July 15, 2024

McKinsey report predicts speed of business travel recovery

Worldwide business travel spending looks set to rise by more than a quarter this year and reach two thirds of pre-pandemic levels by the end of 2022.

This is the forecast in a report from the World Travel & Tourism Council in collaboration with McKinsey & Company published this week.

Based on research, analysis and in-depth interviews with travel and tourism business leaders, the report is designed to help organisations prepare for corporate travel post pandemic.

It predicts a modest 26% rise in global business travel spend this year followed by a further rise of 34% in 2022.

But this comes in the wake of a 61% collapse in business travel spend in 2020 due to the pandemic restrictions.

The report predicts that the Middle East will lead the revival, with business spending set to rise by 49% this year (stronger than leisure spending at 36%) followed by a 32% rise next year.

In Asia Pacific, business spending is expected to climb by 32% this year and by 41% in 2022.

Spending in Europe is predicted to rise by 36% this year (stronger than leisure spending at 26%), followed by a 28% increase next year.

Meanwhile Africa spending is set to rise by 36% this year and 23% next year and in the Americas by 14% this year and by 35% in 2022.

Julia Simpson, WTTC CEO & President, said: “Business travel is starting to pick up. We expect to see two thirds back by the end of 2022.

“Business travel has been seriously hit but our research shows room for optimism with Asia Pacific and Middle East first off the starting blocks.”

The report said global business travel has been more significantly hit than leisure travel, with business spending falling by 61% compared to a 49% drop in leisure spending.

It quoted Kurt Ekert, former President and CEO of Carlson Wagonlit Travel, who told researchers: “The impact has been profound, and on business travel has been even more substantive than on overall travel. In fact, business travel was still down 80% [in our organisation] 12 months into the pandemic.”

To speed up the recovery of business travel, the report recommends businesses “adjust their revenue models, expand geographic focus and improve digital services”.

It said the shared challenge of restoring business travel would also depend on ongoing collaboration and partnerships across the private and public sectors and nurturing new relationships.