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The western business travel market has not yet recovered from the financial crisis and will not reach pre-recession levels until at least 2018, according to a report published today from technology provider Amadeus.
Despite an upturn in the global economy across Europe, travel spend in the region is still behind the levels seen in 2008.
The findings come from Amadeus’ Shaping the Future of Travel report which analysed trends in the industry that will drive growth over the next 10 years.
It showed the slow growth of North America and Europe is being countered by strong growth in the east and other emerging economies around the world, with the study predicting Asia will account for 55% of all global business travel growth in the next 10 years.
The study showed the global travel industry as a whole is set for a decade of sustained growth, with China surpassing the US to become the world’s largest outbound travel market this year and the biggest domestic market by 2017.
“The travel industry has had a difficult time in the past 5 years, but when you look at the report the tide is turning and we see a very strong potential for growth in different sectors - a golden decade is in front of us,” said the report’s author and associate director at Oxford Economics, Andrew Tessler.
“Short haul travel demand in North America and Europe has been sluggish but this is being met with significant growth in the east,” he said.
Tessler added that China’s development is an important driver but there are “more subtle” factors at play.
“Shifting competitive dynamics and the persistence of new behaviours that emerged during the recession are both impacting key indicators in the sector.”
The study showed while long-haul premium traffic recovered quickly and robustly from the financial crisis – particularly that connecting advanced to emerging markets – short haul travel demand has been a lot slower.
The study found changing travel policies in the wake of the financial crisis have contributed to slow short haul growth. It claimed companies may be more reluctant to pay for short haul business class flights, while continuing to recognise the value of long haul business class.
Air travel growth will be led by emerging economies such as India, Indonesia and Russia, as non-OECD air travel is set to overtake that of OECD members for the first time, to become largest source of global air traffic by 2023.
Demand for international hotel stays has outpaced demand for domestic stays since the recession, suggesting reduced domestic hotel spending is the new normal. At the same time, overnight visitor flows for Asia are set to grow nearly four times faster than Europe’s over the next ten years – but Europe will remain dominant.