New data from a survey conducted by the Global Business Travel Association (GBTA) suggests that inflation and risks of recession will have an impact on corporate travel. The GBTA BTI is an annual exhaustive study of business travel spending and growth covering 73 countries and 44 industries. In its 14th edition, this latest report outlines the top-level outlook for global business travel 2022 to 2026.
Total spending on global business travel reached $697 billion in 2021, 5.5% above the pandemic-era low of 2020. Last year was nearly as challenging as 2020 for the global business travel industry, as it sought to carve out a “normal following” the Covid-19 pandemic. The industry gained back roughly $36 billion of the $770 billion lost in 2020.
Recovery was short-circuited by the Omicron variant and spike in global Covid cases in late 2021 and early 2022. As case numbers began to retreat, business travel surged. Global business travel spending in 2022 is expected to advance 34% over 2021 levels to $933 billion, recovering to 65% of pre-pandemic levels.
Recovery in 2022 was dependent upon and has been largely driven by improvement in the four factors of global business travel recovery – the global vaccination effort, national travel policies, business traveler sentiment, and travel management policy – where conditions have improved significantly in the last six months.
Deteriorating economic conditions have slowed global recovery. According to GBTA, global business travel will almost reach pre-pandemic levels in 2025, reaching $1.39 trillion. Global spending is not expected to make it fully back to the $1.4 trillion dollar mark until mid-2026, when it is forecast to reach $1.47 trillion dollars. This adds an estimated 18 months to the industry’s recovery than was forecast in the previous GBTA Business Travel Index released in November 2021.
The 2022 BTI finds the biggest obstacles to more accelerated recovery in global business travel are persistent inflation, high energy prices, severe supply chain challenges and labor shortages, a significant economic slowdown and lockdowns in China, and major regional impacts due to the war in Ukraine as well as emerging sustainability considerations.
GBTA surveyed more than 400 business travelers in July along with 44 global corporate finance executives across four of the world’s regions and described overall sentiment as “positive”. It noted, however, that Covid concerns are “taking a back seat to macroeconomic and geopolitical issues”.
The survey found three-quarters (73%) of business traveler respondents and 38 out of 44 global financial executives thought inflation would impact on travel volumes. Two thirds (69%) of business travelers and three quarters of corporate finance executives were concerned a recession would impact travel. 68% of business travelers and more than three-quarters of finance executives expected high infection rates and new Covid variants to have an impact on their travel plans.
More than three-quarters of the respondents said they expect to travel more for work in 2023 than this year and 85% of business travelers reported they need to travel to meet their business goals. 84% corporate finance executives were confident their travel spending would increase next year compared with 2022.
In all, global business travel spending is expected to gain 33.8% in 2022, however, differences are anticipated across the world’s top business travel markets. The timing and pace of the recovery will continue to vary significantly from one region of the world to the next, as evidenced in 2021.
North America led the recovery in 2021 – driven largely by rapidly returning domestic travel. Western Europe was the one region to witness spending declines last year as Covid-19 impacted its domestic and regional business travel market. Both regions are expected to experience the sharpest recoveries with compound annual growth increases of 23.4% (to $363.7 billion) and 16.9% (to $323.9 billion), respectively by 2026.
Asia Pacific helped lead the industry in terms of recovery of spend in 2021– particularly in China. This reversed in 2022, as China’s Zero-Covid policy led to wide-scale lockdowns and other countries in the region only slowly opened up. For 2022, a solid increase of 16.5% (or $407.1 billion) in spending is expected in APAC (held back by China at 5.6%, or $286.9 billion), with the region recovering to 66% of pre-pandemic levels by the end of 2022.
Business travel spending in Latin America grew modestly in 2021 as the vaccination effort got off to a slower start. While there may be challenges in this region over the next few years, 55% growth in spend in Latin America is forecast for this year as business travel recovers to 83% of pre-pandemic totals.
