Business travel to reach two-thirds of pre-pandemic levels in 2022, led by Asia and Middle East

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Global business travel is expected to reach two-thirds of pre-pandemic levels by the end of next year, with the recovery led by Asia and the Middle East, after the sector has been disproportionately affected by the Covid-19 crisis, according to the World Travel and Tourism Council.

As the segment rebounds, the recovery will be patchy, making public-private partnerships even more important in the months and years to come, the WTTC said in a report working with McKinsey.

“Business travel is starting to pick up. We expect to see two-thirds of it by the end of 2022,” said Julia Simpson, CEO and President of the WTTC. “Business travel has been seriously affected, but our research shows there is room for optimism with Asia-Pacific and the Middle East first in the starting blocks.”

Business travel has been hit particularly hard by the Covid-19 pandemic, as businesses have slashed budgets and turned to online meetings through video conferencing technologies such as Zoom and Microsoft Teams. Request business travel has been slower to recover than leisure travel, and corporate policies continue to influence demand for business travel based on national travel restrictions imposed by governments.

Spending on business travel around the world is expected to increase by 26% this year and a further 34% in 2022, following a 61% drop in 2020, according to the report.

The Middle East is leading this recovery, with spending by businesses in the region set to rise 49% this year, stronger than leisure spending at 36%, followed by a 32% increase in 2022, according to the data.

Business travel is an important segment that generates global economic growth. Business travel is also particularly important for airlines and high-end hotels, generating a significant portion of their revenue.

Before the pandemic, business travel accounted for about 70% of all global premium hotel chains’ revenue, while between 55% and 75% of airline profits came from business travelers who made up about 12% of passengers, according to the report. . The decline in business travel over the past 18 months has been a blow to airlines that depend on business travelers to fill their seats in first and business class.

The resumption of business travel will be “strongly influenced” by Covid-19 vaccine deployments and virus management strategies.

“There remains a very uneven deployment of vaccines, and this large variation will influence how quickly travel rebounds,” the WTTC said in its 27-page report.

In addition, government decisions on travel restrictions will continue to have a “significant and immediate effect” on the industry, the organization said. Policy changes can also disproportionately affect some markets that depend on international travel.

Going forward, the recovery in business travel is likely to vary by region, country and industry.

Business travel could return more quickly to Asia than to many European and American markets, with the recovery likely to unfold in phases depending on dominant industrial sectors, the WTTC said.

Given spending habits over the past year, industries such as manufacturing, pharmaceuticals and construction are the first to embrace a return to business travel, according to the report.

“Given the significant disruption in the business travel segment and its uneven recovery to date, the recovery in business travel is likely to be bumpy,” the WTTC said.

However, there are opportunities for players in the travel and tourism industry to look to domestic and leisure markets to drive growth and foster recovery. For example, business travel providers looking for resilient growth, primarily in short-term domestic markets, might consider ways to find new customers and diversify their geographic markets, according to WTTC recommendations. They could also adjust their revenue model by providing additional services and improve the digital service offering.

Governments could also play a role in offering support to travel agencies and business travel providers, for example finding ways to help small businesses digitize their operations or retrain their staff.

Organizations involved in the MICE segment could play a role in providing new business models, ensuring the security of existing models and developing hybrid strategies to host events, thereby increasing the demand for business travel, WTTC suggested. .

Businesses could offer virtual and hybrid alternatives to in-person events and diversify the use of venues beyond corporate events. They could also increase leisure offerings to take advantage of this growing trend, he said.

Updated: November 3, 2021, 10:13 AM


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