Will business travel recovery continue apace in 2023 or will gathering headwinds knock it off course? We chart the expectations of a range of industry contributors in our annual Outlook

If the contributors’ thoughts shared in our 2023 Outlook are representative of the wider community, it would seem that recession and rising travel costs are uppermost on the industry’s collective mind. The extent to which those challenges will impact business travel’s ongoing recovery are also mulled over, together with the potential for ongoing staffing shortages.

According to a recent poll, nearly a quarter of European companies are considering limiting business travel because of economic concerns, while average airfares and hotel rates are both poised to rise more than eight per cent in 2023.

Turn back the clock 12 months, and many companies and associations were forecasting the extent of business travel recovery in 2022 – generally ranging from 60 to 80 per cent. It was almost an industry obsession, such was the desire for a healthy and resurgent sector. But with recovery well advanced and a number of challenges hitting the industry this year – and some likely to impact travel again in 2023 – perhaps drawing comparisons with 2019 travel volumes may seem less relevant.

Among the words of concern in this year’s Outlook are also reasons to be optimistic. The urgent need to reduce the environmental impact of business travel is, encouragingly, cited over and again, with the necessity of travel, its ROI or the composition of trips increasingly landing in the spotlight. While 85 per cent of business travellers believe travel continues to play a key role in increasing their revenue and profitability, 71 per cent also say they worry about its environmental impact.

Meanwhile, travel managers who’ve already been through the wringer could have further opportunity to widen their skillsets and remind the C-suite of their essential role in not only keeping operations running smoothly, but in optimising programmes in both the employer’s and employees’ best interests.

As VDR’s Christoph Carnier says, “this industry is used to dealing with challenges and will find new ways to cope with all this. More than ever, we must all collaborate.”

Looking back at our 2022 Outlook published in December last year, it quickly becomes apparent how difficult it is to make any predictions or forecasts with any certainty. Conflict in Ukraine, an energy crisis, political upheaval, inflation, recession... tragically – especially in the case of Russia’s assault on Ukraine – they have all made their impression on 2022, yet none of them were even on the horizon 12 months ago.

Instead, there was much talk of growing vaccination rates, the further easing of travel restrictions, and just how rapidly business travel would recover domestically and internationally. Most prescient among contributors were those that foresaw the escalating staffing shortage, mounting travel disruption and rising costs as demand bounced back more swiftly than supply. “The infrastructure and networks we previously took for granted may struggle at times to cope with the initial stages of increased demand,” said ITM’s Scott Davies.

The BTA’s Clive Wratten singled out attracting new talent as “a major obstacle” for TMCs in 2022, while travel recruitment expert Emma Gregory pointed to a potential candidate shortage and warned TMCs to be “open minded to alternative experience and adjust their expectations and remuneration packages to encourage people to move from their existing roles or lifestyle.” The advice may continue to be prudent in 2023.

Read on to see what our contributors think 2023 holds in store...

"The travel industry is used to dealing with challenges and will find new ways to cope. More than ever, we must all collaborate – suppliers and customers alike. Only together are we stronger"

Eloise Ferrara-Neched
Senior procurement manager, Royal Mail

Hotel rate quandaries
The cost of travel is affecting us already and with many factors impacting this I don’t see it ending in 2023. As a result, travel is different now and we also need to manage the expectations of our travellers because industry capacity issues will continue to impact us too. We’re going to RFP for hotels soon and after rolling over their prices since before Covid, I know we’re going to see increases there on what we have now. What I don’t want is to see hotels come back with prices we can’t achieve, or they can’t achieve, or where we’re not going to get any availability. Unfortunately, I think some of these issues are going to last for a while.
Our non-essential travel came back with a bit of a vengeance this year, but I don’t think it’s necessarily going to increase significantly in 2023 and may level out for a bit and then increase gradually.

Paul Tilstone
Managing partner, Festive Road

Disruption is an opportunity
While we wouldn’t expect current servicing issues to go away any time soon, the reality of the next few years is that we will need to cater for an even more widespread set of disruptions that are likely to increasingly affect the traveller, corporate travel teams and the suppliers they work with.
From technological and supply chain disruption brought about by changing business models, to the impact of climate change on travel plans, travel managers will need to understand the landscapes in which they operate, be able to mitigate risk where possible, work with their key suppliers in partnership, and use effective communication to inform and support. In a disrupted world there’s an opportunity to adapt and shine, to provide service and services where and when it matters. Those who do that successfully will see an increase in their value.

