While this time last year we were all debating whether or not we’d see a business travel rebound within the coming days, these past twelve months have silenced most of the rebound doubters with their fast-and-fierce resumption of all things travel.
All things.
Leisure travelers may have started the charge, but those who travel for work were quick to join in on the rebound.
That’s the good news. The not so good news is that the industry as a whole continues to reel. Not surprising when considering the seemingly endless fluctuations and innovations imposed on demands, staffing, technologies, processes, protocols, and systems.
For an industry notorious for moving slow, in 2022 it did anything but.
This past year has been a sprint for all of us. From airlines and the hotel chains to TMCs, travel managers, and travelers. If you felt like the process/system/rule changed every time you thought you had it figured out, it’s because they were. It didn’t just feel like it.
Thing is…
And we’re just the messenger here, but…
2022 was a warm-up.
A quick-sprint start to an industry-wide rebuilding marathon.
The pandemic spurred new innovations (and problems to solve). It also fast-tracked some of the industry’s slower-moving changes that were already in the works. Like the NDC. And single-system, holistic program management. And improved travel data for Risk Management/Duty of Care/Personalization initiatives.
2023 will be a time to rebuild.
To realign policies.
To regain control of your travel program.
To recover.
To recoup.
Legacy processes and the technologies that supported them are quickly becoming obsolete remnants of the pre-pandemic era.
This year we’ll all be tasked with rethinking the way we travel for work.
Rethinking how its booked and how its managed.
Below is a review of industry news from 2022 and a look at what experts are predicting for 2023.
Recap: 2022
It might’ve started out pretty rocky, but 2022 was huge for the travel industry across the board. It’s hard to believe everything that’s happened in the past 365 days, but here’s a recap of the highlights (and unfortunately, the lowlights).
As pandemic-era restrictions disappeared in countries all over the world, hundreds of millions of travelers rushed to the airports to take the vacations they postponed. During the record-breaking summer season, those who travel for work started making waves with a dramatic spike in corporate meetings and events. It’s full steam ahead for many companies, but that doesn’t change the fact that risk management is on the forefront of everyone’s minds.
Travel for Work: Travel Restrictions
Though COVID-19 travel mandates are virtually nonexistent at this point, the start of 2022 was the complete opposite. In January and February, dozens of countries, regions, and territories decided to reopen their borders to international visitors who could provide proof of vaccination and a negative test upon arrival. Some even implemented booster shoot and recovery documentation requirements for certain individuals. For a while, it seemed as if COVID-19 restrictions were going to define travel for the entire year. Luckily, around spring time, things began to look up. Popular destinations like Greece, Spain, Italy, the United Kingdom, and many islands in the Caribbean were reducing their mandates left and right.
It wasn’t until mid June when the U.S. finally lifted pre-departure testing requirements for international travelers and returning residents. Since then, other destinations that were still enforcing pandemic mandates have followed suit by eliminating similar rules. Most major travel hubs, including Australia, Canada, France, and Thailand dropped all of their pandemic restrictions before the end of fall.
While this was good news for business and leisure travelers alike, the end of COVID-19 restrictions marked the beginning of stricter visa and passport requirements in some areas. Travel managers are reporting increased difficulty with planning international trips for their team members. Popular destinations that introduced strict visa and passport requirements have complicated their entry processes due to long appointment wait times at many embassies or consulates.
Travel for Work: Air Travel
Air travel in the U.S. came extremely close to surpassing pre-pandemic numbers multiple times this year. That said, the rebound wasn’t all sunshine and rainbows for flight passengers. When almost 8.8 million travelers passed through Transportation Security Administration (TSA) checkpoints over Memorial Day weekend, major airports around the country were slammed with thousands of delays and cancellations due to staffing shortages. Passengers were stranded yet again during Independence Day weekend as airports continued to grapple with a lack of pilots and general staff.
