Skift Travel News Blog

Hotels have mixed feelings about business travel in 2023.

On one hand the corporate travel and groups segment is the main area of focus for hotel revenue teams this year.

But rather than staffing issues, business travel also represents their biggest challenge, according to a new Outlook & Trends 2023 Survey from revenue management software company Duetto.

When hoteliers were asked how they planned to optimize business mix in 2023, the top responses were group business (59.5 percent) followed by corporate business (51.9 percent).

Channel management (48.1 percent), online travel agencies (38 percent), then tour operator, wholesale and fully independent travelers (30.4 percent) followed.

Business travel is returning this year, but Duetto believes the fact it’s unlikely to return 2019 levels weighs heavily. for example, only half of companies located in North America are seeing international bookings recover to their pre-pandemic levels according to the Global Business Travel Association.

When it comes to the challenges hotels face in 2023, business travel came top at 60.8 percent.

Staffing followed at 55.7 percent, ahead of increased costs, government restrictions, lead times and cancellations.

As expected, seeking out sales digitally is a priority when it comes to channel management efforts — but revenue execs could be focusing on the wrong channel if they want to boost their business travel bottom line.

Their top focus for channel management in 2023 are metasearch websites such as Google, TripAdvisor or Kayak. This came out highest at 75.9 percent.

Other areas including loyalty (57 percent); online agency (55.7 percent); “own website” (54.4 percent); and global distribution systems (53.2 percent). Yet it’s these global distribution systems that are commonly used by corporate travel agencies.

Duetto’s survey was carried out from Dec. 1, 2022, to Jan. 16, 2023.

Respondents worked in leisure hotels, business hotels, casino resorts and hostels. Geographically they came from North America (39.5 percent), Europe (21.1 percent), Latin America (21.1 percent), Asia Pacific (14.5 percent), and the Middle East & Africa (3.9 percent).

Just half of companies located in North America are seeing international bookings recover to their pre-pandemic levels, according to a new poll.

This latest data from the Global Business Travel Association delivers a dose of reality for the travel industry. Most travel agencies are predicting an eventual 70 percent recovery.

The picture is a little better in Europe, where six in 10 companies report a return to 2019 booking levels. Asia Pacific and Latin America are ahead with 65 percent and 77 percent respectively.

The survey polled 217 travel manager members, and they tend to represent bigger corporations. In some ways the association’s State of Global Business Travel report, published Tuesday, backs up reports that it’s the smaller enterprises driving the recovery (explaining why the world’s biggest corporate travel agency, American Express Global Business Travel, has restructured to hone in further on the segment.)

The report also follows bullish airline outlooks, including Delta Air Lines which said corporate travel business was now flatlining at around 80 percent of 2019 levels. There’s a clear discrepancy with the association poll here, but again this could be linked to smaller firms that do not have a managed corporate travel program that are among the carrier’s top international bookers.

However, Southwest Airlines said its managed corporate travel was expected to hit 2019 levels by March. That full recovery is still far off association’s poll results for domestic U.S travel: it found 69 percent of corporations had recovered to pre-pandemic domestic booking numbers, leading both Europe and Asia Pacific by three percentage points. Again this suggests it’s perhaps those smaller companies racing ahead to meet clients face-to-face or attend conferences.

The Global Business Travel Association poll was conducted between Jan. 16 and Jan. 23.

United Airlines saw an increase in corporate travel bookings after Labor Day, the unofficial end of summer in the U.S.

“We did see in September another several points tick up in corporate travel buying,” United Vice President of Sales Strategy & Effectiveness Glenn Hollister said at the ATPCO Elevate conference in Arlington, Va., Tuesday. Those “several points” raised corporate bookings to more than 70 percent recovered from the pandemic, he added.

Asked about the outlook for the rest of 2022, Hollister said United sees no change in corporate booking activity, which continues to gradually improve.

Also speaking at the ATPCO event, Global Business Travel Association CEO Suzanne Neufang said the organization forecasts corporate travel buying globally to recover to roughly 65 percent of 2019 levels, or a little less than $1 trillion, by the end of the year. GBTA does not expect a full recovery until 2026.

A big final step in the corporate travel recovery for United, and many other airlines, is the reopening of Asia. United was the largest U.S. airline to the region before the pandemic and, until large markets like China fully reopen, will face challenges fully recovering to 2019 corporate travel revenues.

United will provide an updated outlook when it reports its third quarter results on October 19.

This is the main event. Of course the Global Business Travel Association has held previous conferences in San Diego before at the city’s waterfront convention center — but never after such a drawn-out downturn.

The association did manage to squeeze its annual convention in last year, in Chicago, but mostly minus the European contingent who were barred from traveling to the U.S.

So it’s back at full pace, with an expected 4,500 delegates here over Aug. 14-17 (down on the usual pre-pandemic 7,000, but this year organizers claim 1,000 buyers.) The mood is mostly optimistic, with delegates surprised at just how little airline and airport disruption there was, and happy to be able to network again; it’s the first time for many people in years.

But again, unlike previous conventions, has there ever been so much uncertainty about what’s ahead? There’ll be some more clarity on Monday, with the association publishing its Annual Global Report & Forecast 2022-2026.

In the meantime, here’s a few questions.

Is This Still a $1.4 Trillion Industry? This was the amount spent globally on business in travel in 2019. That figure is still quoted by travel companies in presentations and still seen as a universally accepted benchmark. But it’s time to update that. The real answer is no one really knows, not just because the pandemic disrupted travel over the past couple of years, but because it’s yet to settle down into measurable patterns, thanks to that hard-to-define mix of business and leisure travel, remote working and “company retreats.” It may take years.

Spending was forecast to have halved to $694 billion in 2020, based on its 2021 release of the Outlook, with slow growth until recovering to above more than $1.4 trillion in 2025.

The fact is it could be way more than $1.4 trillion. We’ll have some more concrete figures when we get our hands on the 2022-2026 forecast, published Rockford Analytics, on Monday. In particular it will be interesting to see the methodology. Which links to the next question…

Is a Recession Coming or Not? This convention brings together suppliers and travel buyers. It’s the ideal setting to test the mood regarding future booking levels. In a recession, marketing and travel tend to get cut the deepest. So how are those forward bookings looking? Are the tech companies, who are already slowing or freezing hiring, cutting back further on travel spend? How are budgets shaping up? Airlines and hotels may be reluctant to share such information, but corporate buyers may have some clues. Of the 1,000 travel buyers in attendance, they’re representing 555 companies, of which 324 are new for this year’s convention.

Will Company Retreats Go Mainstream in 2023? With remote working and vacant offices a fast-growing trend in 2022, will offsites, onsites, retreats and the like make up for any shortfall in traditional business travel. Pampering retreats don’t come cheap for the more global organizations, so offer airlines a valuable source of revenue. The internet is rife with LinkedIn-style guidance on how they should run their retreats, and how often, but hopefully travel managers from the bigger firms like Cisco and PayPal who are gathering over the coming days in San Diego will offer some clarity.