Business travel begins to pick up, but a full recovery faces further delays.

As U.S. and European companies weigh ROI and sustainability goals, corporate travel costs may be lower than pre-pandemic as flexible work arrangements and increased use of technology.

new york, April 11, 2023 /PRNewswire/ —

Key receivers

• Corporate travel expenses in the US and Europe It is expected In the first half of 2023, it exceeded half of the 2019 levels And by the end of the year rise to two thirds. A full recovery from the pandemic is expected in late 2024 or early 2025.
• Live events are set to account for a significant share of corporate travel, peaking in 2023 as the fifth largest driver of spending in 2022. More than half of travel managers in both the US and Europe Expect industry events to spur travel growth this year.
• International travel accounts for the largest share of recovery this year: It is expected that the international share of US companies’ travel expenses will rise 21% in 2022 to 33% in 2023.
• As workplace flexibility and increased use of technology; Traveling to clients is more than just traveling for team building and internal meetings.
• They are travel buyers. Renegotiation of contracts with suppliers and balancing low expected travel volumes with high hotel room and airfare rates.
• A third of US companies and 4 out of 10 European companies say they need it Reduce trips per employee by more than 20% to achieve their 2030 sustainability goals.

Why is this important?
Although leisure travel has reached pre-pandemic levels, corporate travel has been slow to recover. A variety of factors appear to influence the decision to travel for business, including employee safety, customer desire for in-person contact, the cost of attending a conference, and whether virtual conference platforms can replace travel. Although the risk of the pandemic and the testing rules are generally easing in the second half of 2022, financial risks seem to be creating uncertainty for the sector. The third edition of Deloitte’s corporate travel study, “Travel to the New Normal,” examines why and when employees need to travel for business, as well as the industry’s headwinds and opportunities.

The study is based on a survey of 334 travel budget control executives in the US and Europe. Between February 7 and February 23, 2023.

Expected growth in 2023 is a lot of international travel and events.
Full recovery to 2019 levels While late 2024 or early 2025 seems possible, accounting for inflation and lost profits means the corporate travel market will be 10 to 20 percent smaller than it was before the pandemic. Between higher airfares and room prices, the number of trips is likely to be further delayed. However, international travel and live events in 2010 They account for most of the expected growth by 2023.

• Corporate travel throughout the US and Europe In the first half of 2023, it is expected to rise to more than half (57%) before the pandemic and to 71% by the end of the year.
• Most of the companies surveyed – 71% of American companies and 68% of them Europe – Expect a full recovery in travel spending by the end of 2024.
• U.S. respondents expect international travel to account for 33 percent of 2023 spending, 21 percent in 2022, and similar to 2019 levels.
• The main reasons reported for international travel include meeting clients and prospects: in the US, the main drivers are meeting international industry colleagues at conferences and building client relationships. in Europeclient project work, followed by sales meetings are the biggest reasons for trips across the continent.
• While higher travel costs are the biggest factor holding companies back from travel, live events are poised to become the main driver of business travel demand, leapfrogging the US as the top reason for international travel in 2023, and rising to fifth place in 2022.
• With events in mind, companies are adjusting their internal plans: Half report breaking up large gatherings into smaller, regional, almost-connected events, and 44% take a hybrid approach. In the US, 42 percent of those surveyed and 54 percent in Europe Plan to integrate more customers into internal events.
• The majority of companies surveyed (70%) strategically assess and weigh the effects of business travel, such as revenue generation, alongside the side effects of cost, health risks and emissions.

Workplace flexibility and technology continue to change the direction of the business journey.
Although the pandemic has reduced concern about travel among those surveyed overall, the ability to use technology instead of travel, ultimately reducing costs, continues to influence the growth trajectory of business travel. According to the survey, technology can support travel services for every business need – to some degree. In addition, future work from home is expected to be 3.2 times higher than before the pandemic. Together, these factors continue to influence how and when workers travel for work.

