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

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Effectively previous the second anniversary of the pandemic, enterprise journey is displaying its first vital indicators of restoration. As that restoration beneficial properties momentum, a brand new panorama has shaped with the presence of each conventional and new types of enterprise journey.

Amid this new panorama, nevertheless, there stays blended client sentiment towards enterprise journey in addition to a big hole between present quantity and pre-pandemic comparables.

STR’s client analysis from Might 2022 produced telling insights into this all the time standard subject.

Not simply leisure anymore

Till this level, restoration was virtually fully leisure based mostly. That phase got here again prior to anticipated with strong summer time journey in 2020 and the summer time of pent-up demand in 2021 setting the stage for the anticipated “summer time of all summers” in 2022.

Enterprise journey has in fact been slower to return, however restoration within the phase is clear throughout the panorama with conventional enterprise journey for gross sales, consulting, trainings, conferences and conventions in addition to new enterprise journey from digital nomads, extra “bleisure” journeys, and distant employees making journeys again to their firm headquarters due to elevated make money working from home.

The general outlook is“much less unhealthy”

When roughly 500 world enterprise vacationers have been requested to consider their chance to journey for enterprise each now and when the pandemic is “over,” the outcomes, whereas unfavourable, have been considerably much less unfavourable than previous readings.

Nearly half (47%) of shoppers are as seemingly or extra prone to journey for in a single day enterprise now in contrast with pre-pandemic ranges, whereas the next proportion (60%) are as seemingly or extra prone to journey for in a single day enterprise when the pandemic ends. Moreover, internet propensity to journey, which is the distinction between these extra seemingly and fewer prone to journey is -43% for enterprise journey at the moment and -23% for enterprise journey post-pandemic. Amongst enterprise vacationers within the U.S., enterprise journey intentions aren’t fairly as pessimistic, though they’re nonetheless properly into unfavourable territory at -12% internet propensity post-pandemic.

Source: STR
Supply: STR

The associated fee financial savings realized by firms in 2020, with a lot of the workforce connecting from dwelling, and the success of video expertise as an alternative choice to face-to-face conferences are vital causes for this lack of optimism, according to STR research conducted last year. That sentiment can also be connected to increased efforts to limit travel frequency as sustainability initiatives are gaining momentum. So while the outlook is muted, the good news is business sentiment appears to have finally turned the corner with the least negative sentiment scores since COVID began.

Source: STR

Business travel pickup evident in midweek and urban hotel performance

Further indication of the return of business travel is seen in the significant improvement in midweek and urban hotel demand in the U.S., U.K., and Europe. Weekday occupancy has been rising steadily since February 2022 on both sides of the Atlantic. May weekday occupancy has been close to pre-pandemic levels as demonstrated in the two charts below.

Source: STR
Source: STR

Likewise, urban markets in the U.S. and U.K. have been closing the gap to 2019. Weekends and small town/rural destinations were strong in recent years because of leisure travel. This recent improvement in midweek and urban travel demand, when most business travel occurs, is a further sign of optimism for business travel.

The future is looking up for some, but not all business travelers

Looking to the future, just over half of business travelers expect to undertake an overnight business trip in the next 12 months. This positivity is somewhat muted by the fact that one-quarter (24%) of business travelers are not likely to take an overnight business trip in the next 12 months. Some employees who traveled for business in the past are not yet allowed to travel due to corporate policies and concerns from legal departments over duty of care if an employee contracts COVID-19 while traveling. Additionally, the earlier mentioned cost savings companies are realizing are likely still stifling some business travel.

Regionally, North Americans are the most likely to travel for business followed by Europeans and Brits. This pattern of North Americans and Europeans showing greater optimism toward future travel compared to Brits is similar to what was reported for leisure travel in earlier STR research. Notable is that the restrictions in the U.K. were more severe than the U.S., and this translated to a slower travel recovery across both leisure and business travel types.

Source: STR
Source: STR

A complete business return remains TBD

Signs of muted optimism about business travel is echoed elsewhere in our research. Just under one-third of those who traveled for business before the pandemic agreed that travel for business purposes will return to pre-COVID-19 levels. On the flip side, a plurality (43%) disagreed, resulting in a polarization of opinion. On a positive note, overall agreement, as demonstrated by the average measure, has increased steadily over the 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 amid a new business travel landscape

Business travel is recovering, although a complete recovery remains a way off. And the changes in the workplace and workstyle, not to mention the fact that COVID is still a factor, reveal a new business travel landscape. The opportunity for the hospitality industry is to embrace this new landscape with the same adaptability adopted during the pandemic, knowing there is a basic human need for in-person encounters and that business travel is a necessity.

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About STR

STR gives premium knowledge benchmarking, analytics and market insights for the worldwide hospitality trade. Based in 1985, STR maintains a presence in 15 nations with a company North American headquarters in Hendersonville, Tennessee, a world headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the main supplier of economic actual property data, analytics and on-line marketplaces. For extra data, please go to str.com and costargroup.com.

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