Travel
More Trips, Higher Prices: Business Travel Spending May Finally Top 2019 Levels
![More Trips, Higher Prices: Business Travel Spending May Finally Top 2019 Levels More Trips, Higher Prices: Business Travel Spending May Finally Top 2019 Levels](https://skift.com/wp-content/uploads/2023/06/pxfuel.com-3.jpg)
Skift Take
— Christiana Sciaudone, Skift
Business travel spending by U.S. companies may finally exceed pre-pandemic levels by the end of the year, according to a Deloitte report released Wednesday.
Spending is expected to grow between 8% and 12% to meet or exceed pre-pandemic levels by the end of 2024, the consulting company found in two surveys of U.S.-based corporate travel managers and executives, as well as U.S.-based corporate travelers.
“Business travel has been slower to come back following pandemic slowdowns, but this could be the year that it accelerates to new heights,” said Eileen Crowley, vice chair at Deloitte & Touche and U.S. transportation, hospitality and services. “Our managers that we’ve spoken to still expect their budgets or their spend to increase in 2025,” she said, citing two factors: Higher prices from both airlines and hotels and an increase in trips.
That said, next year’s growth will be slower as stability returns, she said.
Business Travel’s Recovery
Earlier this year, the Global Business Travel Association forecasted that most travel buyers expected their company’s business travel spending and volume to increase in 2024 compared to 2023. That survey found that 59% of buyers expected the number of business trips would increase at their company this year, with just 11% saying employees will take fewer business trips.
More travel buyers in North America, 66%, expect an increase in employee travel in 2024 compared to European buyers at 37%.
Travel as a whole has surged in 2024, with a daily record number of passengers going through TSA checkpoints on July 7. Global business travel spending is projected to total $1.5 trillion this year, according to the GBTA, up from $1.43 trillion in 2019. Last year, business travel totaled an estimated $1.36 trillion.
More Trips, Higher Prices
A U.S. growth rate of 8% to 12% in business travel spending would put it ahead of The Conference Board’s projected 2.1% GDP gain for the year, indicating a still-recovering industry, Deloitte said. The frequency per-traveler is also rising, though growth may slow in 2025.
More travel paired with inflated prices has 73% of travel managers expecting higher spending this year, and 58% expecting increases in 2025. While companies aren’t cutting back amid higher prices, they are seeking to rein in costs where possible, mainly by having employees book through company platforms rather than directly with suppliers.
But only 56% of travelers surveyed who are aware of the company booking platform said they always book through those managed channels.
The higher prices are very real: The American Hotel and Lodging Association projects a 2024 average daily rate increase of 3% vs. 2023 – and 22% vs. 2019. Average U.S. domestic airfare in 2023 was up 8.5% vs. 2019.
Deloitte said airlines and hotels are becoming tougher to negotiate with.
On the plus side, employees are embracing business travel. Only 3% of those surveyed said they dislike business travel, while 83% called it “enjoyable.”
“From a professional perspective, they’re valuing the in-person connections,” Crowley said. “But then with that little mix of extending, maybe for a personal trip, they’re seeing the value in spending maybe an extra day in a city that they’ve never been to.”
Business Travel and Sustainability
Sustainability is also still big for companies, which are trying to balance the increased demand with being environmentally conscious. Most travel managers said emissions targets will hinder travel and companies will need to reduce trips to meet 2030 sustainability goals.
And they’re getting active: 46% of those surveyed said they have a strategy in place to assign travel emission budgets to teams and individuals, up from 30% in 2023. While corporations are continuing to implement sustainability targets, they may be unrealistic.
“A lot of the travel managers that we spoke to honestly are thinking that, hey, we’re going to have to reduce travel in order to hit some of these targets,” Crowley said. Employees simply aren’t really factoring in sustainability issues, like emissions. “There hasn’t been this consistent adoption by employees. So I think that’s one area that employers are going to need to think about, how to further entice employees on smart selections from a sustainability perspective.”
Photo Credit: A business traveler about to catch a flight. Source: Pxfuel