Corporate travel budgets may be under pressure from inflation and economic uncertainty, but while the segment may never fully return to pre-pandemic levels, demand for in-person meetings and events is making a comeback as companies look to reunite their employees face-to-face.
A survey by Morgan Stanley has suggested that, while almost 18 per cent of corporate travel is still anticipated to be replaced with virtual meetings this year, corporate travel budgets were “nearly back to normal” and nearly half of respondents expected 2023 budgets to be higher than in 2019.
Two-thirds of UK companies plan to increase business travel spend by 50 per cent or more this year, according to research by American Express, with almost three-quarters saying that connecting remote teams was a key reason.
Meanwhile, a study jointly produced by the Incentive Research Foundation (IRF) and Questex last year also found that nearly two-thirds of the industry indicated that incentive travel was trending up, with 13 per cent saying it would increase by 50 per cent over the next 18 months. The incentive travel market is forecast to witness a growth rate of 12.1 per cent over the next decade, according to Allied Market Research.
“Business travellers are stopping to think before reaching for their travel agent’s phone number as to whether the trip is essential, whether they can combine different purposes, maybe combine a business/conference/leisure element to lessen their overall carbon footprint, and so forth,” explains HVS London chairman Russell Kett.
“Some business travellers are getting better at being more efficient in combining business and leisure but like many trends, I suspect there will be some who will go back to their previous habits such as one-day trips or flying somewhere to attend a one-hour meeting.
“It's still important that hotels change and adapt, however, by offering space for smaller meetings, areas suitable for guests to work in and flexibility when it comes to using public space. This helps maximise revenue, improves footfall and acknowledges that needs for many businesspeople have changed permanently.”
Accor’s flexible approach
Accor is one group that has been integrating coworking space into its properties since 2018, creating customisable spaces under its Wojo brand with anything from two to 400 workstations. Sites in Paris, Lyon, Lille and Barcelona now host more than 500 companies spread over nearly 75,000m2.
The group is also rolling out flexible private office solutions to cater to increasingly ‘nomad’ business travellers, including at its Mercure and Pullman Paris Tour Eiffel hotels and its Mercure Montmartre Sacré Coeur property.
“While the overall quantity of business trips has dropped off significantly since Covid, today’s business travel is about fewer, but longer and more purposeful, trips,” agrees Accor’s SVP sales – Europe & North Africa, Saskia Gentil.
She says that home working hasn’t diminished the desire to hold strategic team meetings in-person, which the group is seeing reflected in M&E requests. Corporate guests are instead staying longer to optimise their time in a location by grouping their meetings together for the duration of their stay, rather than making several trips, a trend which is also being influenced by Corporate Social Responsibility (CSR) targets.
“Long-haul travellers tend to stay longer and, as such, provide a higher overall spend,” adds Gentil. “While we may not completely return to levels in terms of volumes in comparison with 2019, the average price will compensate for the volume in room nights.”
She also says that while there has been some drop-off from larger business accounts, the SME market has been comparably resilient. To capture this, the group is marketing a meetings package offer later in the year targeting start-ups.
Incentive travel changes
In response to growing demand for smaller corporate groups, Rocco Forte Hotels launched Reward Experiences earlier this year, a new programme designed to help clients reward top performers with individual luxury travel experiences.
“Things are constantly evolving. Within the events world you think you’ve found the right solution and then suddenly it all shifts again. We have to constantly remain very, very flexible and have our ear to the ground in terms of what clients are looking for,” says Charla Forinton, director of global sales – groups at Rocco Forte Hotels.
“From an incentive perspective, one thing we did find is that people wanted something on a much more individual basis. Group travel is definitely here to stay and being able to take away a group of employees and combine a mixture of meetings and incentives will still remain, but one thing we tried to hone in on was providing that flexibility and individuality. Not everybody is motivated by the same thing.”
Recipients of the reward will receive an experience including two nights’ accommodation for two people at one of the group’s properties, breakfast, dinner with a wine pairing in the hotel’s restaurant, and a choice of locally curated experiences such as wine tasting in an Italian vineyard or a session with a master chocolatier in Brussels.
Forinton adds that there has also been a “huge increase” in in-person leadership team meetings, with no sign of any abating at the C-suite meetings level.
With businesses looking for ways to reward and retain their employees as well as preserve their company culture, IRF’s 2023 Trends Report declared that incentive, recognition and reward programmes were becoming a key retention tool for businesses, especially in the current inflationary environment, with buyers indicating the number of people participating in incentive travel programmes would increase by 48 per cent in 2023 and 61 per cent in 2024.