After a summer full of chaos, airlines and airports better handled the influx of passengers during the fall months. Flight schedules were reduced across the U.S. to combat operational issues before Labor Day weekend. Though hundreds of delays and cancellations still occurred, the impact on passengers was much less significant than months prior. The Thanksgiving holiday brought more delays and cancellations, but most were caused by severe thunderstorms and other weather related incidents.
As both corporate and leisure passengers hit the skies in record-breaking numbers, experts have monitored how rising demand impacted airfare costs. Domestic flights peaked at roughly $400+ for the average ticket in May 2022. It paved the way for the expensive summer season. Airfare then dropped approximately 40% from late September to mid October. Another price jump came quickly after just in time for the holiday season, leading to ticket costs not seen in the last five years.
Travel for Work: Hotels
Over the last year, hotels in the U.S. have dealt with serious operational challenges that initially made it next to impossible to keep up with rising demand. Staffing shortages caused by the COVID-19 pandemic left many properties without enough workers to service their guests properly. In effort to maintain a positive experience, some hotels even resorted to employed robots . They were designed with capabilities to take over housekeeping and other daily tasks.
Major hotel brands also started testing more flexible work schedules with the option for part-time management positions and extended breaks for family responsibilities. While this hasn’t quite solved all of their staffing issues, it seems to have helped. Multiple companies reported that business travel revenue had fully recovered to pre-pandemic levels by the end of Q3.
Regardless of any operational challenges, most hotel brands continued to expand their portfolios with new properties around the world. For example, Choice Hotels International opened another line of extended stay hotels, Everhome Suites, and also acquired Radisson Hotels America over the summer. Marriott and Intercontinental Hotels Group (IHG) both opened dozens of properties across the globe. Other industry leaders, like Hyatt and Sonesta, have focused on recovering their corporate sectors with unique packages that include company retreats and shared workspaces.
Travel for Work: Car Rentals
Much like the rest of the travel industry, rental car agencies fell victim to staffing shortages and supply issues in 2022. Auto production delays caused by global chip shortages left a majority of agencies without enough vehicles for their customers. Some had no option but to turn to used cars to fill their fleets while they wait for new models to arrive. Other agencies decided to go electric and formed partnerships with electric vehicle (EV) manufacturers.
Though the automotive industry is still being affected by supply chain disruptions, major car rental agencies were able to keep expanding around the world. Enterprise Holdings, the parent company of Enterprise Rent-A-Car, National Car Rental, and Alamo Rent a Car, announced plans to open dozens of new franchise locations in South Africa and South Korea. Hertz Corporation, the parent company of Hertz Rent a Car, Dollar Rent A Car, Firefly Car Rental, and Thrifty Car Rental, agreed to purchase as many as 175,000 EVs from General Motors and then partnered with BP Pulse to install thousands of EV chargers at Hertz locations across the U.S. over the next few years.
Travel for Work: Meetings and Events
After a gradual rise through the spring months, corporate meetings and events made a huge comeback starting in June. Many who travel for work returned from their Memorial Day weekend breaks and jumped right back into client meetings, industry conferences, and company retreats. Cities such as Chicago, Las Vegas, and Washington D.C., experienced the largest amount of growth over the summer.
Since Labor Day weekend, meetings and events have only continued on the path to full recovery. Experts expecting final numbers would reach approximately 73% of pre-pandemic levels by the end of 2022. A variety of industries, including travel and customer experience, went back to frequent in-person conferences that were previously being held virtually. Lots of companies also started to plan off-site events to bring their remote workforces together for face-to-face gatherings that were impossible during the height of the COVID-19 pandemic.
Looking Ahead: 2023
Since we’re reflecting on the steady travel rebound throughout 2022, it’s makes sense if you’re (cautiously) optimistic for 2023. We are.
Record numbers of passengers passed through TSA checkpoints multiple times last year. Eager travelers are bouncing between destinations again. While this is a great sign for all of us, economic challenges and staffing issues have continued to impact the industry in unexpected ways. After living through a global pandemic, we know it is better to be prepared for anything, at any time. That leaves us to wonder – what can we plan for in 2023?
