Business travelers living out of their suitcases may be less common, but many are still flying for work—though less often or for shorter durations.
About 1.3 million people travel daily for business in the U.S. However, fewer businesspeople are traveling long distances—including flying for work—due to high costs, reduced workforces, digital connections, inconvenience, need or preference.
"Prices are up significantly, 10% to 20%, and are the No. 1 impediment to business travel," said Ben Wolthuizen, an equity analyst who follows the travel industry for Cavanal Hill Investment Management, Inc.
Many of those higher costs are driven by energy and food inflation that directly impacts the cost of transportation, dining and lodging, and are compounded by staffing and lingering supply issues.
Still, even with those higher costs, many companies are having workers travel. According to the Global Business Travel Association (GBTA), business travel was about 20% of global travel expenditures in 2021 and rose 47%, to $1.03 trillion, in 2022. Expectations are for an additional 32% growth in 2023, and spending of $1.4 trillion in 2024, surpassing pre-pandemic levels.
To get the most out of travel budgets in 2024, business owners and operators will need to continue to balance the rising cost of travel and the importance of personal connections in getting business done.
Who's traveling and who's not?
Not everyone needs to—or wants to—travel for work. "The ability to meet online has increased the reluctance to travel and the willingness by companies to pay for it," said Wolthuizen.
Zoom and similar video conferencing services, with their relatively minimal out-of-pocket expense, have made a near-casualty out of travel that for some once seemed a semi-reward of the job. Events like training, skill-building, focus groups and all-hands meetings now occur largely online. In other instances, companies have reduced the number of on-hand travelers for new-business pitches, where junior or support associates can attend virtually.
What's mostly stayed the same, though maybe less frequent, is travel by dealmakers, relationship builders and problem-solvers.
"Customer meetings are the top reason for business travel," Wolthuizen said.
Kevin Kramer, Kansas City market CEO for BOK Financial®, has seen this among his team, clients and prospects.
"Fewer people overall are traveling. We're seeing that large companies with $10 billion-plus in revenues are cutting back, but small to mid-size companies of up to $1 billion are returning to 2019 travel budgets and regimens," Kramer said. "For us, the focus is on relationships and understanding the client's needs. Often that's better filled when sitting across the table with face-to-face conversation instead of a virtual meeting."
Events that bring people together
Conferences, trade shows and association meetings have also been industry outperformers.
For 1Q 2023, Freeman—a global event logistics and exhibitor leader—reported event attendance reached 103% of pre-pandemic levels. The U.S. leads all countries in hosting conferences and trade shows, at more than 41,000. That's five times more than the United Kingdom, which ranked second, as of August 2023. Event planners are quick to state that attendees most value peer-to-peer learning, community building and developing relationships that can continue post-event, even virtually.
"Conventions and conferences are driving business travel," said Wolthuizen. "People have the itch to get out and see their peers. Though prices can be obstacles, people are driven by a desire to reconnect with their industry and colleagues."
Travel trends
Though travelers' numbers and spend are down from 2019, new preferences have emerged post-pandemic.
On a company level, retreats or offsite strategic planning sessions have replaced some of the former travel spend. Savings from reworked office space leases and the rise of remote or hybrid workers have contributed to the affordability. Vendors are offering perks, cash back and travel points as incentives in their client negotiations.
Technology is also playing a greater role in trip planning. Booking tools can both empower and regulate a worker's trip planning to comply with company guidelines. Still emerging is the role of AI (artificial intelligence) in streamlining and personalizing trip research to efficiently make flight, lodging and ground transportation reservations.
"Bleisure" (think business + leisure) adds a leisure travel element as an add-on to a business trip. Workers can enjoy requisite airfares, lodging and destinations, and can include friends, partners or family members. As reported by Telios, 29% of employees will take a business-leisure trip, and 28% will take a flexible vacation by booking accommodations for both business and personal travel.
Private air travel can also be a game-changer for small groups, reducing traditional airport "herd hassles" (which are said to be costing the industry 27 million trips and $71 billion in spend) and even overnight stays. Though down 8% year over year as of April 2023, activity was up 10% from 2019. Time and cost savings can be realized by contracting for an allotted number of annual hours or days at fixed prices or pursuing fractional ownership.
Reflecting private travel's niche popularity, providers like Kansas City-based Airshare are expanding their routes and fleets.
"We've seen an uptick in aircraft financing by companies looking to buy corporate aircraft," said Kramer. "Capital investments are the clearest indication that business is up and reflect clients' needs."
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