The business travel sector and its people are a resilient bunch and have made great strides in adapting to the circumstances brought on by the Covid-19 pandemic. Given that the global context has changed so dramatically over the past 18 months, the World Travel & Tourism Council (WTTC) has analysed the current context and through their recently published report offer a perspective on a potential path forward, specifically for business travel.
The intention is for this report to play a part in highlighting opportunities for all stakeholders to collaborate in stimulating growth and aiding business travel’s recovery.
Our own head of Gray Dawes Consulting, Aman Pourkarimi, has studied the full report (so you don’t have to!) and below presents the key takeaways, along with his own recommendations for all business travel stakeholders.
COVID-19 has had a major effect on Travel & Tourism, leading to financial losses of almost US$4.5 trillion and a loss of more than 62 million jobs. But there are signs that the sector is beginning to recover, with global travel spending on the rise.
COVID-19 has had a major effect on Travel & Tourism, leading to financial losses of almost US$4.5 trillion and a loss of more than 62 million jobs. 55 and 75 percent of airline profits came from business travellers who made up around 12 percent of all air passengers. Globally, leisure spending decreased by 49 percent, and business spending decreased by 61 percent from 2019 to 2020. Analysis shows that in 2019, most large countries depended on business travel for 20 percent of their tourism, 75 to 85 percent of which was domestic.
Looking ahead, it is likely that business travel recovery will vary by region, country, and industry. Business travel may return faster in Asia than in many European and American markets, with recovery possibly taking place in phases depending on dominant industry sectors.
In most European countries, business travel spending was equally split between domestic and international travel. There were, however, some notable exceptions. France and Belgium were outliers, with business travellers spending more overseas than at home; while Germany reflected more domestic business travel, with its business activities being spread across a few cities. India and Brazil, on the other hand, had a higher share of business travel in their Travel & Tourism sectors overall.
2019, China spent US$66 million on business travel from industries including pharmaceuticals, manufacturing, and construction and South Korea spent US$56 million, compared to US$23 million in the UK, US$25 million in the US, and US$36 million in Brazil.
ABOVE GRAPH – in the US, air ticket bookings show that leisure travel is driving the recovery, while corporate continues to lag.
The high share of small and medium-sized businesses, amounting to approximately 80 percent of the sector, means that the risk of permanent business closure will remain
if travel restrictions continue.
Many people take a transactional view of business travel—if it doesn’t result in a deal, it has no value. This is so simplistic. A lot of business travel is about building relationships and building a culture. Creating an organisation that attracts, retains, and develops the best talent. Creating an organisation that’s tolerant and has an understanding of different cultures and can operate on a global stage. That learning comes from travelling.
Impact Per Region
According to WTTC’s latest research, following a 61 percent decline in 2020, global
business travel spending is expected to rise by 26 percent this year and by 34 percent in 2022, implying a recovery to 66 percent compared to 20195 In a few regions, business spending growth is set to be faster than leisure spending this year.
Regional projections are as follows:
- In Europe, business spending is set to rise by 36 percent this year, stronger than leisure spending at 26 percent, followed by a 28 percent rise next year.
- In the Americas, business spending is expected to rise by 14 percent this year, and by 35 percent in 2022.
In Asia-Pacific, business spending is set to rise by 32 percent this year, and 41 percent next year.
- In Africa, business 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.
- In the Middle East, business spending is set to rise by 49 percent this year, stronger than leisure spending at 36 percent, followed by a 32 percent rise next year.
The share of people fully vaccinated against COVID-19 ranges from less than 1 percent in Tanzania to 78 percent in the UAE. Countries such as China, Canada, and the UK have passed the 60 percent mark, and the US is around 50 percent, but others such as India are lagging well behind this at 12 percent (as of September 2021).
At every step of the journey of innovation and technological advances, we end up with more demand for travel – not less.
The US plans to open inbound travel for fully vaccinated travellers from 33 countries, commencing in November this year. Countries include 26 Schengen members, the UK, China, South Africa, Brazil, and India.
