By Todd Swisher, CPA
Business travel is a critical revenue stream for the hospitality industry. However, business travel was decimated by the pandemic. While we wait to see if pre-pandemic revenue levels are possible, industry leaders are searching for strategies to offset this dip in revenue.
This article will examine forecasts for the industry and advise how hospitality leaders can navigate this challenge.
Will Business Travel Rebound?
Many in the travel industry wonder when business travel will return to pre-pandemic levels.
First, the negative outlook…
According to some sources, challenges will persist for the industry due to the following:
- An emphasis on travel cost management strategies and sustainability
- Changing retail models
- Emerging conferencing technologies
- Inflation/recession concerns
The U.S. Travel Association estimated that domestic business travel could recover in 2024, but only to 76% of 2019 levels. International business travel was predicted to take even longer to recover.
With travel costs climbing, companies are scrutinizing expenses in an effort to keep spending to a minimum. Trips related to company retreats, trade shows, and incentive rewards are likely to be on the chopping block as companies try to manage costs. Trips with a better chance of continuing will be those that generate revenue, like sales meetings and trips that build client relationships.
Other forecasts are slightly more optimistic. According to the Global Business Travel Association, business travel is forecasted to surpass 2019 levels of travel in 2024.
How Hospitality Leaders Can Navigate Today’s Landscape
Even as business travel rebounds, industry leaders must be persistent in identifying areas poised for change and impact in 2024.
Below are several recommendations to drive revenue for the future:
- Broaden your target market beyond corporate clients. Consider appealing to leisure travelers by developing custom packages and experiences that will engage families, couples, and solo travelers.
- Focus on local marketing efforts. Position your business as the ideal destination for weekend getaways and holidays or as the perfect remote work destination that provides a blend of productivity and relaxation.
- Double down on sustainability. Many reports indicate that today’s business travelers are younger and therefore more eco-conscious. These travelers opt for smaller cars, fly economically more often, and would opt to elongate a business trip to get more done rather than travel more than once. Appeal to this growing market segment by emphasizing a commitment to sustainable practices.
- Consider dynamic incentives and pricing strategies. Cater to a larger market by incorporating loyalty programs and value-added packages. Regularly analyze market trends and adjust pricing accordingly to remain competitive.
The ability to adapt and innovate will determine which organizations survive the new normal for business travel. Companies that take action to pivot and remain agile will be able to compensate for the dip in corporate travel and position themselves for long-term success in today’s evolving hospitality industry.
PBMares knows the hospitality industry and the unique hurdles you’re facing. We help hospitality-focused organizations stay ahead of the competition, find innovative solutions, and achieve the financial goals that lead to long-term success.
Contact us today to learn more.