Travel for Work: Rising Prices
Almost 80% of companies are planning to take more business trips this year. Considering travel demand is only going to get stronger, experts have predicted that costs will keep rising along with it. Airfare is expected to lead the charge as prices go up with an estimated 8.4% jump in 2023. Hotels are not far behind as predictions show an 8.2% rise over the course of the year. Car rentals will trail the rest of the industry at a 6.8% projected increase.
Business travel costs are on the rise; budgets aren’t necessarily keeping up. Travelers – and travel managers – must plan ahead for cost fluctuations. And ensure they’re getting the most “bang for their buck” every step of the way. Travel prices will likely remain elevated for most of 2023, but could decrease in the early fall months as they’re typically known to do.
Travel for Work: Staffing Shortages
What did most of the travel industry have in common throughout 2022?
Here’s a hint: Not a lack of travelers. Quite the opposite, actually.
If you guessed staffing shortages, give yourself a pat on the back. Chances are, you (and your team) probably saw or heard about the impact. A time or two.
Well, the truth is – it hasn’t gone anywhere just yet. Although staffing shortages shouldn’t impact your experience at many airports, hotel properties, and car rental agencies, travelers may need to be prepared for flight delays or cancellations and the loss of certain amenities like daily housekeeping and on-site activities.
Airlines in particular have continued to struggle with staffing issues as contract negotiations stalled on their behalves. Delta Airlines pilots will receive a significant pay raise after voting to authorize a strike at the end of October. Expectation is that this decision will cause a ripple effect for other major airlines currently struggling to reach agreements with pilot and flight attendant unions. American Airlines flight attendants have picketed at 11 major airports in the U.S. United Airlines pilots formed a picket line outside of their flight training center with signs that read “Time to invest in pilots” and “Contract first United second” in response to negotiation delays. Contract issues such as these are likely to stretch into 2023.
Travel for Work: New Processes
Travel is constantly evolving. If you know the industry at all, that’s nothing new.
This year, it’s going to continue to change for the better with new technology and processes that have already been tested for use by the general public. One of the biggest improvements coming down the pipeline in the U.S. is online passport renewals. After two successful test runs, the Department of State (DOS) announced that qualifying citizens should have the option to renew their passports online by early 2023. That means… No more scheduling in-person appointments. Or mailing private documents. And no more rushing to the post office. Most Americans will soon be able to submit their personal information online, shortening the current wait time by about two weeks.
Another big change, which you might’ve noticed at some major airports, is coming from the TSA in the near future. Government officials recently announced plans to introduce more facial recognition technology at airport security checkpoints throughout 2023. The new systems capture live images as travelers pass through security and compare them to driver’s license or identification card photos. So far, 16 domestic airports use this technology. These include the Ronald Reagan Washington National Airport near Washington D.C., and Los Angeles International Airport in Los Angeles, California.
Travel for Work: More Meetings and Events
When corporate meetings and events bounced back over the summer, experts adjusted their predictions for what’s to come this year. Current estimates show that face-to-face meetings and events in the U.S. could surpass pre-pandemic levels as soon as May 2023. By the end of the year, they will likely hit 121.5% of previous volume. Atlanta, Denver, Detroit, New Orleans, San Francisco, and Tampa expect a full recovery during this boost.
And polls are supporting estimates. Poll results are finding that 65% are expanding their meetings and events budgets for 2023. As you return to meetings and events, keep in mind that other businesses are doing the exact same thing. Don’t get caught off guard if a hotel, conference center, or banquet hall will no longer hold your team’s reservation as you weigh your options. It’s very possible that multiple organizations could be attempting to secure the space at once.
Want to make sure your program is ready for what’s to come?
Reach out to your Gant Account Manager – they’re always ready to assist in program improvements and changes.
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