Brighter Days Ahead For Business Travel
In a recent fourth-quarter 2022 earnings call, American Express Global Business Travel (Amex GBT) told company investors that it expects total business travel spending to grow by 24% in 2023 to reach over a trillion dollars.
The expectations for a strong year are supported by data from the company’s vast customer portfolio and also data from across the industry.
According to the Global Business Travel Association’s Q1 2023 Business Travel Outlook Poll published at the end of January, domestic and international bookings are currently at 67% and 54% of 2019 levels. This is up from 63% and 50% in their October survey.
As for Amex GBT, it reports that 78% of travel managers expect more, or a lot more trips in 2023 versus 2022. 86% of travel suppliers expect higher spending from corporate customers in 2023, an improvement from 80% in October. Finance, insurance, professional services and consulting are the sectors showing the strongest growth rates.
This expected increase in demand will be met by increased supply supporting confidence in solid industry growth this year. IATA expects capacity growth of 18% globally in 2023. This includes 5.5% in North America, 6.1% in Europe and 48% in Asia Pacific, largely driven by China.
Amex GBT says that SME clients “were leading recovery” and it was benefiting from an “all-time high” in win rates and customer satisfaction in this segment of the market.
The company told investors that distributed teams and hybrid work models are creating new demand for business travel, meetings, and events; and that global travel spend is expected to grow as capacity increases and existing restrictions in various regions are softened or lifted.
Increased meeting bookings also boosted hotel revenue, particularly for groups of under 50 people. Amex GBT’s meetings and events division has more than recovered, compared with 2019, and those smaller meetings now represent its fastest growing area of business, said CEO Paul Abbott.
Amex GBT signed “$2.1 billion of SME new wins value” in 2022, with a quarter of that value coming from businesses whose travel programs were previously unmanaged or handled in-house.
Abbott noted that: “Of course, our biggest growth opportunity is with SME customers. This represents a total opportunity of approximately $950 billion of travel spend. Within the SME segment, we are the #1 player in managed travel, but only 30% of the $950 billion opportunity is actually managed today, providing a significant growth opportunity.”
While the recovery for business travel has been lagging behind the leisure sector in the aftermath of the pandemic, the company’s latest earnings report paints a more hopeful picture for 2023.
PHOTO Credit – Briana-Tozour