The international business travel sector is expected to grow to nearly $1.8 trillion by 2027, according to the 2023 GBTA Business Travel Index™ Outlook – Annual Global Report and Forecast published by the Global Business Travel Association.
In 2022, global business travel spending rose 47 percent to $1.03 trillion, with a 32per cent growth expected in 2023. Looking further forward, spending for 2024 is set to surpass pre-pandemic predictions of $1.4 trillion and by 2027, will grow to nearly $1.8 trillion.
The estimated breakdown of the $1.03 trillion in business travel expenditures includes $183 billion in air spend, $395 billion in lodging spend, $191 billion in food and beverage spend, $138 billion in ground transportation spend and $121 billion in other travel expenses.
The GBTA said growth was fuelled by pent-up demand after the COVID-19 pandemic and more favorable than expected global economic conditions in 2022 and 2023, considering that many advanced economies were projected to weaken or fall into recession in 2023.
Drivers in the industry’s stabilization also included the return of in-person meetings and events, and the recovery of some international business travel capacity and volumes.
Analysing the recovery in business travel, by region, Western Europe was the fastest growing region in 2022, with North America and Latin America also seeing spending growth accelerate significantly in the same year. Emerging Europe lagged due to the war in the Ukraine. Asia Pacific was the big laggard, given the delayed reopening of the Chinese economy. Chinese business travel spending fell 4.6 per cent, dropping China down to the #2 business travel market in the world for the first time since 2014. However, the country is expected to recover back to being at the top spot by the end of 2023.
The GBTA noted that while a promising rebound is expected, challenges remain including the war in Ukraine, persistent inflation in certain areas and much tighter global financial conditions. Other factors which could influence the longer-term forecast also include an increased focus on sustainability initiatives, widespread adoption of meeting technologies, growth in the remote workforce and the rise of blended travel.
Why it matters
The accelerated recovery in business travel is great news for the hotel sector and many companies are already reaping the benefits.
During Hyatt’s Q2 earnings call, the company noted its performance benefited from the recovery in business transient revenue which has continued to gain momentum; up 36 per cent compared to the second quarter of 2022 and 86 per cent per cent to the second quarter of 2019.
Accor stated revpar in the EMEA region was up 20 per cent year-on-year, with France remaining strong with large inflows of international leisure and business guests in Paris for large events as well as Asia surpassing 2019 figures notably in large cities, supported by the return of international business guests.
Not to be left out, Hilton said business transient revpar remained strong, growing 11% year-over-year. System-wide revpar grew 12% versus the prior year, with growth driven by strong demand in APAC as well as continued strength in leisure and steady recovery in business transient and group travel. In the US, second quarter comparable revpar grew 6 per cent year-over-year with performance led by continued recovery in both business transient and group segments.
What they said
Suzanne Neufang, CEO of GBTA said: “The headwinds that were anticipated to impact the rebound of global business travel over the past year didn’t materialize and that is good news. This latest forecast now indicates an accelerated return to pre-pandemic spending levels sooner than anticipated as well as growth ahead in the coming years. Business travel spending is a key indicator, but how travel volumes will continue to rebound is yet to be seen.”