Christoph Carnier
President, VDR

The challenge continues
Strong recovery seen in 2022 is likely to continue in 2023 but increased demand reveals another challenge the industry is facing. Where are all the people who left the company? Are they coming back? What about the next generation? This will remain a challenge for the next few years.
When it comes to sustainability, we must all work towards creating transparent, validated measurement methodologies and the right actions to reduce our environmental impact will be key for 2023.
There is also a continuing geopolitical crisis and its impact on inflation, while reduced capacity and rising labour costs will remain a challenge. However, the travel industry is used to dealing with challenges and will find new ways to cope. More than ever, we must all collaborate – suppliers and customers alike. Only together are we stronger.

Jack Ramsey
CEO, TripStax

New entrants
The tech landscape will continue to see start-ups enter the market, each focused on digitalising a specific aspect of business travel. But many of these innovators will struggle with the amount of connections they need to build with other providers to make their proposition meaningful to TMCs and corporates. Some of those that have emerged in the last couple of years will be acquired because they have underestimated the cost and complexity of developing their tech into a marketable solution.
Meanwhile, ongoing staff shortages may prompt TMCs to adopt technology from new entrants to fill the human capital gap without truly understanding how best to apply that tech. If our industry isn’t careful the desperation to fill the talent gap with tech solutions will cause more chaos in terms of integration and ultimately be counter-productive.

Odete Pimenta da Silva
Managing director, Netherlands Association for Travel Management

Efficient travel
A shift in mindset by business travellers going from short trips to more efficient business trips for several days in a row will become increasingly normal. Apart from the impact on cost for the company, it also brings one’s work-life expectations more in balance. Management should bear in mind that neglecting the impact of wellbeing will affect a company’s absence and attrition rates.
Sustainable ways of travel are also here to stay, although industry booking tools need to enable travellers to make the right choices that are aligned to their company’s policy. As we work from home more often, employers must facilitate the need for human connection. So the question is no longer whether we should meet, but how we should meet. Business travel is different compared to pre-pandemic, nevertheless business travel will be back in 2023.

John Grant
Chief analyst, OAG 

Low-cost carriers to benefit 
Business travel is not what it once was, especially as corporates face increasing economic pressure. Consumer confidence is also low, with anxiety over rising inflation, gas and electricity prices, and global political situations. Hence we will continue to see a predilection towards low-cost carriers, who have already largely won the capacity battle for European air space.
Some premium airlines, such as IAG's British Airways have reduced their European networks. While historically British Airways had sometimes eight daily flights between London and Paris, this is going to be closer to five according to our OAG data.
Having said all that, travel remains an important part of our lives and we have reason to believe that the uptick seen from 2021 to 2022 will continue into 2023, taking the industry, and travel, one step closer to what it once was. 

"It is critical that we work together in 2023 to accelerate decarbonisation and guarantee that the sustainable choice is the cheapest, educating buyers and travellers to make that decision-making process as easy as possible"

Benjamin Park 
Senior director, procurement & travel, Parexel  

Volatility and uncertainty
Limited supply and increasing demand will continue to be a challenge in 2023, which will likely result in continued price volatility and uncertainty in business travel. Inflation and the possibility of a recession may curb travel demand as companies deal with budget limitations. Even with tighter budget constraints, I foresee collaboration travel continuing in the year ahead.
Supplier negotiation strategies will be very interesting to watch. As demand outpaces supply, the question becomes which suppliers will build their agreements around long-term partnerships with long-term added value, rather than more short-term profit maximisation. Travel managers will need to get more access to market rates and dynamic offerings, as relying solely on static preferred suppliers in a supply limited market will not satisfy the demands of travellers.
Sustainability will also be a key factor. Many companies have ambitious sustainability targets to reach by 2025, and progress must be made in the coming year to reach these goals.

Clive Wratten
CEO, Business Travel Association 

Uncertainty is a certainty
This time last year I noted how uncertainty was the real enemy of our sector. Since then, we have seen war in Ukraine, political turmoil, and widespread skills shortages all feeding into a wider cost of living crisis and a period of severe uncertainty for business travel. Despite this, 2022 was a strong year for recovery. 
However, three major issues must be addressed throughout 2023: cost, sustainability and talent. As travellers and buyers look to cut expenses as costs increase, a major obstacle for the industry revolves around ensuring journeys are efficient and cost-effective. To make this possible, attracting new and returning talent as well as staff retention remains a priority going forward.
By next year, we hope for sector-wide collaboration towards the electrification of rail, the implementation of sustainable aviation fuel and clarification of carbon offsetting practices. As an industry, it is critical that we work together in 2023 to accelerate decarbonisation and guarantee that the sustainable choice is the cheapest, educating buyers and travellers to make that decision-making process as easy as possible. 

