Business travel, marked by a revival in aviation at the start of 2022, appears to be faltering once again as global recession looms and large companies plan to cut expenses.
Global trends indicate that corporate travel will decline steadily for the next six to 10 months until economies recover from the aftermath of the Covid-19 pandemic and the Russia-Ukraine war.
India presents a unique case as the country’s economy has remained largely unaffected by global developments so far. Even though large companies in India plan to reduce expenses, there is strong demand for travel from small and medium enterprises and an increase in meetings, conferences and exhibitions in the domestic market.
It's unclear whether the global recessionary environment will be a drag on corporate travel in India or if the segment will prove to be resilient.
Most hoteliers, for whom corporate travel makes up about 50 percent of their business, are sceptical. Airlines and online travel agents expect domestic corporate travel to remain at current levels and drive the overall segment for the next year.
However, when it comes to international corporate travel, all stakeholders expect the segment to fall in double-digits from current levels in the next two quarters.
Business travel was one of the last segments to recover after the pandemic and appears to be under pressure once again due to economic uncertainty. Accelerating inflation, geopolitical issues and the risk of a global recession are resulting in companies cutting back on corporate travel in India.
Corporate travel is making a slower return after the pandemic and conferences and trade shows, which account for a significant volume of business trips, remain mostly virtual, said Mehul Sharma, founder of Signum Hotels & Resorts.
“Now, due to the risk of recession, companies are avoiding corporate travel as much as possible and are cutting back on corporate travel,” he added.
Big tech companies are under cost pressure and are likely to cut down business travel, said Saurabh Juneja, business head of Paxes, a travel management company. The recovery of business travel in India had reached 60 percent, Juneja pointed out.
“Companies will attempt to reduce expenses and as business travel is one of the largest segments, there will be a dramatic drop in foreign travel but a minor decline in domestic travel,” he added.
Sharma said companies are putting team meetings on hold.
“Beginning of 2022, we saw a trend of corporate travel picking up but a prediction of an upcoming recession has again slowed down corporate travel. There is a sharp decline in the inflow of queries for corporate bookings,” he said.
Retail, real estate and manufacturing industries are pulling back on corporate travel, the hotelier said.
Inbound travel in segments including IT and automobiles has slowed down, said Chander Baljee, chairman of Royal Orchid & Regenta Hotels.
“Shortly after the Covid-19 pandemic brought global travel to a standstill, one thing became clear: corporate travel would face a slower return than leisure. We were seeing slight growth at the beginning of the year but it has again slowed down and would take at least two years to get back to pre-Covid levels,” Sharma said.
Manoj Agarwal, head of asset management at InterGlobe Hotels, said he expects uncertainties around geopolitical issues and talk of western economies going into recession to have an impact on inbound travel.
However, domestic airlines are quite optimistic about corporate travel after a revival in the segment this year.
“We cannot compare corporate travel of 2022 to the corporate travel of 2019 anymore–it’s an apples-to-oranges comparison,” a senior executive from a domestic airline said.
He added that while large companies are likely to cut travel budgets, the revival in corporate travel since the start of 2022 in India has been on the back of small and medium enterprises and gains in market share from the railway segment.
“In the last two years, trains were not available and even when they started plying, many did not want to take a chance and risk infections. We think we can both retain and grow this segment,” a senior Vistara official said.
A senior official from Air India said that in the past six months, there has been a significant rise in individuals signing up for the airline’s frequent flyer programme.
“New businessmen and younger entrepreneurs have started traveling again for both work and leisure and this has added a new segment to corporate travel,” the official said.
An official from IndiGo said there is a rising trend in offsites and team-building getaways. He added that while large companies are still only spending 70 percent of their pre-Covid-19 budgets on travel, startups and newer businesses have increased travel spending significantly.
While there may be some debate over domestic corporate travel trends, there is general agreement that international business travel to and from India is expected to fall significantly in the next two-three quarters.
“Inbound travel is yet to pick up as international companies are not in favour of employees traveling for many reasons. Major events are also being postponed,” Baljee of Royal Orchid & Regenta Hotels said.
A senior aviation official said there’s already been a fall in international corporate travel for his airline in the current quarter, not counting trips to Australia and Qatar for the world cups.
An official from Yatra.com said corporate travel to and from India to West Asian countries Dubai, Abu Dhabi, Kuwait, Saudi Arabia and Oman has still not returned to pre-Covid-19 levels. He said corporate travel from these countries is not expected to recover to pre-pandemic levels any time soon.
A senior official from an international airline that operates in India said its corporate travel segment between India and Europe, India and Singapore, and India and Australia is still much lower than pre-pandemic levels and is unlikely to recover soon.
