Business Travel Market - Size and Share | Industry Analysis
The tourism sector continues to grow year in year out despite ongoing fears for the environment and the continuing development of technology to avoid face to face contact.
Video calling services such as Apple’s FaceTime have developed to such an advanced stage that entire meetings can take place without anyone ever being in the same room as one another.
Thousands of pounds can be saved by not travelling yet people still choose to travel for business. Why?
Firstly, people like to do business with people they like. It’s hard to establish a connection with someone who can only be seen in 2D on a screen. Humans like to build relationships face to face and these relationships tend to be stronger and last longer.
Secondly, there is a great advantage in people being able to see things with their own eyes. It’s all very well having the people and processes of a company explained on a video call, but it’s another thing actually seeing a company’s daily life in person.
Lastly, it enables people to see the world. There’s nothing like experiencing the culture of a foreign land first hand, it’s an even better feeling if the trip has been paid for by somebody else! Travel is motivational for a person which in turn is a good thing for their company.
This is partly the reason why more exotic locations such as UAE, China, Saudi Arabia, and India have experienced such a spike in business travel in recent years. They are destinations that people might not otherwise have been to.
However, the overriding reason for the continued growth of business travel is simply the desire to grow and develop a business. In turn, this provides boosts to other businesses in the industries of accommodation, transportation, catering and conference venues, to name a few.
Business travel also allows a company to grow their perceived global presence, this is why ‘networking’ has been such a buzz word in business for a number of years.
The growth of the business travel market is expected to continue too, at a compound annual growth rate of around 4.1%. It is expected to reach a value of $1.66 billion by 2023.
The fastest growing part of the business travel market is the food and accommodation sector which accounts for half. This is expected to grow at 4.7%. This is ahead of other areas including transportation and recreation.
This is largely because the cost of accommodation has fallen considerably due to a number of significant factors.
Firstly, the sheer volume of accommodation has increased making the choice of business accommodation far larger than it has ever been in the past. The number of affordable hotels continues to grow as businesses turn their back on luxury in order to save money. The upward trend in making bookings online has also allowed accommodation owners themselves to significantly reduce cost as the traditional bricks and mortar travel agents continue to decline in usage due to costs.
Alternative options for accommodation also continue to significantly grow. It’s difficult to miss the continued rise of a company such as Airbnb. This allows business travellers to rent spare rooms in people’s houses and apartments for a fraction of the cost of a traditional hotel.
Not only that, it also provides access to whole houses and accommodation which is often preferable to previous alternatives such as hotel suites, not to mention cheaper.
Other companies, such as TheSqua.re, specialise in renting out corporate apartments in central business districts across the world.
The rental of entire apartments also benefits budgets in terms of economies of scale. Three corporate visitors travelling together can rent a three bedroom apartment for a much cheaper rate than renting three separate hotel rooms.
Apartments from TheSqua.re also have the added bonus of offering living areas as well as fully equipped kitchens.
Living areas can double up as informal meeting spaces, forgoing the need to rent small conference spaces. They also offer an alternative to meeting in restaurants and bars. Meals or drinks can easily be prepared in apartment kitchens far cheaper.
In terms of where the corporate travel industry is growing the fastest, that title goes to the Asia Pacific area which has the distinction of having the largest business travel market in the world. This area contains some of the countries with the largest economies in the world right now, not to mention some of the largest and most densely populated urban areas.
These are also the areas where the technology and infrastructure that drives the modern business market forward is based.
In 2019, the largest specific growth area for business travel was China, as it sees its forestry & fishing, utility, agriculture and manufacturing industries continue to expand.
As business travel contuse to grow, the need for companies to put in place solutions for the provision of managed travel services increases. More and more companies are finding a need to put in place sturdy corporate travel policies in order to meet the requirements of their employees as they represent them throughout the world.
Like never before, companies are finding that they are able to manage their own business travel requirements by the utilisation of business travel programs, or by using the accessible online systems put in place by corporate travel companies.
Alternatively, they are creating travel policies which allow employees to make their own decisions regarding their needs whilst travelling for business. Again, the online booking tools and facilities provided by travel companies in recent years has made this not only a reality for employees, but has also made things easier to track for employers.
The years between 2019 and 2023 are predicted to be important ones for the business travel market. As internet penetration continues in the already booming Asia-Pacific region the possibilities and the need for business travel is expected to increase dramatically.
The growth in the overall internet of things around the world is also a big driver for expansion. Every part of the business travel process continues to become more and more intertwined, making it easier than ever to book a seamless business trip from start to finish.
Artificial intelligence on things such as booking systems is providing travellers with their most popular demand in recent times, that is to feel like their trip is completely bespoke to them.
Travel companies are starting to realise that the travel part itself should be an insignificant part of the overall goal of the trip. Business travellers are demanding simplification of the travel process, after all, travelling and working can be glamorous, but it is often stressful and tiring too.
For a corporate traveller, being satisfied with a business travel experience means that the process has barely been thought about. For a company, reduced cost and time spent on the process are both important factors as the achievement of these in turn leads to greater productivity for employees. Which is usually the point of the trip in the first place.
The challenges that have hindered the growth of the market in recent years, such as the fear of data breaches, security surrounding online payment systems and the reliability of technology such as video conferencing, are quickly beginning to dissipate. Or at least the fear of the issues from companies and travellers is starting to disappear.
SMEs continue to make a far larger impact on the business travel market and that trend is expected to increase throughout the years leading up to 2023. The most significant reason for this growth is simply the increase in demands made by SMEs for business travel. Even smaller companies are realising that their growth ambitions are limited unless they are prepared to go out and meet the world demand.
The ability to manage travel activity and closely manage costs is a major factor in why so many SMEs are prepared to take the risk. Minimising expenses is vital in a start up or developing company.
The chatbots and automated travel tools previously mentioned have reduced the costs incurred with travel companies too, making travel much more affordable for smaller businesses.
Lastly, the growth of ‘Bleisure’ is expected to continue. For the unenlightened, this is where business and pleasure combine on a business trip.
Most people who don’t travel for business look on with envy at colleagues who go to exotic places in search of business.
Most people who do travel for business will complain to these colleagues that it is a tiring and stressful time. However, when questioned, around 80% of those travellers saw travelling as a perk of their job.
Blurring the lines between business and pleasure has also grown easier largely thanks to the advancement in technology of booking platforms. Flights and accommodation can easily be changed or increased to enable travellers to add breaks onto the beginning or ends of their trips.
Booking platforms such as the one found on TheSqua.re make this process particularly straightforward.
However, it is also thanks to the changing attitude of companies who not only see the advantage of happy and rested employees, they also see an additional clause in their green policies as their employees cut down on their yearly flights!