On demand | Elevate 2022

PANEL  •  THOUGHT LEADERSHIP

Business travel is back in play, but the rules of the game have changed. What are the top trends of corporate travel post-pandemic? What’s the next move for recovery? What does the future look like for the various players, from buyers to suppliers? Don’t miss this thought-provoking, fast-paced discussion about this new era of business travel. 

Donna: We're going to start with Suzanne, who's going to give us some recent GBTA industry insights.

Suzanne: Alright, super. First, I want to ask, how many of you traveled here today from outside the DC/Virginia area? Can you raise your hands? How many of you with your hands raised would rather be sitting behind a screen at home instead of being here today? Point made. Okay, there's our data point for today. 

Alright. So, let's move into some of our data, which is, we might think we had a catastrophe over the last couple of years, two and a half years now, and this chart shows we did. 

So, as you look at this, this is a compounded average growth rate from other crises that the business travel industry has gone through. In many ways, the leisure travel industry also had these same crises, but what you'll see is that over the course of usually three to five years, our business travel industry still recovers. And so, we are an industry that goes through crises and then takes our time and recovers. 

And a lot of this is always based on how CFOs feel about our industry, how HR people feel about our industry, but the dip that we had in 2020 was the deepest we've ever seen. And so, this recovery as you'll see with some of the data I show you, will also show a bit of time before we get back to normal. 

So, 2021 our industry, which in 2019 was a 1.4 trillion-dollar industry globally, we lost about, certainly, we lost about 74%. 68 to 74% depending on the country in 2020. In 2021, we only got five and a half percent of that back. And as we've seen from this year, the first half had some Omicron surprises. 

So, you'll see that back half makes up for that and we're projecting right now that we'll have a 34% increase year-over-year. So, from that little bit of improvement last year, we'll have a 34% year-over-year improvement to about 933 billion USD by the end of this year and we think that is about 65% of global travel spend coming back for business travel at the end of this year. 

Now, as you look at this upward trend, you'll see that by the time we get to 2026, we're finally back at those 2019 levels. It's a slower number and a slower climb than we had even predicted as late as last November when we came out with our second to the last Business Travel Index. And this Business Travel Index because of Omicron, because of inflation, because of the war in the Ukraine, because of energy prices, all of these things that you are also gauging every day in your day jobs… those things have put downward pressure and are suppressing this faster rise back to the business travel normal. 

But with that said, there's a lot to be thankful for as we're here now in early October in Washington, DC, area. 

You'll see again that domestic travel never quite hit completely zero. That's probably what we were all thankful for back then. There was PPE that needed to be flown around, there were other people that needed to go places, but I'm happy to say this is our highest number ever on an average basis. 86% are now allowing some or most domestic travel within their regions today and we're actually last year, a year ago, it was 75% so we see that that is continuing to improve and Omicron itself didn't really affect domestic business travels. 

So, that was not something that we really saw change when Omicron came on our radars in December and January. International travel 68% of companies now, again, high depending on the region you're in, 68% of companies allow some or most international travel today, which we're also glad for, but that doesn't mean that 68% of international travel is back. It just means that they're allowing some, which they didn't before. 

Supplier perspective, many of you are suppliers here. So, supplier perspective is pretty optimistic and you'll see through June, and it continues, our October one also had an 84%. So, changing in the last month, which is a very recent indicator... how are business travelers traveling on your airlines? Are they staying in your hotels? And this shows that month-over-month, that continues to improve steadily. 

And then, in our October poll, here's some more recent details from just last week that we released. So, right now, in asking questions of travel buyers, 63% of domestic travel is back and we expect, again, for that to be back to 65% in the next two and a half months. And 50% international, which as I know, a lot of certainly front of plane international flights are something that really keep airlines profitable, and we want to make sure that comes back, but if you'll remember that it was only in June that the U.S. decided that they would let in non-citizens. 

So, a very important thing for us as we think about from June to October isn't that much, and the US is still a big driver with China closed, so as we look at this 50% is something I think we should be thankful for. 

We also know that 26% of buyers estimate that their international business travel volume has increased to at least 70%. So, some companies are definitely traveling, and you probably see this in your businesses as well. 

