A new report from the World Travel & Tourism Council (WTTC) suggests that worldwide business travel spending looks set to grow by more than a quarter this year and could reach two-thirds of pre-pandemic levels by 2022. The report, entitled “Adapting to Endemic COVID-19: The Outlook for Business Travel,” was produced in collaboration with McKinsey & Company; it draws on analysis, research and in-depth interviews with travel and 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. As per the latest report, the modest boost for business travel with global business travel spend rising 26 percent this year will be followed by a further rise of 34 percent in 2022. But this comes in the wake of a 61 percent 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 and expand geographic focus, besides improving 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.
“Business travel is starting to pick up. We expect to see two-thirds back by the end of 2022,” said Julia Simpson, WTTC CEO and president, in a press note. “Business travel has been seriously hit but our research shows room for optimism with Asia-Pacific and Middle East first off the starting blocks.”
Considering this year and next, the WTTC data shows that business spending is set to rise by 49 percent this year in the Middle East, stronger than leisure spending at 36 percent. It is expected to rise by 32 percent next year. In the Asia-Pacific, business spending is set to rise by 32 percent this year, and 41 percent next year; while Europe will witness a 36 percent rise this year, stronger than leisure spending at 26 percent, followed by a 28 percent rise next year. In Africa, spending is set to rise by 36 percent this year, slightly stronger than leisure spending at 35 percent, followed by a 23 percent rise next year; and in the Americas, business spending is expected to rise by 14 percent this year, and by 35 percent in 2022.
The report details how global travel-related spending declined considerably from 2019 to 2020, due to COVID-19 and the ongoing restrictions to international mobility. Last year, the travel and tourism sector suffered losses of almost $4.5 trillion, and over 62 million people lost their jobs. Domestic visitor spending decreased by 45 percent, 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 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 pharmaceuticals, manufacturing and construction companies while service-orientated and knowledge industries including healthcare, education, and professional services are likely to experience longer-term disruption.
The report emphasizes 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 percent of their tourism, 75 to 85 percent of which was domestic. Although business travel represented only 21.4 percent of global travel in 2019, it was responsible for the highest spending in many destinations, making it essential for the recovery of the 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 percent of all global revenue for high-end hotel chains while between 55 and 75 percent of airline profits came from business travelers, who made up around 12 percent of passengers.
WTTC believes while business travel will return, its uneven recovery will have important implications across the global travel and tourism sector, making private-public partnerships even more crucial in the months and years ahead.
Source: WTTC
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