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Boston Herald
Boston Herald
20 Aug 2023
Tribune News Service


NextImg:Workers returning to the office, and the skies

DALLAS — First came the leisure travelers. Now, prepare for business travelers to make flying and vacationing even more crowded than it already is.

Southwest Airlines and other carriers are taking a harder look at business travel efforts, as the global industry expects to surpass its pre-pandemic levels of spending to $1.4 trillion in 2024.

According to the Global Business Travel Association’s Business Travel Index Outlook report released last week, spending will continue to accelerate to $1.8 trillion by 2027. In 2022, global business travel spending rose 47% to $1.03 trillion, as pent-up demand accelerated the travel recovery and more workers returned to the office. Business travelers, a group carriers have been trying to woo throughout the pandemic, are often some of the big spenders at airlines when it comes to upgrades, perks and last-minute, expensive flights. They’re a key demographic airlines can tap into to make some extra money.

“We can cautiously say that we are through the worst of the pandemic,” said Suzanne Neufang, CEO of the Global Business Travel Association.

Airlines, hotels and the overall hospitality industry took a large hit during the pandemic when corporate and leisure travelers were held up by pandemic-related restrictions. Now, these industries are feeling the demand for corporate travelers as businesses make larger pushes for returning to office, amid recessionary pressures that placed a halt on travel spending.

Many of Southwest Airlines’ corporate business customers are just now “getting off the bench,” said Dave Harvey, vice president and chief sales officer at the carrier. That’s come as more companies have called employees back to the office this year, he said.

“You may work for one of these large professional services, banking, insurance, health care, whatever it is, but may have not had a reason to travel,” Harvey said.

But workers are still wrestling with workplace flexibility policy. A lot of travelers have adopted the idea of “blended” travel, mixing a business trip with some leisure, which could look like using your own dollars to extend a hotel stay and sightsee.

“The blended leisure travel was already going on,” Harvey said. “It just accelerated with people having more flexibility. It’s still heightened, but I’d say it’s actually normalizing a little bit.”

According to a July report from Melius Research, consumer spending has trended favorably towards goods with experiences. But business travel has still remained an outlier, that can accelerate in the future.

“The missing piece is large corporate travel, and there are mounting green shoots as corporations push for return to office — crucial to high-frequency business travel,” said the report. “Although the explosive growth witnessed in the early recovery phase is now normalizing, growth is still expected to continue.”

Deloitte’s 2023 corporate travel study mentioned that climate concerns would put a cap on business travel gains, as a third of U.S. companies need to reduce travel per employee by more than 20% to meet 2030 sustainability goals.

October and the fall season is a busy travel window for corporate travelers, and carriers have continued to prepare for what is to come ahead of the holidays.