Stay Ahead of the Game: Business travel spend trends you can’t ignore

Corporate Traveller connects the dots between factors like economic challenges and demographic shifts and their effect on business travel spend trends. Discover what this means for the future of business travel in South Africa and beyond and how business travel managers need to adapt.

Thanks to the wild ride of the last three years – courtesy of the pandemic and a rollercoaster of economic factors such as loadshedding and rising inflation – South African business travellers have had to face unprecedented challenges head-on. But, these travellers have proven themselves as masters of adaptation, reshaping business travel in surprising ways, new research into business travel spend trends from Corporate Traveller shows.

Travel data shows that the number of travel bookings is down slightly in the first six months of 2023 when compared to 2019 levels. However, the number of room nights is significantly up and has, in fact, increased by 88%. The message is clear – one of the biggest trends among South African business travellers is that they're hitting the road less often but spending more.

“This trend indicates that business travellers are opting to stay longer at their destinations and planning more meetings during their business trips,” explains Bonnie Smith, GM of Corporate Traveller. "We're seeing business travellers clustering meetings to achieve more on each trip.”

Interestingly, despite the decrease in bookings, the Corporate Traveller research shows a significant increase in business travel spend trends in the first six months of 2023 as compared to the same period in 2019.

These increases have been observed both in global and local accommodation – international travel hasn’t escaped the hit. Other travel components have also seen a substantial rise in spend: the transactional value for domestic flights has increased by 151%, international flights by 112%, domestic car rentals by 62%, and international car rentals by 224%.

The reasons for these increases in business travel spending, while bookings remain constrained, are varied. It seems that business travellers today are leaning towards more premium services. Instead of booking economy flights or standard hotel rooms, they may be choosing business class flights or luxury accommodations. Of course, increased prices also play a significant role in the surge in travel spend. Prices for accommodation, flights and car rental are up across the line after the pandemic.

To give some shape to emerging trends highlighted by the data and how global factors and economic shifts have influenced business travel, Corporate Traveller has released a new white paper, "Economic Jet Lag: Understanding the Impact of SA’s Economy on Business Travel".

Smith shares some of the key business travel trends covered in the report:

The Zillennial effect: What are the travel trends for Gen Z?

The emergence of Gen Z travellers is making a mark. Born between the mid-1990s and early 2010s, Gen Z brings unique preferences and values that greatly influence their travel choices. Seeking work-life balance, they blend business and leisure travel—a trend called "bleisure travel." Immersing themselves in new cultures, they value sustainability, favouring eco-friendly accommodations and carbon-neutral flights. Tech-savvy, they desire seamless AI-powered trip planning and smart travel assistants. Gen Z's "hush trips" involve remote work from various destinations without employer consent.

What this means for business travel: Businesses must adapt to cater to this generation's preferences and opportunities, embracing green initiatives and offering flexibility.

The rise of tech: What is a new trend in travel?

In 2023, global business travel trends are all about recovering to pre-pandemic levels. Travel restrictions and vaccination requirements have eased, leading to an increase in travel demand. Travellers are embracing technology for enhanced travel planning, booking, and communication. AI adoption is revolutionising various aspects of the travel journey, enhancing efficiency and personalisation. Two significant tech trends in travel are the rise - contactless payments and the growth of online spending. They are requiring businesses to adapt and embrace new technologies and customer preferences, explains Smith.

What this means for business travel: “To attract and retain customers, travel companies must ensure their online platforms are user-friendly, secure, and offer a wide range of options to cater to the growing number of online travellers,” says Smith

The bigger picture: What is a top global travel trend for 2023?

Sustainability has become a major trend in global travel for a few reasons. First, businesses understand the importance of matching their values with their brand's purpose to meet customer expectations. By focusing on environmental, social, and governance initiatives and promoting green travel, companies show they care about sustainability, attracting customers who also value these concerns.

Second, sustainability is a smart approach to dealing with economic challenges and reducing risks. Even though there might be uncertainties, businesses that invest in eco-friendly practices can create lasting value and keep customers loyal and happy.

What this means for business travel: "Embracing sustainability in travel is not just a trend; it's a strategic imperative for businesses. By prioritising environmental responsibility and aligning travel choices with sustainability goals, companies can not only attract conscious customers but also create long-term value and resilience in the face of economic challenges,” says Smith.

SA’s economy: The effect on business travel spending

The Corporate Traveller report also reveals that power outages in South Africa aren't just leaving people in the dark; they're reshaping the future of work and business travel. Persistent load shedding is putting the brakes on the hybrid workplace trend, disrupting virtual connectivity and shaking the foundation of online business events.

South Africa is pivoting from the global trend, trading in digital workspaces for good old-fashioned offices, thanks to Eskom's power failures. As Smith notes, face-to-face meetings are poised for a resurgence, all thanks to the struggle to keep the lights on. Power solutions are a financial black hole, forcing companies to opt for the certainty of in-person dealings. Load shedding, ironically, is giving business travel an unexpected boost, making each trip a strategic play for maximum ROI as companies scramble to maintain productivity in the dark.

Meanwhile, inflation has skyrocketed, with South Africa’s central bank raising its benchmark rate to a 14-year high. This has gnawed away at the purchasing power of citizens and placed a burden on households leaving them feeling the squeeze from power shortages and energy price hikes. Inflation drives up travel costs, affecting accommodation, transportation, and meals.

The solution to keep costs in check? Smith says that tracking spending habits and embracing cost-saving tactics has become crucial for businesses planning travel budgets.

“Working with a travel management company (TMC) that has the tech, buying power, and expertise is key. With business travel costs continuing to rise, it is a good investment – essentially one that pays for itself," says Smith.

Smith is optimistic for the future and says she sees a potential resurgence in 2024 as the economy improves and businesses regain confidence. However, this doesn't mean it's ‘business travel as usual.' The travel spend trends we see emerging will keep both business travellers and travel managers on their feet.

"Now is the perfect moment to take action, rethink the way we do things, and lead the way into the future. As the world of business travel keeps evolving, companies need to be flexible, creative, and attentive to the preferences of the upcoming generation of travellers."

About Flight Centre Travel Group
The Flight Centre Travel Group is one of the world’s largest travel retailers and corporate travel managers. The company, which is headquartered in Brisbane, Australia, has company-owned leisure and corporate travel business in dozens of countries, spanning Australia, New Zealand, the Americas, Europe, the United Kingdom, South Africa, the United Arab Emirates, and Asia. ASX listed Flight Centre Travel Group (FLT) also operates the global FCM corporate travel management network, which extends to more than 100 countries through company-owned businesses and independent licensees, along with Corporate Traveller, the flagship business specific to the small-to-medium-sized enterprise sector. For more information, visit fctgl.com.