When will business travel resume? It's complicated...

Summer 2021 was a blockbuster season for the hospitality sector, yet business travel is still nonexistent. Will business travel return to 2019 levels? If so, when?

TJ Lind
September 1, 2021
Hotel Guest Service
Hotel Guest Messaging
Hospitality Highlight

As with most things in the travel industry, business travel has been decimated by the COVID-19 crisis. According to Oxford Economics, global business travel spending dropped 61% between 2019 and 2020, from $1.29 trillion in 2019 to only $504 billion in 2020. Business travel in the United States alone mirrors this number, with a 62% drop in the same time period. 

In spring of 2021, the US rolled out one of the most aggressive and successful vaccination campaigns in world history. Finally, a light appeared at the end of the tunnel. Summer 2021 released pent-up demand for travel across the United States as everyday restrictions relaxed and families embarked on their first vacations in more than a year. 

Summer 2021: A blockbuster season

As of August 2021 US overall hotel occupancy has returned to pre-COVID levels, with a caveat. 

The landscape in 2021 is dramatically different from 2019. US hospitality markets that are most dependent on leisure travel are finding occupancy booms. Markets who rely on business travel are still waiting for recovery. 

For example: More than 30% of Detroit’s hotel market relies on business travel. Without those travelers, Detroit’s hospitality sector has operated at recession-level occupancy for more than a year. Other cold-weather economic hubs are experiencing similar effects. 

Minneapolis-St. Paul has consistently been in the lowest-performing markets for occupancy since March of 2020. The market’s reliance on business travel is compounded by decreased visitors to large indoor populated attractions like the Mall of America and the convention center. Throughout summer 2021, conferences and tradeshows remained virtual. Physical offices remained closed. 

The burning question in the hospitality industry is when (or if) business travel will return, especially with our newfound fluency in Zoom and other virtual work arrangements. 

Watch for early signals of normalcy in Q4 2021

All eyes are on Q4 for signaling the beginning of the road to normal for business travel. Many companies plan to significantly accelerate their return to offices in fall of 2021, and many conferences are returning to live or hybrid format (albeit with attendance well below 2019 levels). 

According to a Deloitte survey of corporations and their intentions around business travel, less than 1 in 5 companies had reached even 25% of their 2019 quarterly spend by Q2 of 2021. By Q4 2022, nearly half of respondents still do not expect to reach 2019 levels. 

Research does point to confident and accelerated return of business travel throughout 2022, with early signals in Q3 and Q4 of 2021 kicking off the shift. 9 in 10 companies expect to spend at least 75% of their pre-pandemic travel budgets within 2022. Many companies do expect travel to return in the back half of 2021, especially as children return to school and summer leisure travel winds down. 

In the end, all eyes are on Q4 of 2021 to see if companies will begin sending their road warriors out into the world again. If the business travel industry can gain traction in the next few months, it’s a huge signal that 2022 will see significant recovery of demand. 

Schedule a conversation.

Curious to learn more about Kipsu and digital messaging? Connect with a member of our team to get all of your questions answered.