise next year

Americas – Business spending is expected to rise by 14 per cent this year, and by 35 per cent in 2022.

The report details how global travel-related spending declined significantly from 2019 to 2020, as a result of COVID-19 and the ongoing restrictions to international mobility. Last year, the tourism sector suffered losses of almost $4.5 trillion, and more than 62 million people lost their jobs. Domestic visitor spending decreased by 45 per cent, while international visitor spending fell by an unprecedented 69.4 percent.

WTTC’s report also shows significant changes over the past 18 months, particularly in demand, supply, and the overall operating environment which affect business travel.

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.

However, some sectors have fared better than others with early rebounders including manufacturing, pharmaceuticals, and construction companies while service-orientated and knowledge industries including healthcare, education, and professional services are likely to experience longer-term disruption.

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 per cent of their tourism, 75 to 85 per cent of which was domestic. Although business travel represented only 21.4 per cent 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 per cent of all global revenue for high-end hotel chains while between 55 and 75 per cent of airline profits came from business travelers, who made up around 12 per cent of passengers.

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

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