Passengers wait for flights with their luggage at Heathrow Airport in London
Luke MacGregor | Reuters
The cost of business travel, from hotels to airfares, is expected to rise through 2023 as demand returns more than two years after the start of the Covid pandemic, according to an industry report published on Wednesday.
According to a report by travel management company CWT and the Global Business Travel Association, air fares for business travel are expected to increase nearly 50% this year compared to 2021, after two years of steep declines. Next year, fares are expected to increase by more than 8%, the organizations said.
Airline and hotel executives have been optimistic about a return to business travel after Covid-19 and measures to curb its spread, such as travel restrictions, have forced companies to suspend many work trips .
As leisure travel rebounded from 2020 pandemic lows, business travel lagged, depriving hotels and airlines of an important source of revenue. Business travelers or their employers are often less price sensitive than leisure travelers and are more likely to book rooms or airline tickets, which command a premium price.
American Airlines last month said revenue from domestic business travel, which accounted for nearly a third of its passenger revenue in 2019, was 110% higher than three years ago, before the pandemic.
This is despite concerns about a slowing economy, labor shortages in the travel industry and other headaches, as some large corporations look for ways to cut spending.
“The anecdotal feedback we’re getting as we head into the fall is that people need to travel more,” Hilton Worldwide CEO Chris Nassetta said on a July 27 conference call. “As people worry about the changing macro environment, they have to lead companies. And in fact, the more they worry, the more they realize they have to kind of go out and make sure that they are hustling.”
Globally, hotel rates are likely to exceed 2019 levels next year, according to the industry report.
Big events like industry conferences have also made a comeback, such as the Farnborough International Air Show last month. But prices are on the rise, and the cost per attendee is expected to increase by 25% this year compared to 2019, according to the report.