So, from headwinds to now, what is our point of optimism? We've heard since probably all of those months of 2020 that internal travel would never come back. That is not what we're hearing. 

In fact, what we hear more so is that corporate culture can't happen unless you have people and employees in the same room together. So, you'll be happy to take this step back. 78% of our travel buyers say that next year, they expect there to be more employee trips for internal travel than there were this year. 85% percent of suppliers say there will be more trips overall. So, that's an important number as well and some of those bookings are already being booked now. 

And then, as we see that both internal and external travel overall, 65% of buyers say there will be more travel in general for business travel. And 75% say that they are not currently so worried about inflation or threat of recession, that they are limiting their travel for next year. And so, there is a fair bit of, I would call it pragmatic travel management at the moment, that I think we can all look forward to. 

And then, the last point here is that while inflation, a recession have taken over from the covid fears, only four percent right now are really worried about covid. And, again, I would emphasize that we don't have a huge APAC response rate for this particular survey and we know that it would be higher there from some other research we did in the summer. So, that said, this starts us off then with where we need to go next. So, Donna, back to you. 

Donna: Thank you, Suzanne. I appreciate that and there's definitely some positive indicators and projections in there and I want to start with one of the last points you made about the macroeconomic environment and even though the Asia factor was not necessarily in that, 80% are more concerned about macroeconomic conditions rather than covid, which was only 4%. However, prices have increased. Although airline fares have leveled off recently a bit, I've recently talked to buyers and they've already hit or exceeded their travel budgets for 2022. How is that going to impact their 2023 travel and budgeting? And why don't we start with Nick and what you're seeing at CWT? 

Nick: Sure. So, I think the most telling statistic that we just saw was that 75% of the survey respondents are not worried about the threat of recession or inflation as they consider planning for next year. And, by in large, I think the corporate viewpoint is driven by two fundamental premises. 

One is everybody wants to be in growth mode right now. It's a really tough last several years and I sense that corporates are more focused on growth than they are necessarily the concerns around how to manage the nuance of corporate spend. But, they know that growth is fueled by travel to some degree. So, that's kind of point one. 

Point two: Many corporates, not all, but many, are also very keenly aware of their own employee value proposition. And travel policy, quite frankly, has a role to play in what that looks like. And purposeful, internal collaboration has a role to play in what that looks like. 

And I know we're going to touch on this later, but as we think about more and more dispersed workforces, the idea of being more purposeful about internal travel, getting people together, so not just traveling for the purposes of driving sales and driving revenue, but for the purposes of bringing people together. Creating culture, driving collaboration, driving innovation, fundamentally this is what's driving the corporate planning process. 

I think there's just a fair amount of understanding that we are in an inflationary kind of environment that there may be a higher cost per trip for some period of time. That can't last forever and then there's going to be this kind of natural dampening effect as it relates to how people start thinking about what traveling less and how to make that a part of kind of sustainable travel going forward. 

So, I'm all over the place considering some of the topics we've got, but I think focus on growth and employee value proposition, and that's where the corporate mindset is right now. 

Donna: Okay. Glenn, from the supplier side, what are you seeing how travel buyers are managing their budgets and for quarter four, and for going forward, and any other macro trends you're noticing? 

Glenn: Sure. So, I think kind of as Nick hinted to, we're seeing everything, right. We are absolutely seeing companies saying, “Hey, we set our budget for the year at whatever 50% or 75% of 2019, and we've run through it.” We also have just as many companies who said, “Well, we've already spent more than what we spent 2019. We're just going to keep going.” Right, and so, it really depends on that company, the role that budgeting plays. 

Some companies don't really do travel budgets. For example, I was in consulting prior to coming to United. We did not have an annual travel budget, right. If we sold a project, that paid for the travel. And so, it's all over the place. 

So, it's really hard to get to a trend on budgeting. What I would say is that we did see in September another several points tick up in the rate of buying travel versus 2019. So, we went from around probably just under 70% to just over 70% as an industry. And we continue to get a lot of feedback that there is still a lot of untapped, pent-up demand for travel that has not been released yet. 

