Introduction
By many measures, leisure travel in the United States and Europe reached pre-COVID-19 levels months ago, following consistent trends since the start of vaccination in early 2021. However, corporate travel has been slower to return. Decisions about these trips face an entirely different calculus, taking into account a number of factors: traveler safety and willingness to board a flight, client interest in holding face-to-face meetings, the value of attending a conference and whether a virtual conferencing platform can replace travel, just to name a few.
The second half of 2022 was affected by competing forces: on the one hand, the world had moved several months beyond the peak of concern about the pandemic, which helped pave the way for the growth of corporate travel. The United States suspended pre-arrival testing for most foreign visitors in June, several months after Europe. However, as the year progressed, worrying economic signs continued to emerge. From concerns about an impending recession, layoffs emerged, affecting the technology sector in particular. In March 2023, financial worries were compounded by problems in the banking sector, whose trajectory was uncertain at the time of writing.
As professionals have begun to include more travel in their schedules, many are finding higher airfares and accommodation rates. These pricing conditions fit uncomfortably with both the seemingly cautious financial approach of travel buyers and the widely reported challenges of hiring staff and slow infrastructure upgrades faced by many travel suppliers.
As Deloitte continues to study the future of corporate travel, we are tracking the following key trends and developments:
- Restructuring travel to take account of social changes, such as more flexible working, and changes specific to corporate travel, such as higher expectations of flexible travel bookings.
- The strategic position of travel within companies.
- Attitudes towards conferencing platforms and other technologies as substitutes for different travel use cases.
- The state of relations between travel buyers and suppliers, especially in relation to contract negotiations.
- Which sustainability efforts led by suppliers have the potential to significantly impact reserves.
Main conclusions
- The responses from travel managers indicate that the recovery in corporate travel is following similar trajectories in the United States and Europe. Spending in the combined markets is expected to exceed half of 2019 levels in the first half of 2023 and two-thirds by the end of the year.
- Although a full recovery to 2019's spending volume looks likely by the end of 2024 or early 2025, when factoring in lost growth and inflation, corporate travel is likely to be lower in real terms than it was before the pandemic.
- International travel continues to grow as the challenges of visiting parts of the world diminish. US respondents expect the share of international travel costs to jump from 21% in 2022 to 33% in 2023. European respondents expect 32% of 2023 spending to go on international travel within the continent and 28% beyond.
- Attendance at face-to-face events looks set to drive growth, rising from the fifth biggest factor in increasing spending in 2022 to first place in 2023. More than half of travel managers in both the United States and Europe expect industry events to drive travel growth this year.
- Many supplier contracts were frozen for two years or more during the COVID-19 pandemic and began to be renegotiated in 2022. As buyers return to the negotiating table with an expected lower volume of travel, some report that some suppliers are seeking higher rates. Accommodation providers are taking a stricter approach than airlines, and European suppliers are pushing harder than American ones.
- Climate concerns are likely to limit corporate travel gains in the coming years. Four out of 10 European companies and a third of American companies say they need to reduce travel per employee by more than 20% to achieve their sustainability goals by 2030.