Northman & Sterling

The Business Travel Boom – A $1.8 Trillion Projection for 2027!

The global business travel sector has rebounded much faster than initially anticipated, surpassing its pre-pandemic spending level of $1.4 trillion in 2024. It is projected to further grow to almost $1.8 trillion by 2027. In 2022, global business travel spending surged by 47% to reach $1.03 trillion, with expectations of continued strong growth, estimated at 32% in 2023. These impressive gains can be attributed to pent-up demand following the COVID-19 pandemic, improved global economic conditions in 2022 and 2023, and the absence of anticipated recessions.

These key findings are derived from the most recent 2023 GBTA Business Travel Index™ Outlook – Annual Global Report and Forecast, which was produced in partnership between the Global Business Travel Association and Visa.

Introduced today at the 2023 GBTA Convention in Dallas, the GBTA Business Travel Outlook (BTI) provides a comprehensive annual forecast of business travel spending and expansion, encompassing 72 countries and 44 industries. In its 15th edition, this latest report offers an overview of the expected trends in global business travel spending from 2023 to 2027.

Noteworthy additions to this year’s BTI report include data and analysis from GBTA’s extensive survey of 4,700 business travelers from five global regions. These insights represent the perspectives of employee travelers regarding their preferences, behaviors, and spending on business trips, including their reported average expenditure for a business trip.

The global expenditure on business travel is expected to bounce back to its pre-pandemic level of $1.4 trillion by 2024 and is projected to reach nearly $1.8 trillion by 2027. This recovery is being driven by more favorable economic conditions than initially anticipated for 2022 and 2023.

In 2022, global business travel spending experienced a remarkable 47% increase, reaching $1.03 trillion. This strong growth trend is expected to continue in 2023, with a projected 32% increase in global business travel expenditures for the year. The breakdown of the $1.03 trillion in business travel expenses includes $183 billion spent on air travel, $395 billion on lodging, $191 billion on food and beverages, $138 billion on ground transportation, and $121 billion on other travel-related costs.

The global spending recovery is expected to happen faster than previously predicted, with a return to pre-pandemic levels by the end of 2024, which is ahead of the previously estimated timeline of mid-2026 as per last year’s BTI Outlook. One contributing factor to this accelerated rebound is the notable stability in the global economy. While many advanced economies were initially forecasted to weaken or enter into recession in 2023, this has not materialized.

Over the past 18 months, the progress in combating the Covid-19 pandemic has played a pivotal role in determining the pace of recovery in global business travel. The resurgence of in-person meetings and events, as well as the gradual recovery of international business travel, have been the two primary drivers of stability in the industry over the last six months.

The recovery of business travel varies by region, with Western Europe experiencing the fastest growth in 2022. North America and Latin America also saw significant spending growth acceleration in 2022. In contrast, Emerging Europe has been slower in its recovery, facing challenges related to the conflict in Ukraine.

Regionally, Asia Pacific faced delays in reopening its economy, leading to slower growth in business travel spending in the previous year. Chinese business travel spending decreased by 4.6% in the same period, causing China to drop to the second position in the global business travel market for the first time since 2014. However, China is expected to regain its status as the number one business travel market by the end of 2023.

The recovery in business travel spending also varies by industry, with construction, education, and professional, scientific, and technical activities demonstrating the most resilience.

While the resilience of the global economy has been a critical factor in the current rebound, there are challenges on the horizon. These challenges include the ongoing conflict in Ukraine, persistent inflation in certain sectors, tighter global financial conditions, and deterioration in the manufacturing sector.

Although a promising recovery is anticipated, several factors could shape the long-term outlook for the industry. These factors include a heightened focus on sustainability initiatives, the widespread adoption of virtual meeting technologies, the growth of remote workforces, and the emergence of blended travel. However, at present, there is insufficient data to make a definitive forecast regarding their potential impact on business travel spending and volume.

According to a survey conducted by GBTA involving 4,700 business travelers across 22 countries and four regions (North America, Europe, Asia Pacific, and Latin America), 82% of respondents reported that business travel was either very (48%) or moderately (34%) effective in achieving their business objectives.

On average, business travelers estimate their spending per trip to be approximately $1,018 per person. This spending is divided with lodging accounting for $391, food and beverage at $189, air travel at $182, ground transportation at $136, and miscellaneous expenses at $120.

The survey also revealed that business travelers are increasingly blending business and personal travel, with 62% engaging in “leisure” travel more frequently than they did in 2019. Among these travelers, 42% add extra leisure days to their business trips, and 79% stay at the same accommodation for both their business and vacation portions of the trip.

Regarding payment methods, 66% of business travelers stated that their company provides them with a corporate credit card. Among this group, approximately one-third (37%) mentioned that their company mandates the use of these corporate cards for booking business travel. Furthermore, 64% of business travelers who have corporate cards have uploaded them to a mobile wallet. Nearly 87% of these travelers use their mobile wallet for at least 10% of their business transactions, with 33% using them for at least 20%.

Leave Comment

Your email address will not be published. Required fields are marked *