• Business leaders are weighing the benefits of in-person communication, with internal training and team meetings (44%) rated as replaceable by technology, compared to customer relationship building (11%) and customer acquisition (7%).
• Two-thirds (67%) of respondents say they are moving more to cities within driving distance of where their employees live.
• There is also an increase in the number of trips made by indirect workers to the company’s headquarters, the majority (70%) of which are paid for in whole or in part by the company.
• American companies are increasingly including non-hotel accommodations, including private rentals, in their corporate travel policies. Almost half (45%) of those surveyed have non-hotel accommodation in their corporate booking tools, up 9% from last year, and 57% have an agreement with a specific brand of apartment or rental provider, up from 23% in 2022. Only 10. % of U.S. companies surveyed do not pay for non-hotel accommodations, down from half (49%) in 2022.

Key quote
“As business travel continues to increase, high airfare and hotel costs are slowing the growth of travel. As business leaders take a strategic view of their travel plans and the industry adjusts to new normals, live conferences and events are increasingly emerging. They can provide effective opportunities to connect in person, especially remotely. And hybrid jobs remain constants of the corporate world.

– Eileen CrowleyVice Chairman, Deloitte & Touche LLP and leader of America’s transportation, hospitality and services will testify

Contract negotiations aim at reasonable amounts of travel expenses.
Companies may find significant cost savings in not traveling during a pandemic. Now, after three years of reduced travel, higher airfare and room prices due to inflation, many companies are working to accommodate the changing expectations of their employees.

• About half (51%) of respondents reported that employees expect luxury services such as first- or business-class airfare and upscale hotels, as well as the need for last-minute (45%) or flexible bookings (52%). Higher.
• When negotiating contracts with suppliers, nearly 1 in 5 (19%) companies say hotels are less affordable because they expect lower rates, while 11% report the same for airlines.
• Regionally, 63 percent of U.S. travel buyers surveyed report airline fares in a positive light, compared with 54 percent of those surveyed. Europe.
• Higher rates have less impact on the number of trips taken: 45% of companies say they will limit frequency to control costs, down from 72% in 2022. Instead, they focus on reducing travel costs with cheap accommodation (59%). ) and low-cost flights (56%).

Sustainability drives some travel decisions.
Travel, in general, attracts attention as a major contributor to carbon emissions. However, 49 percent of companies report that choosing sustainable service providers is costly. As a result, business leaders are forced to weigh travel costs and environmental impact.

• A third (33%) of US companies and 40% of European companies say they need to reduce the number of trips per employee by more than 20% by 2030 to meet sustainability goals.
• 42% in the US and 45% in the US to meet sustainability goals Europe Along with the financial budget, they stated that they are implementing a structure to allocate the carbon emission budget to the groups.
• Travel suppliers’ sustainability efforts lead to varying degrees of engagement with travel buyers. Mandatory use of survey respondents is low, but about a third consider things like hotel sustainability certifications and standards (32%), airline sustainable fuel use (31%), or car rental fleets offering electric vehicles (27%). %) to calculate the carbon footprint of travel.

Key quote
“The return of corporate travel continues to take a downward spiral as both corporate leaders and travel providers consider not only increased costs but also the increased use of technology to offset financial and environmental goals. A long-term view and a conversation with them about their sustainability progress should be prepared to explore the ongoing shifts in travel priorities.

– So MikeVice Chairman, Deloitte LLP and non-executive director of US transportation, hospitality and services

Connect with us on Twitter @DeloitteCB Or on LinkedIn: @EileenCrowley and @MikeDaher

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s leading brands, including nearly 90% of the Fortune 500.^® and more than 7,000 private companies. Our people work together for the greater good across industry sectors that drive and shape today’s marketplace – delivering measurable and sustainable results that help strengthen public confidence in our capital markets, transform challenges and help clients prosper and thrive. Lead the way to a stronger economy and healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that matter most to them. Building on over 175 years of service, our network of member firms spans over 150 countries and territories. Learn how nearly 415,000 Deloitte people worldwide connect for impact at http://www.deloitte.com.

Deloitte refers to Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), a network of member firms and one or more related legal entities. DTTL and each of its member companies are legally separate and independent entities. DTTL (also known as “Deloitte Global”) does not provide customer service. in AmericaDeloitte refers to one or more US member firms of DTLL operating under the name “Deloitte”. America and their respective affiliates. According to the rules and regulations of public accounting, some services may not be available to ensure customers. Please see www.deloitte.com/about to learn more about our global network of member firms.

Source Deloitte