When will International business return?

The good news of 2022 has been that all seem to believe that the worst of the pandemic lies behind us and it is more about the recovery.

Given this, it is strange how little the importance of international business travel is mentioned as, for the major cities, it equates to close to 35% of top-level hospitality spend. So what are the forecasts? Some suggest 2024 and some 2025. The picture is still unclear and of course, the lingering question is: will it return to the same levels? If the 2025 forecast is correct, then for many top hotels there is still a three-year journey before 2019 levels are reached again. Or will they adapt and find new audiences?

It has been a desperately difficult time for many hotels but it must have been worse for the airline companies who have been left helpless at times. There are promising signs that leisure travel is returning to strength but business travel is still some way away. The airlines sit on standby but the recovery is proving slower than many expected. 2021 saw business travel lie at around 40% of 2019 levels and the expectation for 2022 is a rise to 65-70%.

For airlines, many believe that the pandemic probably will mean fewer business passengers for a longer span and a heavier dependence on consumer travel.

In 2021, the coronavirus outbreak is estimated to have cost the airline industry $63 billion to $113 billion in lost revenue from passengers this year. Business travel is crucial to large airlines, which rely on those flyers to fill premium-class seats and pay higher fares for trips booked on short notice. In the US, corporate travel remains 63% below pre-pandemic levels. The U.S. Travel Assn. forecasts that U.S. business travel spending and the number of trips will not reach 2019 levels until 2024. Tickets sold through U.S. travel agencies for corporate trips as of Jan. 23 were 63% below 2019 levels.

Companies have been slow to resume business trips as their return-to-office plans have been constantly pushed back and employees have come to rely on, and even enjoy, video conferences instead of face-to-face meetings. That has raised a new question of whether business travel will resume its old ways or retain the cost and time savings. Will executives travel for a board meeting as they once did or will they attend via VC? Some do estimate that business travel will naturally fall by 25% as the ability of technology improves.

This does all impact on the return to strength for hospitality and the major cities. It has been admirable how so many hotels and restaurants have adapted to the loss of this market but, given the above facts, it still faces a further two years before they see return to the custom levels of 2019. Add in the fact that many consumers are going to feel the impact of inflation and higher costs, then it could be a long year ahead. It will be interesting to see how many hotels adapt. How will they change?