Even as COVID-19 health concerns and travel restrictions subside, corporate travel faces a complex prognosis. Many companies are now implementing the return-to-office plans they delayed last fall, and an increase in corporate travel is likely to accompany this shift. However, according to Deloitte’s latest report, “Reshaping the Landscape: Corporate Travel in 2022 and Beyond,” a recovery to 2019 spending levels remains unlikely this year or next. While uncertainty around international relations and additional COVID-19 variants will continue to affect corporate travel, the scope of why and when employees are expected to travel for business is becoming clearer.
The study is based on a survey of 150 U.S.-based executives with travel budget oversight, fielded from February 10-18, 2022.
Business travel set to take off, but pre-pandemic returns are delayed
Deloitte fielded its first corporate travel survey in June 2021, when a rebound appeared to be aligned with return to office plans initially set for the fall. However, as Delta was named a variant of concern a month later, many big companies pushed back their initiatives. Now, many of these same companies are re-evaluating their overall approach to travel, driving travel managers to reduce their expectations while seeking opportunities to further increase the financial savings and environmentally friendly practices realized from two years of limited travel.
One-third (34 percent) of corporate travel managers surveyed in June 2021 expected to reach half of their 2019 travel spend by the end of 2021; however, only 8 percent achieved this milestone. While 17 percent of travel managers anticipate a full recovery by the end of 2022, this has dipped significantly from the 54 percent who expected the same last summer. Overall, strong growth is expected in 2022, but corporate travel spend is not likely to recover to pre-pandemic levels this year or next. Travel spend is expected to reach 36 percent of 2019 levels by the end of Q2 2022, increasing to 55 percent by the end of the year, and 68 percent by the end of 2023.
COVID-19 variants are a main consideration for this downward revision: Two-thirds of respondents (66 percent) said the Delta and Omicron variants caused them to push back travel timelines; one in seven (15 percent) reported a significant rethink. Travel restrictions and employee unwillingness to travel continue to be the largest deterrents for a full return; however, the influence of each is down 18 percent from 2021. Concerns about increased travel prices remain a persistent concern, yet increasing only slightly (one percent) compared to summer 2021. The return of live industry events is now among the top five reasons for business travel. When considering the triggers for business travel, sustained low infection rates remain at the top of the list, followed by clients and employees returning to the office, and easing of quarantine requirements.
International travel poised for a slow return
Despite the easing of restrictions for some destinations, international travel for business still presents many challenges including testing requirements, quarantines and generally unpredictable regulations. Among those surveyed, international travel accounts for one-quarter of 2019 spend, and projections remain more conservative than for domestic travel. Geopolitical developments may further curtail plans for international travel, particularly to Europe.
More than half (54 percent) of respondents expect international travel to Europe to resume, but remain below pre-pandemic levels. Sales visits (43 percent), leadership meetings (32 percent) and client project work (31 percent) are the top drivers of international corporate travel. Europe leads destinations for U.S.-based travelers, with nearly one in four companies (24 percent) saying frequency will approach or exceed pre-pandemic levels by the end of 2022, followed by Asia (15 percent) and Latin America (12 percent). More than half of companies with reasons to visit Africa (70 percent), the Middle East (54 percent) or Australia/Oceania (52 percent) expect no or very little travel to those regions this year.
Workplace flexibility drives shifts in business travel
Many employers implemented flexible workplace policies over the last two years, and travel managers expect the future work from home rate to be two and a half times higher than before the pandemic. This will continue to impact how and when employees travel for both work-from-home dominant companies (where the average employee comes to the office zero to two days per week in Q2 of 2022) and office-dominant companies (where the average employee comes to the office at least three days per week in Q2 of 2022).
For companies that are work-from-home dominant in Q2 of 2022, 36 percent expect their corporate travel spend to recover to pre-pandemic levels by the end of 2023. Conversely, 71 percent of office-dominant companies said their travel spend will recover by the end of 2023. As a result of flexible work arrangements, one in four respondents expect more trips to company headquarters, despite less frequent travel overall. For employees who relocated during the pandemic, two-thirds of companies will reimburse for trips to headquarters. However, nearly one-third (29 percent) of companies leave employees to shoulder the cost themselves.
Additionally, private rentals, which offered travelers more space to distance from others during the pandemic, have not become a mainstay of corporate travel programs. Only one in 10 companies include non-traditional lodging in their corporate booking tools, and about half (49 percent) of companies do not reimburse employees for non-hotel lodging.
Sustainability and cost guide decisions on when to travel
The severe dip in corporate travel throughout the pandemic helped companies realize significant gains toward their sustainability goals and their bottom line. As a result, when determining which trips employees should take, business leaders are weighing the expense and carbon emissions involved, along with the ability of technology to replace the need to meet in person.
One-third of travel managers (35 percent) said their companies have pledged to reduce carbon emissions by a specific amount within a certain time period, affecting when and how employees travel. Most respondents expect sustainability to reduce their 2025 travel spend by 10 percent or less. However, nearly three in 10 expect a reduction of 11 to 25 percent. The rise in travel prices grew slightly as a concern from 2021 to 2022. Nearly three in four companies said they would seek to control costs by limiting the number of trips taken this year.
Nearly one in three travel suppliers are looking for guidance from travel management companies on how to reduce their carbon footprint. Further, one-quarter of travel managers said they would prioritize travel suppliers that invest in sustainability.
Source: Deloitte
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