Business travel sector will grow by 3.7 per cent per year over the next decade, according to a new report by Travelport and the World Travel & Tourism Council (WTTC). The fastest growth is expected in the emerging markets, with Asia Pacific leading the way at a predicted rate of 6.2 per cent each year to 2027
In 2016, US$ 1.2 trillion was spent around the world on business travel. The spending on these trips, undertaken by employees on behalf of their companies or organisations, represented nearly one quarter (23 per cent) of total travel and tourism spending. In 2016, the sector contributed 6.6 per cent of total global export earnings and 30 per cent of service sector exports. As a leading job creator, travel and tourism directly employs 109 million people representing 3.6 per cent of all employment. When indirect and induced impacts are included, the sector contributes one in every 10 jobs worldwide.
Business travel, which supports wider trade flows stemming from new sales generation, customer retention, partnership development, innovation, exports and FDI improves global corporate productivity at a return on investment rate of ten-to-one.
Business travel in 2016
It is not surprising that those countries with the largest business travel spend are those with both the largest economies and largest travel and tourism economies, with the USA, China, United Kingdom, Germany and Japan leading the world. Within developing economies, business travel often plays the leading role in driving exports and growing the country’s wider travel and tourism sector by generating valuable spinoff benefits by providing infrastructure that other industries can use, and by boosting trade, skills, and investments. Fourteen of the top 20 countries where business travel represents the highest proportion of total travel and tourism GDP in 2016, are those classified as Least Developed Countries (LDCs) by the UN.
Growth ahead
Over the past five years, at a global level, business travel spend has grown at an annual average of 3.6 per cent and is forecast to grow at 3.7 per cent per year for each of the next 10 years. Regionally, South Asia has led the way, averaging growth of 11.3 per cet per year (albeit still with business travel representing a relatively small share) and in most regions, business travel growth over the past five years outperformed the direct travel and tourism GDP growth overall. Business travel growth in Asia will continue to lead the world regions in the years ahead.
At an individual country level, many of the countries that have experienced the highest levels of growth in business travel over the past five years are those in developing and emerging markets. Countries emerging from conflict such as Sudan, Sri Lanka, Angola and Rwanda also feature highly on this list, quite clearly emphasising the clear link between peace and economic development. WTTC forecasts show that driven by trade, by 2027, corporate travel spending in Asia-Pacific will more than double to US$ 645 billion from the current US$ 334 billion. The region will make up half of the global total, easily out-performing the Americas, the current region with the largest business travel spend.
Macro trends
As the nature of work changes with more contract or flexible labour, advances in automation and robotics moving people out of jobs, increases in geopolitical volatility and strengthening protectionist and localisation policies bring a slowdown to global trade, the future landscape for business travel while growing, is faced with flat-lining of its relative importance as leisure travel gains ground.
The trends and issues that influence business today are often fast evolving and unpredictable, creating a less-safe world. Terrorist attacks, political instability and unrest around the world, together with disease outbreaks and natural disasters, have all helped to push safety and security to the forefront of concerns when it comes to business travel, and requiring companies to reassess their risk strategies and travel policies.
Changing technologies and pervasive consumer behaviours have fundamentally altered how people socialise, communicate and do business. These advances have opened up myriad new opportunities for brands to support, engage and empower their customers via sophisticated apps and mobile services. The challenge for companies is not just to be fast and responsive and to anticipate personal preferences, but also to ensure that alongside this technology, their brands also have a personal ‘face’ and understand the boundaries of control. It is here that the corporate travel policies which regulate allowable business travel expenditure can be seen to lag behind employee expectations particularly when excluding peer-to-peer services, or allowing for business trips to blend into leisure.
The growing importance of well-being is a key trend that when embraced by organisations, can significantly improve employee productivity, saving costs over the longer term. Technology is changing every aspect of how people travel and its use and development is only going to accelerate in the coming years. The challenges of incorporating data-driven insights into day-to-day business processes and attracting and retaining the right talent are particular challenges that will need constant attention over the months ahead.
