Business travel and meetings and events making incredible recovery progress
The global business travel and meetings and events industries have made "incredible progress" in recovering from one of the worst economic downturns on record, notes the report. Domestic demand continues to improve, and the easing of COVID-related restrictions around the world is beginning to accelerate cross-border business travel.
Positive outlook though potential risks to frustrate recovery
The outlook for the industry is positive, though there are potential risks that could frustrate recovery, notes the report. Business travel and meetings bookings are picking up despite geopolitical uncertainties including the war in Ukraine, lingering COVID restrictions in major aviation markets, travel disruptions caused by labour shortages, the rising risk of a global recession and persistent higher prices.
Despite the rises (highlighted below) predicted pricing remains "on the whole, on par with 2019," says Patrick Andersen, CWT's chief executive officer.
Air travel to see highest percentage cost rises over 2022 and 2023
The forecast highlights that air travel will see the highest percentage cost rises over 2022 and 2023. After falling -12% in 2020 and -22% in 2021, a +48.5% spike is estimated for 2022 followed by a further +8.45% rise in 2023. Rising demand and continued price rises on jet fuel will put "upward pressure" on ticket prices, according to the report.
Hotel prices boosted by leisure demand and now corporate meetings and events uplift
Hotel prices fell -13.3% in 2020 from 2019 and a further -9.5% in 2021, however the report expects them to rise +18.5% in 2022 followed by an +8.2% lift in 2023. Hotel prices have already eclipsed 2019 levels in some areas such as Europe, the Middle East & Africa and North America and are expected do so globally by 2023.
Hotel rate increases were initially driven by strong leisure travel in 2021 but group travel for corporate meetings and events is improving and transient business travel is similarly gaining healthy pace, putting further pressure on average daily hotel rates, notes the report.
Ground transportation takes greater importance in travel planning
Global car rental prices fell -2.5% in 2020 from 2019, before rising +5.1% in 2021. Prices are expected to increase +7.3% in 2022, hitting new highs, and rise a further +6.8% in 2023, according to the forecast.
The vehicle industry remains capacity constrained and rental agencies which reduced fleet sizes in the wake of the pandemic, have not yet fully recovered, it says, due in part to "component shortages and supply chain disruptions" that have reduced global auto production.
Skyrocketing prices, vehicle shortages and the need for visibility into carbon emissions from door-to-door are driving corporate travel managers to "factor ground transport into full trip planning from the beginning," notes the report, especially when factoring in the inclusion of electric vehicles.
Meetings and events cost per attendee up +25% in 2022, +7% in 2023
Prices have increased in all regions across most categories of spend, fuelled by pent-up demand, a desire to build company culture and an uncertain economic outlook. The cost-per-attendee for meetings and events in 2022 is expected to be around +25% higher than in 2019, and it's forecast to rise a further +7% in 2023, estimates the report.
Alongside pent-up demand, corporate events are now competing with many other types of events that were cancelled in 2020, notes the report. And, with many companies having given up office space during the pandemic in favour of remote working, they are now booking meeting spaces when staff gather in person, further fuelling demand, it says.
Shorter lead times for events, varying from one to three months versus six to 12 months, are also contributing to this perfect storm, it identifies, perhaps underscored by corporate concerns that the situation they face today could change very rapidly.
This, it says, is particularly noticeable within Asia Pacific, which has been slower than other regions to re-open post-pandemic, with ongoing restrictions in China prompting clients to make sure their events can go ahead, and as quickly as possible.
Corporate ravel growth anticipated, but uncertain environment means challenges
Growth is expected in all major business travel and meetings markets and segments in the coming years as the industry works to recover to pre-pandemic levels. But despite this encouraging outlook, businesses and business travellers continue to operate in a highly uncertain environment.
Growing confidence in business travel is being driven by a number of factors, according to the CWT report, including an overall improvement in the global economy, rising corporate profits, and increased demand for goods and services.
Despite these positive trends though, there are still some potential risks that could impact the business travel industry in the coming years. One of the biggest risks remains the possibility of another wave of COVID infections which could lead to renewed restrictions on travel.
Inflation, too, is exerting pressure on most continents and is forcing central banks to raise rates aggressively, notes the report. "High prices could dissuade consumers and business travellers and aggressive interest rate hikes could precipitate a recession," it says.
Already economic growth is slowing in most parts of the world, which in turn could impact corporate profits and business travel demand. "Even a minor recession could dent the business travel recovery," notes the report.