Nick: Especially because Asia is not open yet. When Asia is fully open, you are going to see another spike, especially from the enterprise sector, without a doubt. 

Donna: Suzanne, do you have anything you want to add? 

Suzanne: I agree. I think there's lots of stories. They're anecdotal and they're important because for every kind of vertical market in the enterprise space, there is a trend. And if there's 40 of them, there's 40 different trends that we see. So, it's the culmination is then numbers that suppliers and TMC see so that we can track that. 

Donna: Right. Well, as we heard earlier this morning, sustainability is a hot topic across corporate America, and corporate travel is no exception. I'm going to hit on a couple points in this topic. How are overall corporate sustainability goals affecting the corporate buyer role? Glenn, are you seeing anything? 

Glenn: Sure. I think sustainability is a huge impact on the way corporations buy travel and it has become very much part of the role of the typical corporate buyer in a way that it never was in the past. 

In fact, when we were at GBTA’s convention in San Diego just about a month and a half ago, every customer conversation we had touched on sustainability at some point and a number of them really were primarily focused around sustainability. That was a huge change from what we saw pre-pandemic. 

So, it's very much on the buyer's agenda now. The approaches they're taking vary. In general, what companies are doing is saying we have some type of sustainability goal, and if travel is a big part of our carbon footprint, there's many companies are starting to have a plan about how to address that portion of their carbon footprint. 

Some have gone so far as to say they're segregating money and say, “We're going to take this pot of money, that's different than the travel budget by the way in the vast majority of cases, and we're going to use that to address our carbon footprint.” 

Other companies where maybe travel is not a big portion, they're more interested in just understanding the details of their travel and how that's creating emissions and starting to think about their options. 

Nick: Yeah, maybe just to build on that. I do think the impact of travel to any organization's net neutrality objectives is thoroughly dependent on the type of business that they're in, right. 

So, you're not going to see a tremendous amount of energy—no pun intended—from the oil and gas sector because, quite frankly, there's a lot of bigger fish for them to fry in terms of reducing their footprint. 

That being said, for organizations where travel does have a material impact, the next evolution I think that we're going to see is this idea of establishing carbon budgets. That any individual budget owner won't just have a specific dollar amount that they can spend, but they will have a certain emission amount that they can also spend. And we're already starting to see organizations try to kind of get their arms wrapped around this. 

Historically, it's been hard because reporting has not been widely available. I think that's really different now. Several TMCs so the supply base there's great access to really rich and robust reporting to help customers at least understand “what's my starting point, how might I go about setting a carbon budget?” 

And I think we're going to see some level of scrutiny between what's allowable for external travel. So, in your previous days what would be client-related travel versus setting up a carbon budget for internal travel. 

Glenn: Yeah, I think on the reporting, that's a great point. We have made advances. I think there's a couple of issues around sustainability. One is there's a lot of different ways to calculate carbon emissions from a flight. 

So, the good news there is that the airlines got together with IATA and there's a new IATA standard that we think is a really good way of calculating the addresses shortcomings of a lot of the previous calculation methods, and I expect that the airline industry is going to widely adopt that and use that. Then, we need to create that data. 

So, United, we about five months ago launched reporting to all our corporate customers that has actual emissions based on the plane that person actually flew on and how much fuel that plane actually burned on that trip. But that's not the long-term answer… that's kind of the interim. 

Ultimately, we in all other lines are going to have to get that data to Nick so that he can put it all together because no buyer wants to look at a different report for every airline. 

Nick: Right. Ultimately, while I think we all cringe at the reality for corporate organizations to reduce their emission footprint, they will necessarily have to travel less. There will have to be some limiter to the amount of travel that becomes acceptable and the entire industry has struggled for years trying to understand the efficacy of an individual trip. 

And I know we've tried to look at it, and the folks at GBTA tried to look at it, but at some point, we're going to have to start correlating the value of a trip to meaningful emission versus controllable emissions. 

Glenn: I think there are a couple early trends we're seeing right now that companies are taking. One is the air versus rail decision. Obviously, in the United States, there's not a lot of opportunity to shift from air to rail, but in Europe and other places, there's more. We're definitely seeing that being part of it. 

