Dubai: A recovery in global business travel spending will be delayed until mid-2026 due to persistent inflation, high energy prices and shocks from the Russia-Ukraine conflict, according to an industry report.
Business travel reached $697 billion in 2021, 5.5 per cent above the pandemic-era low of 2020. This is still much lower than 2019’s spending levels of $1.4 trillion, said the Global Business Travel Association (GBTA). The grouping also blamed the lower forecasts on other headwinds such as severe supply chain challenges, labor shortages, economic slowdown, and frequent lockdowns in China, the world’s largest manufacturer.
“To understand the headwinds that have been impacting a more accelerated recovery for global business travel, all you have to do is look at the news headlines since the beginning of 2022,” said Suzanne Neufang, CEO, GBTA. “The factors impacting many industries are also anticipated to impact global business travel recovery into 2025. The forecasted result is we’ll get close, but we won’t reach and exceed 2019’s pre-pandemic levels until 2026.”
The industry body expects global business travel spending in 2022 to advance 34 per cent over 2021 levels to $933 billion, recovering to 65 per cent of pre-pandemic levels. The short-term gains in the sector have been achieved due to success of the global vaccination effort, lifting of travel restrictions and improving business traveler sentiment, said GBTA. “The timing and pace of the recovery will continue to vary significantly from one region of the world to the next.”
Asia-Pacific helped lead the industry in terms of recovery of spending in 2021, but this was quickly reversed due to China’s zero-Covid policy that resulted in wide-scale lockdowns. For 2022, an increase of 16.5 per cent in spending is expected in APAC, with the region recovering to 66 per cent of pre-pandemic levels by the end of 2022.
Business travel spending in Latin America grew modestly in 2021 as the vaccination effort got off to a slower start. While there may be challenges in this region over the next few years, 55 per cent growth in spend in Latin America is forecast for this year as business travel recovers to 83 per cent of pre-pandemic levels.
North America and Western Europe are expected to experience the sharpest recoveries with CAGR (compound annual growth rate) increases of 23.4 per cent and 16.9 per cent, respectively, by 2026.
