The State Of Business Travel In 2022

Like most if not all aspects of everyday life, business travel has taken a hit due to the COVID-19 pandemic. 

Uncertainty surrounding the pandemic means it is unlikely that business travel will return to pre-pandemic levels soon, though it seems leisure travel was not hit as hard.

In today’s article, we will be discussing the current state of business travel, reasons why business travel will never be the same, and reasons why business travel may partially recover in the long-term.

Background

According to McKinsey, global business travel expenses fell by 52% in 2020 compared to 2019 following the onset of the pandemic. None of this is surprising. Business travel has historically been volatile and recovered slowly following major economic upheavals (e.g., 2007-2008 global financial crisis), writes McKinsey in a different article.

According to the Global Business Travel Association, global business travel expenses have since somewhat recovered. Expenses have rebounded 14% in 2021 and are expected to further improve by 38% in 2022.

However, this is slower than previously expected. Consequently, global business travel will likely only return to pre-pandemic levels in 2024. Moreover, global business travel is forecasted to slow down again in 2025.

Reasons Why Business Travel Will Never be the Same

Forbes writes “Going through the permit process and potential quarantines may not be worth the legwork when a videoconference can iron out most of the details.” Newsweek adds “The ongoing pandemic, potential further delays in return-to-office timelines and carbon emission reduction mandates directed at corporate travel all point to a continuing drag on [business travel] into 2022.” 

The Forbes and Newsweek articles sum up the current business travel situation quite succinctly. Businesses have adapted to the various lockdown orders and travel restrictions by transitioning to videoconferencing and work from home initiatives. Work meetings, and even trade conferences, previously conducted in person have since transitioned to virtual models.

Moreover, businesses have also become more environmentally conscious, writes Deloitte. 79% of corporate travel managers surveyed have pledged to reduce emissions, including specific provisions that further scrutinises corporate travel policies. Business travel, and paper use reductions and making supply chains more green, are among the top targets for corporate environmental harm reduction.

The Business Travel Association reports that while younger workers are more keen on business travel, they are more environmentally aware and will further travel policy revamps, though this assumes workers would willingly forgo preferred workplace flexibility arrangements. However, beyond environmental reasons, corporate travel policy revamps are also driven by financial reasons. 

According to Deloitte, US companies saw travel budgets decline by 90% in 2020. 20% of corporate representatives surveyed state it is unlikely that travel budgets will return to 25% of 2019 levels by Q2 2021 while most surveyed state travel budgets will only reach 75% by Q4 2022.

Reasons Why Business Travel May Partially Recover in the Long-Term

There remains hope business travel may still recover. After all, “51% of business travel specialists see human interaction as the number one success factor in both winning new clients and delivering effective travel programmes,” writes the Business Travel Association. Deloitte adds that competition and growth imperatives means business travel may still be necessary.

The need for business travel varies depending on business’ industries. Consumer industries will still need to travel to facilitate on-site visits to factories, retail stores, warehouses, and other operations centres. The need for travel further increases for companies in industries that rely greatly on conferences, exhibitions, and trade shows to connect with vendors, partners, and consumers.

However, even when it comes to conferences, analysts are uncertain when conferences can resume pre-pandemic operations. During lockdown, many conferences began holding virtual conferences in lieu of face-to-face conferences. It is likely that moving forward conferences will adopt hybrid models due to persistent public health safety concerns.

What It Means For Your Business

In conclusion we at Kusu believe that business travel will come back to a degree but it will never be back to where we were before the pandemic. 

The allure of new technologies, coupled with continuing uncertainties relating to the pandemic and greater environmental awareness, ensures business travel will be very different in the future.

Nonetheless, with our strategic office location in Singapore, known for its high vaccination rate and significant healthy safety procedures, we provide assistance to customers still hesitant to travel.