The opportunities
Digital innovations can bring benefits for both business travellers and their employees. Travellers can gain from services that offer greater personalisation and are tailored to their own needs and preferences and those that offer significant time savings. For employers, less human interaction may bring about significant financial savings, more efficient management of the burden of travel administration, and the mitigation of risk through technologies that track employees or new financial systems that reduce fraud.
Artificial intelligence (AI) can be a way to engage with travellers before and during their trips. A ‘mobile assistant’ to help travellers with every part of their end-to-end journey is set to be the next huge leap for business travel. Saved profiles with passport numbers and frequent flyer details are just the start of this process which will lead to the delivery of an individual, tailored and contextual experience. The Internet of Things (IoT), refers to the growing number of physical devices connected by electronics that can communicate with each other – in travel, this spans all types of services from airport terminals to hotel accommodation throughout of a journey and is an area being taken seriously by the travel industry. Innovations such as ‘smart’ airline seats which track bio rhythms, baggage tracking and mapping, sensory and temperature controls in hotels are some of the recent examples.
Mobile payment options along side the use of Virtual Account Numbers (VANs) do away with both the need to obtain local currencies and complete expense reports have great potential for business travellers. Being more secure than traditional credit cards, their value in reducing fraud also makes their future much more certain.
Many challenges
Across the world, there are barriers that currently hold up potential growth from both technology and regulatory standpoints. For the benefit of business travellers, for companies looking to do business and build trade, and for the destinations that can do far more to maximise experience (and thereby increase spending), they need to be broken down. Reducing the restrictive visa regimes, upgrading lagging technological infrastructure, and making improvements in data security, are three of the most pressing issues that need collective industry action, better communication and improved coordination between companies and governments to enable the further growth of business travel.
Existing WTTC data shows that there can be a link between visa facilitation and growth in travel – including business travel. Eight of the top 20 fastest growing business travel destinations introduced visa improvements for at least 41 countries. In countries where visas are an obstacle for travellers – including business travellers – measures to facilitate these visas can play a role supporting growth.
Both public and private investment is essential in supporting the ongoing growth and development of the sector. Investment is needed to build structures and facilities to expand capacity, to maintain, enhance and upgrade current infrastructure to account for the evolution in consumer tastes over time and new regulations and environmental standards, and also to stimulate demand.
For business travel, at a company level, the focus is clearly on a need for increased investment in digital technologies. On a practical level, the success of mobile as the key tool for business travellers also relies on a strong telecommunications infrastructure and widespread accessibility to both Wi-Fi and mobile networks to ensure regular, reliable and cheap access to key online apps and platforms. There are also some widespread concerns about the advance of technology, particularly around data security issues.
Recommendations
Invest in technology: With mobile phones now a main source of communication, reference and digital assistance for travellers, efficient, reliable and free Wi-Fi technology can maximise the opportunities within economies and greatly enhance the experience that a business traveller can have of a destination and of travel process.
Reduce visa burdens: Research from WTTC based on case studies show substantial and in some cases, significant increases in visitation when visa-related policies and processes are improved. While no visas are optimum, the balance of security versus being open for business through initiatives such as Global Entry in the USA is to be welcomed.
Invest in infrastructure: Public and private investment is essential in supporting the ongoing growth and development of the sector. Investment is needed to build structures and facilities to expand capacity, to maintain, enhance and upgrade current infrastructure to account for the evolution in consumer tastes over time and new regulations and environmental standards, and also to stimulate demand.
Cyber security: As the increased desirability of greater personalisation for business travellers is matched with enabling technology, so too is there a greater need for companies to ensure that they are planning the right levels of cyber security and crisis response.
The needs of the business traveller: Connecting experiences throughout an entire business trip, filtering choices based on personal preferences, facilitating quick and easy access to itineraries and other travel information, allowing the functionality to make changes where necessary, making suggestions based on itinerary and current location and contacting agents speedily, round-the-clock, within one single app is the “experience-first” strategy that will be the future of travel management companies.