In Asia, Singapore currently allows travel from certain countries, with restrictions in place. All travellers entering or transiting through Singapore, including Singaporean citizens and permanent residents, are required to take a pre-departure COVID-19 Polymerase Chain Reaction (PCR) test within 48 hours before the scheduled departure date of their flight. Short-term visitors can only enter Singapore if they hold a valid approval entry pass, such as a vaccinated travel pass. The country has a vaccinated travel lane that is currently open to travellers from Germany and Brunei but may open to other countries such as Denmark, Canada, Italy, and Switzerland as well as the European Union in the near future.
Most predictions about how technology will change the world have usually ended up being incorrect. Technology has increased the pace of business and the time to do the deal has been cut by 80% — but there are 80% more deals.
Business travel may return faster in Asia than in many European and American markets, with recovery possibly taking place in phases depending on dominant industry sectors.
There are three categories that illustrate how different business sectors may influence business travel recovery:
- Early rebounders including manufacturing, pharmaceuticals, and construction;
- market followers such as real estate, oil and gas, and finance; and
- sectors that are likely to experience long-term disruption such as service-orientated and knowledge industries including healthcare, education, and professional services.
Business travel recovery will also be influenced by proximity and reason for travel. In terms of proximity, regional travel that can be completed by car will likely recover faster than domestic travel by air or train. International business travel by air will likely be slowest to recover. Reason for travel will also affect recovery speed. In-person sales or client meetings and essential business operations will be the quickest to recover, while internal meetings, training programmes, and other small-group gatherings are not as urgent and may be delayed. Large industry conferences, trade shows, exhibitions, and events will most likely be slower to recover given the large number of people involved and associated health and safety concerns, the possibility of substituting these with virtual events, and the dependence on bilateral or multilateral travel agreements between countries.
There are three areas of opportunity for business travel providers.
Companies could consider adjusting their revenue model, for instance by providing additional transport or accommodation services. There may also be room to expand to B2C and B2B2C services. Different ambitions and company strategies will obviously impact product strategy, pricing, loyalty, and sales strategy.
Border restrictions may make large domestic markets more attractive than before, especially in Asia-Pacific. In some instances, travel providers could look to acquire new customers in new geographies. Companies doing so may need to make strategic decisions around footprint and local language capabilities.
Digital and remote self-service are now considered ambitions across the sector, and any decisions made on the target revenue model and footprint will impact these digital service models. An example of this would be whether to build a detailed B2B2C CRM, or choosing between communications platforms, such as iMessage and WhatsApp.
TAKE THE FINAL STEP
TO BETTER TRAVEL
Gray Dawes Consulting is an impartial, in-house team of experienced travel data experts who combine 90 years of experience, market-leading tools and analytical thinking to drive corporate travel booking efficiencies, cost savings and traveller satisfaction.
Our approach is to fully understand a client’s organisation; its culture, employees and business objectives, which helps us make informed, realistic, achievable and measurable recommendations about enhancing your travel programme.
We typically deliver up to 22% in savings by looking at 28 KPI levers surrounding costs. So, if driving value is your goal then our holistic approach is designed to assess and measure efficiencies at every step of the booking process.
We make sure we have every eventuality covered to ensure your travel programme operates more efficiently through change.
To help you navigate the changes of business travel, we’ve created the brand-new Traveller Toolkit. This invaluable online resource is packed full of easy-to-use guides and checklists for every stage of every journey. We detail exactly what you need to know and do before, during and after your trip.
You’ll also find innovative and interactive virtual trips, which walk you through each step of being at the airport, on the train and in the hotel. You can even check the travel restrictions and health status of your destination with our comprehensive COVID-19 Country Tracker, updated five times daily to ensure you have the very latest information to help keep you and your travellers safe.
Travel is changing. With common sense and a good TMC behind you, travellers can have the confidence to once again take to the skies. It’ll soon be back business as (un)usual.