Dive Brief:

• Corporate travel’s rebound is on similar trajectories in the U.S. and Europe, but the market is expected to ultimately be smaller than pre-pandemic levels when adjusting for lost growth and inflation, according to Deloitte’s recent corporate travel study, “Navigating Toward a New Normal.”
• Compared to Deloitte’s 2022 survey, more companies are incorporating non-hotel accommodations into travel policies. Only about 10% do not reimburse for non-hotel accommodations, down from half in 2022, and 45% now have non-hotel lodging in their corporate booking tools versus 9% last year.
• As leisure travel returns with a vengeance, corporate travel has been slower to come back due to a host of factors, including a client’s interest in meeting in person, the perceived value of attending a conference and the continued usage of virtual conferencing platforms to replace business trips.

Dive Insight:

Business trip volume is up, but corporate travel managers face higher hotel and airline prices, tougher supplier negotiations and sustainability mandates, which are hindering its comeback in both the U.S. and Europe, according to Deloitte's recent corporate travel study.

According to the survey, corporate travel grew roughly twofold from the beginning of 2022 to the end of the year, with spending across the U.S. and Europe expected to reach 57% of 2019 levels in the first half of 2023 and nearly three-quarters of the pre-pandemic mark by the end of the year.

The biggest drivers have been live events and the easing of restrictions, including China clearing the way for inbound and outbound trips. According to Deloitte, more than half of travel managers in both the U.S. and Europe expect industry events to spur travel growth this year. Live event attendance has jumped from the fifth biggest trigger for increased travel spending in 2022 to the top spot in 2023.

This renewed interest in events such as conferences can, in part, be credited to ongoing remote and hybrid work schedules that make it more difficult to connect with clients and prospects digitally. But the continued use of virtual conferencing platforms is also replacing business trips, particularly internal meetings.

Citing the looming recession and banking sector issues, travel buyers are taking a cautious financial approach, according to the survey. Higher airfares and room rates were found to be the largest contributors to growing corporate travel costs, and have become the No. 1 factors that deter the number of trips taken, up from No. 5 in 2022.

Just under half (45%) of companies surveyed said that they are limiting trip frequency to control costs, which is down from 72% in 2022. Instead, the focus has shifted to mitigating the cost per trip with cheaper lodging (59%) and lower-cost flights (56%).

While full recovery appears possible by late 2024, the survey predicts that the corporate travel market will be between 10% and 20% smaller than it was prior to the pandemic, when accounting for inflation.