Corporate travel to recoup 71% of pre-pandemic spending by end 2023

14-04-23

Corporate travel in the US and Europe will recover 71% of pre-pandemic spending volume by the end of 2023, while by 2024 or early 2025 it will reach 95% of 2019, according to the third edition of Deloitte's 'Navigating to the New Normal' report.

The study is based on a survey of 334 travel managers, executives with various titles and travel budget oversight, conducted from 7-23 February 2023, across the US, UK, Germany, Spain and France.

US respondents expect the cost share of international travel to rise from 21% in 2022 to 33% in 2023, while Europeans expect 32% of 2023 spending to be on international travel within the continent and 28% outside.

"Even after restrictions are officially lifted, it may take some time for travel to resume on a large scale, especially for long-haul travel or destinations requiring visas," notes Deloitte.

On the other hand, attendance at face-to-face events will be a major driver of growth in this type of travel, moving from the fifth most important factor in increasing spend in 2022 to the top spot in 2023.

More than half of travel managers in both the US and Europe expect industry events to drive travel growth this year.

For European respondents, client project work is the top reason for travel outside the continent, followed by sales meetings. US companies say the main reason for travel is to network with peers from across the industry at conferences and to build relationships with clients.

Cost control and sourcing

As corporate travel continues to expand after three lean years, companies are facing a difficult cost environment, according to Deloitte.

Rising airfares and room rates are the biggest contributor to rising costs and have also become the number one deterrent to the number of trips taken, up from fifth place in 2022.

Around half of respondents say that employee expectations for luxury services and the need for flexible or last-minute bookings are driving up costs in 2023.

In addition, many supplier contracts were frozen for two years or more during the Covid-19 pandemic and began to be renegotiated in 2022. As purchasers return to the negotiating table with a lower volume of trips expected, some report that some providers are pushing for higher rates.

According to the report, hotel suppliers are taking a more assertive approach than airlines and European suppliers are pushing harder than US suppliers.