The boom in business travel is under pressure from high costs

High airfare and accommodation costs could subdue the current business travel boom, experts predict.

Business travel has returned to pre-pandemic patterns but airfare and accommodation costs could change that.

A snapshot of business travel in 2022 has revealed how quickly corporates have returned to pre Covid-19 patterns, shuttling around the “Golden Triangle” and across the Tasman for work. 

Data from Flight Centre’s Corporate Traveller showed Auckland in New Zealand was again the top international destination for business travel, followed by Port Moresby, Singapore, London and Christchurch. 

On the domestic front, Port Hedland replaced Canberra in the top five domestic destinations, and Perth bumped Brisbane out of third place behind Sydney and Melbourne. 

Corporate Traveller general manager Tom Walley said it was no surprise two destinations in Western Australia were in the top five, given the strength of the mining sector.

“The mining industry booked the most travel in 2022, replacing government which was the top in 2019,” Mr Walley said.

“You have to also remember Western Australia was effectively closed for two years so there was a huge appetite from corporates to visit when the state did reopen early last year.”

He said not even high airfares were a deterrent last year, as executives were prepared to travel “at any cost”.

Corporate Traveller general manager Tom Walley.

But inflationary pressures and fears of recession could clip the wings of corporate travel, at least according to Perth business consultant Julia Ewert.

Corporate Traveller’s own data showed businesses spent double on overseas accommodation in 2022 compared to 2019, even though there was less time spent in hotels.

Domestic accommodation costs jumped 13 per cent, making work trips more expensive.

Ms Ewert, a sales and negotiation expert, predicted rising travel costs would force companies to return to Zoom and Teams meetings, making it harder for employers to attract and retain staff who viewed work trips as a major perk.

“There’s status involved in corporate travel for younger employees and it can be a measure of success, so it won’t please these workers when they learn they won’t be flying around the country or overseas in 2023,” she said.

“Business travel allowed workers to accumulate travel points or have a long weekend away, but companies will move away from this popular perk to save money and boost their revenue.”

Corporate Travel Management chief executive Jamie Pherous. Picture: Liam Kidston

To date, corporate travel bookers were not seeing any indication of cutbacks, with Corporate Travel Management reporting that November was its “biggest volume month in history”. 

But CTM managing director Jamie Pherous said there was increasing pressure to keep trips within budget. 

“What we are experiencing at unprecedented levels is companies and their employees choosing alternative carriers based upon price, with some customers choosing new carriers for the first time,” Mr Pherous said. 

Mr Walley said the return of Chinese airlines along with increased capacity into Australia would make airfares more affordable, and keep the steady flow of bookings pumping.

“We’re already seeing business class fares to Europe under $10,000 which they haven’t been in a while,” he said.

“The other thing that has changed is businesses are starting to book a bit further out. The lead time on trips was three to six weeks, now it’s more like nine to 12 weeks, which helps to lock in a decent price.”

Accommodation could be a different story with higher rates seemingly the “new normal” in the hotel industry, in the wake of the pandemic, Mr Walley said.

“Hotels have suffered with a lack of staff and now with demand so strong there’s been the ability for a lot of them to charge a bit more,” he said. “Demand is so high and supply is so low, so broadly rates have just gone up, but they should start to plateau in 2023.”