Business travel

Business travel is back, but a return to pre-pandemic levels remains a long way off

Long after the second anniversary of the pandemic, business travel is showing its first significant signs of recovery. As this recovery gathers pace, a new landscape has formed with the presence of traditional and new forms of business travel.

In this new landscape, however, consumer sentiment towards business travel remains mixed, along with a significant gap between current volume and pre-pandemic comparables.

The May 2022 STR consumer study has produced some eye-opening insights into this ever-popular topic.

No longer just leisure

Until now, recovery was almost entirely based on hobbies. This segment returned ahead of schedule with strong summer travel in 2020 and the summer of pent-up demand in 2021 leading the way for the forecast. the summer of all summers in 2022.

Business travel has of course been slower to return, but the recovery of the segment is evident across the landscape with traditional business travel for sales, consulting, training, conferences and conventions as well that the new business trips of digital nomadsmore “bleisure” travel and remote workers returning to corporate headquarters due to increased work from home.

The overall outlook is “less bad”

When around 500 business travelers from around the world were asked to think about their likelihood of traveling for business both now and when the pandemic is “more,” the results, although negative, were significantly less negative than previous readings.

Almost half (47%) of consumers are as likely or more likely to travel for overnight business now compared to pre-pandemic levels, while a higher percentage (60%) are as likely or more likely to travel for overnight business when the pandemic ends. Additionally, the net propensity to travel, which is the difference between those most and least likely to travel, is -43% for business travel today and -23% for business travel. business after the pandemic. Among business travelers to the United States, business travel intentions are not as pessimistic, although they are still well into negative territory with -12% post-pandemic net propensity.

Source: STR
Source: STR

Business cost savings in 2020, most of the workforce connecting from home, and the success of video technology as a substitute for face-to-face meetings are important reasons for this lack of support. optimism, according to an STR study conducted last year. This sentiment may also be linked to increased efforts to limit travel frequency as sustainability initiatives gain momentum. So while the outlook is muted, the good news is that business sentiment appears to have finally turned the corner with the least negative sentiment scores since COVID began.

Source: STRSource: STR
Source: STR

Business travel recovery evident in midweek and city hotel performance

Another indication of the return of business travel can be seen in the significant improvement in midweek and urban hotel demand in the US, UK and Europe. Weekday attendance has been rising steadily since February 2022 on both sides of the Atlantic. Weekday occupancy in May was close to pre-pandemic levels, as seen in the two graphs below.

Source: STR
Source: STR

Similarly, urban markets in The US and UK closed the gap from 2019. Weekend breaks and small town/rural destinations have been strong in recent years due to leisure travel. This recent improvement in mid-week and urban travel demand, when most business travel occurs, is another sign of optimism for business travel.

The future is bright for some business travelers, but not all

Looking to the future, just over half of business travelers expect to take an overnight business trip in the next 12 months. This positivity is tempered somewhat by the fact that a quarter (24%) of business travelers are unlikely to take an overnight business trip in the next 12 months. Some employees who have traveled for business in the past are not yet authorized to travel due to company policies and legal department concerns about duty of care if an employee contracts COVID-19 while traveling. Additionally, the previously mentioned cost savings by companies are likely still hampering some business travel.

Regionally, North Americans are the most likely to travel for business, followed by Europeans and the British. This tendency for North Americans and Europeans to be more optimistic about future travel compared to Britons is similar to what has been reported for leisure travel in previous research on the STR . It should be noted that the restrictions in the UK were more severe than in the US, which resulted in a slower recovery in travel, for both leisure and business travel.

Source: STRSource: STR
Source: STR
Source: STR

A full corporate return is yet to be determined

Signs of moderate optimism about business travel can be found elsewhere in our research. Just under a third of those who traveled for business before the pandemic agreed that business travel would return to pre-COVID-19 levels. On the other hand, a plurality (43%) disagreed, resulting in a polarization of opinions. On a positive note, overall agreement, as demonstrated by the average metric, increased steadily across all three waves of this research, from 2.65 in November 2021 to 2.88 in May 2022.

Source: STR
Source: STR

Green shoots of hope in a new business travel landscape

Business travel is picking up, although a full recovery is still far from on the horizon. And changes in where and how to work, not to mention that COVID is still a factor, are revealing a new landscape for business travel. The opportunity for the hospitality industry is to embrace this new landscape with the same adaptability embraced during the pandemic, knowing that there is a basic human need for in-person meetings and that business travel is a necessity.

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About STR

STR provides premium benchmarking data, analysis and market intelligence for the global hospitality industry. Founded in 1985, STR operates in 15 countries with North American headquarters in Hendersonville, Tennessee, international headquarters in London, and Asia-Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of online commercial real estate information, analysis and marketplaces. For more information, please visit str.com and costargroup.com.

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