Business and Group Travel Make a Stellar First Quarter Comeback

Skift Take

Encouraging signs from a host of companies releasing first quarter statistics, but a recurring theme is: Can it last?

Matthew Parsons

At first glance, the first three months of this year mark a decisive turnaround for corporate travel, based on statistics from a range of specialists.

No doubt it’s a relief for many hotels and airlines, but some reports warn this recovery momentum might not last due to fears suppliers won’t be ready in the coming months, with corporate travel agencies particularly unprepared.

Hyper Growth Mode

Omicron proved to be a bump in the road, rather than a brick wall, with group bookings in particular leading the pack, according to corporate travel agency TripActions, which said the first three months saw the kind of “hyper-growth” last seen before the pandemic.

“Once Omicron cases dipped and restrictions dropped, February’s rebound resulted in TripActions’ biggest month ever. Biggest, that is, until March,” the company said. It put this down to more offices reopening, but also gave a nod to the rise of super commuters.

Travel spend, according to TripAction’s numbers, increased 220 percent from January through March 2022, jumping 1,650 percent year-on-year in March 2022. In terms of expense category shifts, airlines have returned to their pre-pandemic top spot, increasing 240 percent from January 2022 to the end of March 2022. In the same quarter in 2021 they were positioned 14th.

Sales professionals made up 44 percent of the travel management company’s business travelers in March this year, with operations and engineering employees tied for second, at 12 percent.

Meanwhile, bookings made on its new Team Travel platform grew 662 percent over the three months, it said in its State of Business Travel and Expense Q1 2022 report, published Wednesday. Just over half its customers have either searched, created an event, or booked travel on the platform, which launched in June 2021.

Too Much Too Soon?

With the much-awaited return comes a risk that the industry will be caught out. In the UK, airports are already under fire for lengthy queues. On Tuesday, the managing director of Manchester Airport stepped down, according to reports.

“What we’re seeing now is a confluence of rising business demand and somewhat limited capacity,” said Daniel Finkel, TripActions chief commercial officer. “Airlines are reporting 70 percent recovery of business travel, yet there are pilot and staffing shortages and supply chain issues with plane deliveries. And while rising fuel prices have not affected fares just yet, that could be on the horizon.”

A new report from SAP Concur shows a similar sentiment. The expense platform recently surveyed 100 U.S. travel managers, where most of them (77 percent) said their organization had more employees traveling for business in March 2022 compared to February 2021. Nearly all respondents (96 percent) also said they thought their company’s travel spending would increase in the next 12 months, predicting an increase of 34 percent on average.

However, just 62 percent of travel managers said hotels were going to be capable of meeting demand for an increase in business travel this year, and 60 percent said the same about airlines. Travel management companies were viewed as the least likely to be ready from the travel manager’s perspective, with just 53 percent having faith in them.

Amadeus has also reported growth in bookings from its customers. In the U.S., the group travel market showed signs of improvement during the second half of 2021, and forward-looking figures for 2022 are “increasingly positive”, it said in a report published Wednesday. Amadeus’ Demand360 data also showed that as of March 17, 2022, on-the-books hotel group occupancy rates for the first half of 2022 were quickly approaching 2019 levels.

“Looking at 2022 and beyond, there is clear evidence to suggest that the market is returning, albeit with some significant shifts compared to pre-pandemic,” noted Dana Cariss, vice president of revenue strategy, Coraltree Hospitality, in the report. “At this time, trends are showing that there will be fewer 500+ person multi-day conventions and many more 30 to 50 person gatherings with overnight stays.”

Bernstein has also noted U.S. airlines perceived Omicron as “a minor hiccup” during the winter. “Looking ahead, we are constructive on the future of business travel given the increased pace of return-to-office across major business hubs like New York,” it said in its “The business of business travel: What recovery scenario is looking most likely?” report. “As more workers in industries like finance, consulting, and tech start filling up offices, demand for on-site business travel is likely to accelerate in the coming months,” it added.

Elsewhere, the UK’s Travel Counsellors said corporate sales in March were up 20 percent so far against levels in 2019. Last month was its most successful sales month since Covid began.