- The cost of travel surged this year and will likely rise again in 2023, according to a business travel industry report.
- A recession and geopolitical problems could threaten a rebound in business travel.
The cost of business travel, from hotels to airfare, is set to rise through 2023 as demand returns more than two years after the Covid pandemic began, according to an industry report published Wednesday.
Business travel airfare is on track to rise nearly 50% this year over 2021, following two years of steep declines, according to a report from travel management company CWT and the Global Business Travel Association. Next year, fares are set to increase more than 8%, the organizations said.
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Airline and hotel executives have been upbeat about a return to business travel after Covid-19 and measures to curb its spread, like travel restrictions, forced companies to put many work trips on hold.
While leisure travel has roared back from 2020 pandemic lows, business travel has 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 that fetch a high price.
American Airlines last month said domestic business travel revenue, which made up nearly a third of its 2019 passenger revenue, was 110% higher than it was three years ago, before the pandemic.
"The anecdotal feedback that we're getting as we go into the fall is people have to travel more," Chris Nassetta, CEO of Hilton Worldwide, said on a July 27 earnings call. "While people are worried about where the macro environment is going, they've got to run the businesses. And in fact, the more worried they are, the more they realize they sort of got to get out there and make sure they're hustling."
Globally, hotel rates will likely surpass 2019 levels next year, the industry report said.
Big events like industry conferences have also made a comeback, such as the Farnborough International Airshow, last month. But prices are on the rise and the cost per attendee is set to increase 25% this year from 2019, the report said.