The financial impact of global travel decline is expected to be 10 times the Great Recession and 9/11. No one in the travel and tourism industry really expects (or expected) a full recovery for the business travel sector of the global travel industry. After all, travel for business is more a symptom of the overall industry’s health, not a driver of it.
Even so, the Global Business Travel Association (GBTA) left no doubt about the course of the industry when it released its annual BTI™ Outlook, a detailed analysis of business travel in 2020, with projections for 2021 and beyond.*
The cold, hard facts:
—The true global financial impact of COVID-19 began in Q2 2020, resulting in an expected 68 percent decline (to $738 billion) from April 1, 2020 to the end of the year.
—Because of the relatively strong (pre-COVID) first quarter of 2020, global spending on business travel is expected to show a 52 percent decrease for all of 2020 (to $694 billion USD), down from $1.4 trillion USD in 2019.
Other facts and finding that stand out in the report include the following.
2020 Losses and Challenges:
—Global GDP is expected to have declined 4.4 percent in 2020, an unprecedented drop-off when compared to the -0.5 percent decline experienced during the Great Recession of 2008.
—Global trade is expected to contract by almost 11 percent, due to lockdowns that temporarily froze the movement of people and goods and forced a review of supply chain networks, resulting in many countries looking to source locally.
—Coming into 2020, business travel had grown for 10 consecutive years, with an average growth rate of 5.1 percent per year.
— As the following table suggests, the impact of COVID-19 on business travel has varied by region.
—The magnitude of these losses and their impact on travel suppliers is unprecedented: the 2020 business travel spending losses are expected to be 10 times larger than the impact of either 9/11 or the Great Recession of 2008. Understandably, organizations with more exposure to sectors at the epicenter of the crisis are expected to face more volatility moving forward, including leisure and hospitality, ground transportation, retail, food services and energy.
Forecast on Business Travel Recovery:
—A 21 percent increase in business travel spending is projected in 2021. Most of this gain is expected to come at the end of 2021 as vaccinations increase globally and consumer confidence returns.
—In 2022, the BTI Outlook forecasts further acceleration in business travel, including a significant pick-up in group meeting activity and international business travel.
—While annual business travel spending growth is expected to slow somewhat in 2023, it is projected to remain well above historical average rates of growth of 4.6 percent. By the end of 2024, annual business travel spending is projected to reach approximately $1.4 trillion, nearly equaling the 2019 pre-pandemic revenue peak of $1.43 trillion.
—A full recovery to pre-pandemic levels is expected by 2025.
*The BTI Outlook, now in its 12th year, is an exhaustive study of business travel spending and growth covering 75 countries across 48 industries.