Eric Meierhans 
Chief commercial officer, HotelHub 

City rate rises 
It depends on the city and the destination, but we expect to see hotel rates rise by anything up to 15 per cent in the first two quarters of 2023. This is due to the impact of inflation, with hotels facing increased costs because of staff resourcing challenges, higher wages and energy bills. 
With the FED, Bank of England and other central banks increasing interest rates, plus global currencies depreciating against the US dollar, and inflation growing everywhere, I suspect those hotel increases to happen mostly for Europe and Asia destinations. However, inflation in the US will probably drive rates up there to a certain extent too. 

Avi Meir  
CEO, Travelperk 

Getting back together 
As employees return to the office and business travel programmes have resumed, most organisations have settled on a hybrid model. But very few are being deliberate about how they maximise their team’s in-person time – for example, using it to build connections, reinforce culture, and foster collaboration. Instead, most say “come in twice a week” and leave it at that.
Businesses need in-person connections to thrive. Offsites doubled in volume immediately following the pandemic as dispersed teams were brought together to reconnect. The benefits of in-real-life (IRL) connections are undeniable for collaboration, creativity, developing rapport and building trust, as well as reinforcing relationships, and instilling a company culture. IRL activities can be not only transformative on a workforce level but are integral to the growth of businesses and its revenue.
How to harness face-to-face and connect people in a sustainable way is going to be key in 2023 as businesses look to drive productivity and profitability. 

Emma Gregory
Director, Urbanberry Recruitment 

Staffing solutions 
2023 could be a year of growth for many TMCs but we don’t anticipate the mass of recruiting we saw in 2022. Nevertheless, we do still see the need to be consistently attracting and retaining business travel staff across the board to fulfil service levels, particularly at operational levels. 
The challenges TMCs face regarding staffing levels are ongoing – some people are pursuing opportunities in higher paying industries than travel. We also see more people looking for a better work/life balance and that includes working shorter or fewer days per week. This is occurring largely among more experienced staff. If we shut down these opportunities, we risk losing a valuable part of the work force. Companies must also be mindful of thinking differently about recruitment going forward and investing in training for their emerging talent. Focusing on culture ‘add’ rather than culture ‘fit’ will ensure a consistent stream of enthusiastic, creative and dedicated people, making the business travel industry a diverse and inclusive place to work.  

Chris Pouney 
Independent consultant 

Opportunity knocks
2023 represents a fantastic opportunity for travel managers to transform themselves and elevate their role for the next generation of travel. The days  
of expensive company resource managing granular issues has (and needs) to disappear. Outsourcing the function to the supply chain has been done by some and reversed by many.
The reality is that companies need agile, capable category managers who can deploy innovative and cross-silo thinking to deliver programmes aligned to their company’s objectives. AI and robotics process automation allows travel managers to truly get out of the weeds, freeing up time to deliver value added and more strategic solutions to their companies. This allows savvy category managers to incorporate areas such as expense, harmonising a travel and events approach, or incorporating fleet to develop and deliver a wider mobility outlook for their companies. Even, dare I say it, looking to own the travel policy. They are all possible with an elevated approach.

"We’re trying to keep our travel costs flat next year but I’m not sure that’s possible.With ongoing supply and capacity constraints all we see is increasing rates – we’re expecting at least 10 per cent on air and hotel costs"

Lotten Fowler 
General manager, SBTA 

Return to office resistance
In last year’s Outlook I wrote about ‘travelling the right way’. This is still highly relevant as sustainability is very much on the agenda. Buyers are looking for tools to help them make the right choice from a sustainability perspective and to deliver data on CO2 emissions. There is an acceptance that we might have to pay more for a sustainable alternative, but only if it delivers high-quality reporting. 
The issue of travel industry staffing is another concern. In the short term there is not much the buyer community can do, apart from making use of new technology to relieve the TMC. In Sweden there is resistance from some staff to return to the office and many corporations will continue to allow limited working from home. Whether the trend is here to stay or just during a transition period post-pandemic remains to be seen.  

