Pragmatic importance of business travel gaining ground
Employees are traveling to cities within driving distance from their location
image for illustrative purpose
As of early 2023, international borders were finally truly open for the world’s biggest economies, with China being the last to clear the way for inbound and outbound trips.
The major reasons for these international trips primarily involve connecting with clients and prospects, but there is some variability across the United States and Europe. For European respondents, client project work is the biggest reason for trips beyond the continent, followed by sales meetings. American companies reported that the biggest reason for international travel is to connect with global industry colleagues at conferences and to build client relationships.
Pent-up demand plays a role, as many industry conferences were canceled or held virtually for two years or more. But this strong interest could also signal events’ growing importance as remote and hybrid work remain fixtures of the corporate world. When it is harder to call on prospects and clients in their offices, conferences can offer appealing opportunities to connect.
Companies continue to see some degree of tech replacement potential for all types of travel use cases. But there are clear standouts.
Internal trainings and internal team meetings are rated as most replaceable, with more than 44% of respondents rating each at the extreme low end on the need for in-person interaction. On the other end of the spectrum, only 7% and 11% of respondents gave similar ratings, respectively, to client acquisition and client rapport–building.
This rise in WFH preference and incidence over the past two years has solidified some changes in the type of business trips taken.
According to the survey, employees are traveling to more cities within driving distance from their location. There is also a reported increase in trips to the company headquarters by relocated employees, most of which (70%) are either completely or partially paid for by the company.
The biggest impacts that flexible work arrangements are having on travel volume are less direct: Companies have learned that virtual conferencing can support, to some degree, every business need that travel serves. And distributed workforces make it more complicated to arrange in-person meetings with clients, prospects, and internal teams that are spending fewer days in the office.
As corporate travel continues its expansion after three lean years, companies face a challenging cost environment. Higher airfares and room rates are the largest contributor to growing costs, and they have also become the No. 1 factor deterring the number of trips taken, up 2022.
While consumer industries have been affected by inflation broadly, and published airfares and room rates have also risen for leisure trips, corporate travel faces distinct pressures. After years of reduced travel, many companies are working to accommodate shifting expectations from their workforce. About half of respondents report that employees’ expectations of luxury services (such as first or business class airfares and upscale hotels) and the need for flexible or last-minute bookings are pushing costs up in 2023. An equal number of people say that the pursuit of sustainable providers also adds to costs.
While these numbers demonstrate that a majority of companies treat travel with some strategic importance, they also indicate potential room for improvement. The travel management function has historically focused on controlling costs, and many companies are likely in early stages of better tracking how the benefits warrant those costs. Corporate travel suppliers and partners may have opportunities to help companies navigate toward better optimization, both by playing a bigger role in supporting positive trip outcomes, and by helping to measure trips’ impact.
As some companies seek to reduce their carbon footprint to meet either regulatory requirements or their own goals, travel attracts attention as a significant contributor to emissions. Although just one in seven surveyed companies in the United States and one in five in Europe expect sustainability curbs to reduce their travel in 2023, just over 40% of each say they are working to optimize their corporate travel policy to decrease their environmental impact.
