June 13, 2024

Not all Zoom and gloom

Paddy O’Neill, Country Manager UKI for Spendesk, says business travel is bouncing back but is it only short term?

Few scenarios could have been more devastating for the travel sector than the pandemic, during which only 35% of UK businesses booked domestic travel. Then the rise of virtual meetings and hybrid working meant that “business as usual” was never going to fully return, with two-fifths (41%) of companies who participated in a Department for Transport survey stating they expect to make fewer business trips than pre-pandemic, though only 1% said they expect no business travel at all.

Business travel has changed for good but business spend on travel has bounced back, which is surely welcome news for the beleaguered travel industry. Our own data analysis of travel spending since the end of 2019 – across 3,500 SMBs in the UK, France and Germany – showed a strong recovery in 2021, with 2022 so far matching pre-pandemic trends in overall travel spend.

“Business travel has changed for good, but business spend on travel has bounced back”

We know why travel spend plummeted during the pandemic but the “how” is where we found some interesting differences between the three countries. Broadly, the UK favoured air travel over trains, with payments for rail bookings declining by 58% compared with 42% for flight bookings, while its continental cousins trended in the opposite direction. In Q1 2022, spend on flights in the UK has even surpassed pre-pandemic levels by 14%, though this is partly attributable to the increase in fares.

Rising costs proved to be a theme in the research, as the supply chain and fuel crises sent 2021 prices soaring for car rentals (+344%) and fuel (+691%) in the UK, which was the biggest spender on road travel among the three countries surveyed. With businesses in the UK continuing to opt for road and air travel despite the significant expense, this may point to a difference in cost and quality between the UK’s public transportation network and those of its European cousins.

“Business travel spending in early 2022 is in a far healthier place than at the height of the pandemic, and in some areas is surpassing pre-pandemic levels”

In the longer term, it will be interesting to see if current issues at UK airports – with reports of long queues and flight cancellations – have an impact on business travel plans and spend.

There are also questions about whether business travel will be impacted by the ongoing fuel crisis and wider economic uncertainties. The situation in Ukraine and Russian sanctions, for example, mean inflationary pressures will likely remain into the near future. Businesses wanting to cut costs may look at their travel spend, either reducing travel or opting for cheaper methods. Businesses will have to weigh up whether spending on flights, fuel and rentals is worthwhile versus meeting remotely on video calls.

It’s not all Zoom and gloom, however: business travel spending in early 2022 is in a far healthier place than at the height of the pandemic and in some areas is surpassing pre-pandemic levels. This is no surprise after two years spent mostly indoors, but the global economy is currently too volatile to predict how spending trends will settle in the longer term.