Leila Dunphy 
Global category manager, travel & fleet, Eaton 

Innovative ideas 
As a company we’re trying to keep our travel costs flat next year but I’m not sure that’s possible. With ongoing supply and capacity constraints all we see is increasing rates – we’re expecting at least 10 per cent on air and hotel costs.
It’s a real challenge when negotiating with suppliers trying to say to them “I need you to bring it in below this figure and I need you to be innovative”. Those conversations where we’re trying to squeeze every last drop out can be difficult but every price increase matters.
We are doing our global hotel RFP and it’s a challenge. Even with hotels where we have volumes, some are declining to bid. We are also hoping to conduct an air strategy review to assess our global air programme. We’re looking for more collaborative and creative ideas in the year ahead. 

Julia Lo Bue-Said 
CEO, Advantage Travel Partnership  

A rising tide of cost concerns
While Covid has seen many companies move towards managed travel programmes, resulting in an increase in new business enquiries and revenues for TMCs, agencies are growing increasingly concerned as they continue to manage various business pressures. This looks unlikely to change any time soon.
For TMCs, managing a disparate range of distribution channels is bringing more complexity and the disruption we have experienced in recent years has highlighted the significant operational gaps that still exist in the capabilities of NDC. Recent agreements by several airlines to distribute NDC-driven content through the GDS are a good sign that perhaps 2023 will be the year where we finally see that delivered. However, airlines’ different levels of development towards dynamic fares mean that content complexity is here to stay. 

Scott Davies
CEO, Institute of Travel Management 

Ifs, buts and maybes… 
Geopolitical and economic influences have been considerations when making annual forecasts for as long as forecasting has been a thing. But it’s hard to recall a time when these two elements have seemed more impactful or more volatile and they both have potential to be direct and indirect drivers for the evolution of business travel in 2023.
What is clear, however, is that the case for in-person meetings over virtual is quite well understood and supported in the corporate world. So, if travel can be possible and more predictable in 2023 – with a longed-for less disrupted and better resourced ecosystem as we go through the year – and at least reasonably affordable, then demand will remain strong.
Our recently released buyer priorities survey for 2023 confirmed the rightful focus upon sustainable/responsible travel for many corporates. Over the past year travellers have often needed to take the option available rather than the one which would have trodden most lightly upon our planet. 2023 isn’t going to be for the faint hearted. Still, I prefer the challenges we have now over the ones we’ve endured for the last few years. 

Chris Tarry 
Aviation research & advisory, CTAIRA  

Turbulence ahead?
Some airline CEOs are now expressing the view that fares will need to stay high not just to meet higher costs but also those of externally supplied services. We have already seen significant wage claims being settled at some airlines with annual increases of between 15 and 20 per cent.
We believe that the optimism of demand continuing to be strong at recent price levels in many key markets is misplaced. Against a background of inflationary and recessionary pressures, does it make sense for airlines to add back much more capacity than they have done so far? Pursuing a shrink-to-maximise-value strategy and removing frequencies and routes which didn’t contribute to value might be how they ‘build back better’.
Generalisations are dangerous and what we might see play out in the US may be different to markets that are still in the ascendancy, driven by the local macroeconomic fundamentals, rather than in a mature phase. There are however still opportunities in mature markets aided by the commoditisation of economy class on short-haul flights, as demonstrated by amongst others Ryanair. One thing that is for sure is that the future is certainly not going to be dull. 

Martin Ferguson  
VP Public Affairs, American Express Global Business Travel

New demands
Demand for business travel will continue to grow in 2023 – but so will demands on business travel. Value will be in the spotlight in ways that are different but related. The value of connecting people is now more profoundly and widely recognised – as is the value of well-managed travel, highlighted when volatility and disruption create complexity. But at the same time, we’ll see an increasing need to demonstrate the value of each trip and each dollar spent, driven by both financial and environmental imperatives.
People want to see meaning and purpose in all travel and meetings. There’s going to be pressure on the industry to deliver. To deliver on tough sustainability targets. To deliver strategies that adapt to a changing workforce and support its wellbeing. And all while delivering a seamless travel experience in a turbulent environment. Our industry will need to continue loudly reminding the world why what we do is so important, whether that’s to lobby governments or attract new talent. Travel sparks success by bringing people – with their ideas, skills, experiences and cultures – together.