Business travel is expected to start showing signs of life late this year, according to the Global Business Travel Association's annual BTI Outlook. The report calls for spending to increase by 21 percent in 2021, although meetings activity isn't expected to grow significantly until 2022, and a full recovery for the industry isn't expected until 2025.
The new report notes that the industry impact of Covid-19 began in April 2020, and is reflected by an expected 68 percent drop in business travel spending between April 1 and the end of last year. Factoring in a relatively strong first quarter in 2020, GBTA expects overall business travel spending for the year to reveal a 52 percent year-over-year decline, from $1.4 trillion in 2019 down to $694 billion in 2020.
The total global financial impact of the pandemic on business travel is expected to be 10 times that of the Great Recession or 9/11. Major setbacks include the following:
- Global GDP is expected to have dropped by 4.4 percent in 2020 — compared with the 0.5 percent decline that occurred in 2008's Great Recession.
- Global trade is likely to have shrunk by nearly 11 percent as a result of lockdowns and travel restrictions.
- The loss of global work hours in the business travel industry last year is equivalent to 400 million full-time jobs in the hotel, airline, airport, ground transportation, restaurant and other service-provider market segments.
- Before 2020, business travel had grown for 10 straight years, at an average of 5.1 percent annually.
- When broken down by region, North America suffered the greatest year-over-year loss to business travel spend in 2020, with a 60 percent drop. Western Europe was close behind, with a 58 percent decrease. The Asia-Pacific region managed a 44 percent decline.
“The pandemic has been devastating for business travel and it’s clear our industry will take some time to recover given the challenges we’re facing on multiple fronts,” said Dave Hilfman, interim executive director of GBTA.
Forecast for Business Travel Recovery
"Economic recovery is already underway, although very uneven across countries and sectors," added Hilfman. "The continued rollout of the vaccine will be central to recovery globally, as will decisions the new Biden administration makes regarding global trade, and border and quarantine policies."
The 21 percent increase in spend this year predicted by the BTI Outlook is expected to happen in large part towards the end of the year, as vaccinations become more common globally and consumer confidence likely rises.
A significant gain in meetings activity and international business travel won't be seen until 2022, according to the report. The rate of growth is expected to slow a bit in 2023, though still exceed the historical average growth of 4.6 percent. Annual business travel spending is projected to hit about $1.4 trillion by the end of 2024, just shy of the 2019 total.
The full report, which was conducted in partnership with consulting firm Rockport Analytics, can be found here.