Pandemic risk, vaccination rates, inflation, business traveler considerations, and travel volume return are among potential recovery challenges ahead
Business travel recovery in 2021 proceeded at a slower, more cautionary pace than expected from a year ago. However, global business travel spending is expected to surge in 2022 with full recovery expected in 2024–ending the year on pace with the 2019 pre-pandemic spend of $1.4 trillion, and a year sooner than previously forecast.
This is according to the Global Business Travel Association (GBTA), the world’s largest business travel association, which today released the results of its latest business travel index–the BTI™ Outlook.
The report provides a detailed analysis of business travel in 2021 with projections for 2022 and beyond, including post-COVID-19 recovery forecasts. Now in its 13th edition, the BTI Outlook is an exhaustive annual study of business travel spending and growth covering 73 countries across 44 industries. New first-time additions this year include survey insights from global senior financial executives as well as business travelers.
Forecasts and analysis highlights from the latest BTI Outlook (in US dollars):
- Global business travel activity has begun its rebound from the sharp downturn brought about by the COVID-19 pandemic. After declining 53.8% in 2020 to $661 billion, global expenditures are expected to have rebounded 14% in 2021 to $754 billion. This was more slowly than forecast in GBTA’s previous BTI Outlook report issued in February of this year.
- Despite recovery setbacks in 2021, a year-over-year surge of 38% is expected in 2022 as recovery and pent-up demand kicks into a higher gear, bringing global business travel spending back to over $1 trillion.
- Recovery will continue into 2023, with global spending rising 23% year-over-year as even more international and group travel comes back online.
- By 2024, global business travel is forecast to have made a full recovery, ending the year at $1.48 trillion or just above the 2019 pre-pandemic spend of $1.4 trillion.
- In 2025, global business travel growth is forecast to slow to 4.3%–just below the 10-year average growth rate of 5.1% coming into 2020–ending the year at a forecasted $1.5 trillion.
However, persistent COVID-related threats and disruptions, supply chain strains, labor shortages, rising inflation, increased costs, and lagging recovery in Asian markets are just a few of the risks for continued on-target recovery. Additionally, yet to be determined are the potential impacts of emerging factors including broad adoption of remote working models, long term cuts or elimination of business trips and travel volume, and the increased focus on sustainability practices and policies for business travel.
“Of any year we’ve issued the BTI Outlook forecast, this one was the most anticipated and it’s no surprise,” said Suzanne Neufang, CEO for GBTA. “The business travel industry recognizes there are factors, related to COVID-19 and beyond, that could impact the road ahead over the coming years. However, there is optimism overall as the industry, companies and travelers worldwide lean into recovery and the much-needed return to business travel.”
Other key findings from GBTA’s BTI Outlook include analysis of 2021 challenges for the business travel industry as well as recovery outlook into 2025.
Business travel faces headwinds in 2021
- The global business travel recovery that began in late 2020 hit a fair number of bumps in 2021. Pandemic surges, variant introductions, uneven vaccination rates, and mounting supply chain challenges all took their toll on previously forecast growth expectations.
- North America led the recovery, the U.S. in particular, rebounding 27% in 2021. Business travel markets in Latin America, Middle East and Africa (MEA) and Asia-Pacific (APAC) all picked up 15% to 20% growth in 2021.
- European markets have lagged in 2021. Emerging Europe is expected to gain only 10% and for the region of Western Europe, business travel expenditures for 2021 are expected to fall 3.8% from 2020 levels. This stems from early year underperformance, but with recent resurgence, business travel demand in the region is set to outpace most other parts of the world, barring any COVID-related setbacks.
- Recovery in Asia Pacific has been slower, due to lagging border re-openings and a high dependence on international business travel. China’s expected growth was downgraded last year due to challenges posed by financial and other issues which could signal larger risks.
- Business travel in Latin America is performing relatively better in terms of percentages—recognizing that volumes vary significantly across global regions—, boosted by fewer government restrictions and travelers’ desire and confidence to return to business travel. However, rising public debt and interest rates, declining credit ratings, and lower vaccination rates could pose future threats for Latin American business travel.
Total Business Travel Spending – Top 15 Markets (2021)
- Business travel recovery will also vary by industry. Professional and business services and real estate have been resilient to date, while wholesale trade has been challenged. Accommodation and food services, arts, entertainment and recreation, and retail trade, which were significantly impacted during the pandemic, are expected to recover sharply over the forecast period.
View From The C-Suite
- In a poll of 40 CFOs across North America, Latin America, Asia-Pacific and Europe, 70% felt in 2022 the overall economy in their country would be better or much better than in 2021.
- About half (52%) of respondents reported they expect their company’s business travel spend to reach 2019 levels in 2022.
- When asked about the importance of business travel for their company, CFOs felt the top return-on-investment reasons for business travel are sales and business development (68%), internal business planning and strategy (50%), client account management (48%) and employee training and development (48%).
Business travelers are ready and willing
- Among 400 global business travelers polled, 86% report that they need travel to accomplish their business goals.
- A majority (81%) believe that their volume of domestic business travel will be greater or on par in 2022 than it was prior to the pandemic.
- Over half (54%) miss traveling and hope to travel more often in the future. However, 43% wouldn’t mind traveling less in the future, whether they indicated they miss it or not.
- Four in five (81%) of business travelers say their company requires vaccines for travel and in-person meetings.
Challenges to the pace of recovery
Global GDP growth is expected to reach 5.8% for 2021 and 4.2% in 2022. Should another wave of COVID materialize, China further decelerates, and/or an energy shortage intensify, more downward revisions may be necessary.
The BTI Outlook outlines four conditions necessary for full recovery in global business travel: 1) the global vaccination effort, 2) national travel policy, 3) business traveler sentiment, and 4) corporate travel management policy. The recovery remains highly dependent on the vaccine rollout, employees’ return to the office, and a normalization of travel policies on both the national and corporate levels. Travel managers will also face the challenge of juggling duty of care with rising costs, sustainability priorities, and new considerations on the ROI of business travel.
GBTA members can download a full copy of the BTI Outlook on the GBTA members-only hub. The report was conducted in partnership with Rockport Analytics, a research and analytical consulting firm, and made possible by HRS.