The other trend we're seeing is a lot of scrutiny on day trips or really short trips. Like, do you really need to go just for one meeting or can you maybe package two or three things together, go for a longer trip and only fly once? And that's definitely a trend as well. 

Nick: Confirmed. 

Suzanne: We see that, too, and I think all of us are doing that this week as well. So, we're practicing good travel hygiene. You might hear that more often—corporate travel hygiene doesn't mean what you think it is… no bed bugs, but used to be the problem in New York City. 

I think what we also see, even as an industry, we didn't know we were started. GBTA didn't talk about this before I got here 18 months ago. And so, last November, we started on a journey thanks to companies like yours, both of yours, we have a new sustainability leadership council and sort of a separate cab.  

So, the sustainability officers of some of 10 of the world's largest traveling companies have given us some access to their sustainability officers where travel is one of those. Scope three emissions that matter and they need to start on the journey of what do they do, and we hear various things, but we started with a thought paper in April, which we call “The State of Sustainability in the Business Travel Industry.” And we asked policy makers, primarily in Europe and North America, some who look outside in, we asked industry practitioners from a supplier and a buy side, “how do you see all of the UN’s sustainability criterions?”, that is people and planet. 

So, it's all a list of like 12 or 16 different colorful blocks if you go to the UN’s website. And, resoundingly, all of them said, “Our biggest opportunity is to get to carbon neutrality.” 

That is the place that we need to start, and that comes almost full force to aviation rather than other categories that we also have to care about, which is hospitality and car rental and ground transportation and other things. But we have to start with this big, big piece that we haven't talked about it yet. But the commonly known stat is 3% of emissions right now are caused by aviation. 

And, when you think about that, it's not just business travel. That is tourism, that's also cargo, and then you think about what business travel can affect, we start to realize that it is a very organized industry. And so, when you think about SAF—what the prior panel talked about—we are the face of, really, that industry that can organize demand. 

Demand for SAF, that in a way, when there is enough that the price can come down and it can become more affordable because I know that our buyers also are asking for “Can you tell me which plane had SAF in it, Glenn? And how much SAF did it have?” because they want to get to that level of detail. 

So, I think where we start, where they ultimately know they have to start, is they buy, or commit to buy, a certain number of gallons of SAF and then, you have to just prove that you've flown airplanes with that in it and they are part of that solution. 

So, it's a demand and supply side that is so complicated and then their auditors want to know, okay now prove that that happened, so now you need the audit systems behind it. So, accounting systems actually have to work with this as well.  

So, but we do know that buyers are on the journey already. Our data tells us that 38% of buyers are currently have corporate sustainability practices in their travel policies already. So, 38% was more than we expected. 60% of travel industry companies, that both supplier and buy side, have a sustainability team already and a program. And then finally, barriers. 

So, the first one is cost. Perceived cost of SAF was the number one. 82% cited cost as the main barrier and the other one, Nick to what you talked about, 63% said the second biggest barrier was the lack of consistent data and transparency. So, all of that together, we have to weave our way into that process to be able to measure, track, and then celebrate small success. 

Glenn: And what I would say at this point, certainly SAF or Sustainable Aviation Fuel, the price needs to come down, right. We need scale in order to get the price down, but there are enough buyers willing to pay today's price. That the price is not a barrier. The barrier today is actually supply. 

So, we went out with our 2023 SAF program at GBTA convention and we're oversubscribed the first day, right. We just, there's not enough supply out there. 

Suzanne: Black Friday for SAF! 

Donna: You guys are great. You answered all of the questions I had additionally for the sustainability section, except, and the last one I was going to end on, is what the corporate program for United was looking like since you launched it? 

Glenn: So, as we are able to obtain supply for SAF, we can sell it really quickly. Where we're going is some of what Suzanne touched on. It's really about the auditing and how do we get the scope three credits to the buyer in a way through a fully auditable trail that is transparent and that everyone believes in. And that's where a lot of effort is going right now as well. 

Donna: We're going to move on from sustainability and I want to make sure we touch on another topic before we run out of time, and that is remote and distributed workforce. How is this affecting corporate travel needs and program negotiations? Whoever wants to kick off. 

