More than half of large-company CEOs see negative consequences of reducing business travel, according to a new survey released by J.D. Power, Tourism Economics, and the US Travel Association (USTA). Key findings from the survey reveal executives agree that reducing business travel may represent short-term savings but will bring long-term negative impacts on revenue.
Despite agreement, more than two-thirds of executives expect their company will spend less on business travel over the next six months compared to the same period in 2019. Further, half of companies still have policies in place restricting business travel.
Additionally, both business travelers and executives report “negative impacts related to reduced business travel.” Executives note that decreased business travel may represent short-term savings but damage sales in the long term (46 percent), which may harm overall financial stability and performance, according to the study. While frequency of trips is closing in on 2019 levels, spending is expected to be depressed throughout the end of 2022—primarily at conferences and trade shows as well as company meetings.
The Quarterly Business Travel Index projects a positive outlook for Q3, with an expected improvement to 84—up from 81 in Q2 (2019=100). The business conditions leading index, which measures the business environment for travel, shows moderate improvement, rising to 103 for Q3, up slightly from 102 in Q2.”
This near-term positive outlook also aligns with USTA’s latest forecast, which shows that domestic business travel will experience strong growth in 2022 before tapering off in following years.
However, there are headwinds on the horizon that threaten growth. In the coming quarters, companies will make travel decisions in a business environment that is adjusting to increased interest rates and high inflation, as well as labor shortages and supply chain challenges. Elevated risks of recession are anticipated to result in some caution among corporate decision-makers, which would stifle business travel spending by some companies. Additionally, with more businesses setting aggressive goals to reduce their carbon footprint, companies may choose to reduce business travel to achieve net zero emissions.
Click here to view the results of the survey.