This sucks: corporate travel is expected to fall 15 percent this year. As much as you like to think you’re doing your part by buying a heavily discounted ticket and going on vacation, the individual traveler’s contribution to the industry pales when compared to that of the corporate road warrior. If the airline industry is going to recover, it will come on the backs – and corporate cards – of those suited crusaders who wield laptops, demand pill water and pay full fare.
Hotels and airlines – and rental agencies and restaurants and just about everyone else – relies on corporate travel. In addition to spending more, this segment of the traveling population tends to hit the road more frequently, so they spend more per trip and per year than the rest of the world. Without their full “commitment,” the tourism and travel industry will have a hell of a time recovering.
A new report from travel industry research firm PhoCusWright dives into the 15 percent plunge for the $85 billion sector, which involves budget-cutting measures by the businesses on which travel service providers have typically relied. Meanwhile, the U.S. travel industry as a whole is only expected to drop 11 percent, making it smaller than it was in 2006.
How important is business travel? Historically, it’s accounted for around 40 percent of the travel market, but shrinking demand brought it down to 39 percent of the travel business in 2007 and could push it all the way to 35 percent by the end of 2010.
“Current economic challenges and public scrutiny of travel and entertainment spending has placed corporate travel on the chopping block. Sharply curtailed corporate travel budgets will mean not only less travel in 2009, but stricter policies and tougher policing when spending does occur,” said Susan Steinbrink, PhoCusWright‘s senior research and corporate market analyst. “However, the recession will positively affect innovation, as corporations and travel management companies intensify efforts to optimize travel programs. This means bringing more spend under management, accelerating integration efforts across the corporate travel value chain, and leveraging new technologies-from mobile to video conferencing-to bolster the bottom line.”