Nick: So, I'm happy to kick off. I think we are going to see two very clear emerging trends as a result of this idea that, and look, there's I think, hopefully you'll have some data… 

Suzanne: I have a little. 

Nick: We are living in a world of distributed workforces. This will be our new norm and I think you're going to see two things from a corporate travel perspective. We are already hearing from our customers that this new need, which is to be able to, specifically through corporate agreements, can I bolt on travel for fun when I'm traveling for work? 

So, I think the idea that “bleisure” as a thing becomes a bit more of a reality, is certainly pushed forward a little bit more with the idea of people who become roving Nomads, number one. 

Number two… Because this will likely drive more of a need for what I mentioned earlier, internal collaboration, solving for the small meeting needs from a technological perspective has not always been easy. 

So, there's lots of support to put this type of conference together. It’s high tech. There are tremendous facilities in order to do that, but if you are co-locating four or five people, all potentially from different locations, into a singular destination… that's not an office space… it's not always easy to take care of food and beverage, get a meeting room. Somebody's got to go do that. And there is plenty of technology in play today to help facilitate that. 

So, this kind of blurring of lines between what was traditional transient travel versus what is more traditional meeting travel, I think those lines are going to blur and you're going to start to see a holistic solution, in a more holistic approach, to “I need to be able to do all of this from a single place.” Not necessarily go through different silos or bifurcated services in order to address that kind of need. 

Suzanne: I think we're all becoming meeting planners because when you have to coordinate, I mean classic is I work out of my apartment in New York City. I don't want to invite people into my apartment. Like every New Yorker, our apartments are small, right. So, we're finding where do we squat for the day, right. So, budgets are still an issue for many, and so thank goodness for great hospitality lobbies around the cities that you live in. That's certainly something. 

But the data that you asked about, I will let you know that 41% of the buyers in our October survey said they are getting more questions about—I like to call it blended travel. I don't like the word bleisure, but blended travel, bleisure—that 41% are getting more questions about this. So, that is a significant trend, I think, thanks to the pandemic. 

And then, we also asked them a little bit about what they allow and for the companies that allow hybrid or remote work already, 44% allow employees to work outside of the city, state, or province where they normally would have done their job. So, country isn't on there, but many also allow 30 days outside of the country where tax doesn't become an issue. So, it does become complicated then. How do you re-humanize business meetings? That's one thing we think that we evolved during crises like this. Got to make sure we didn't all evolve into introverts that don't want to ever get together again either. 

Nick: Nothing wrong with being an introvert, Suzanne, come on. 

Suzanne: Nothing wrong, I’m borderline! 

Glenn: Early in the pandemic I think there were some CFOs and CEOs who were really excited at the idea of “we can run a whole business without having to pay for office space or travel” and as the pandemic went on and the natural turnover in the teams and stuff, it turned into a “boy, I've got 20% of my workforce who really doesn't know my company and how do I get them to be part of my company and part of my culture?” 

And that is, for most of those same people, their top concern now. And what that's driving is a real change in travel patterns. There's still certainly “I've got a headquarters and people work there and they always travel from there out to wherever,” but there's now these new travel patterns that, “well I have a remote workforce and they travel into headquarters” or “I have a remote workforce and I got rid of a lot of my office space and so once a month or once a quarter, whatever the frequency is, we're all just going to get together somewhere fun.” Then, in the winter, it's probably more in the southern part of the United States and in the summer maybe it's a little further north, right. 

So, a lot of new travel patterns, and that's changing the way travel buyers have to manage their programs and manage their spend. And so, that's that certainly a trend we're seeing as well and that we're adapting to by offering different types of relationships and deals with corporations. 

Donna: Sounds like there's an opportunity for technology there to help identify transient versus meetings versus blended. So, maybe there's technology companies in the audience who can work on that. And, with that, we are just about out of time. If anyone has a parting comment to make, otherwise I think we'll wrap. 

Glenn: Keep traveling! 

Nick: Yeah, that's right. 

Donna: Keep traveling, keep meeting. 

All: Thank you.