Business travel is back, or is it?
Many business travel professionals are now especially careful to estimate the future of business travel. Some say it’s changed forever, others say that it is now recovering with record high speed. We are the leading corporate housing provider in the Nordics, and one of the top serviced apartment providers in Europe — and our data and professionals say that maybe both sides are right.
As we stated already in our Forenom’s forecast 2022, the covid-19 pandemic caused a major shift in travelers’ needs. This is visible also in business travel as project workers, expats and international professionals are now favoring home-like accommodation and longer business trips when traveling, and one-day trips are being replaced with digital meetings. At Forenom, we could not agree more. When we travel less, but stay longer, it leads to more responsible business travel for our environment.
Corporate travel faces a more complex prognosis than leisure travel
While it seems clear that many companies seek to decrease short business trips to save money and the environment, the need for a physical connection as fuel for team and trust building has not disappeared. The situation is not simple, and it is likely that traveling companies are now working on rearranging new employee orientation and business travel programs to fit changing employee and business needs — as well as environmental programs. Also, Deloitte Insights assumes that corporate travel faces a more complex prognosis compared to leisure travel.
We see that the length of stay is going to increase and it’s going to blur with living, and the need for this service is going to increase. This is also visible at Forenom.
Today, Forenom is growing organically at an annual rate of around 1,000 units and 2022 turnover is expected to reach the highest level in the company’s 20-year history.
In our Forenom Forecast for 2022, we estimated that:
- Hybrid model is here to stay
- We continue to come together for key moments and interacting physically
- Stays are getting longer, which increases need for home-like facilities
- Business travel picks up again, with increased length of stay
- Work and living are blending
For 2023, we add the following trends that are already visible in our data, customer insights, global research and professional estimations.
With large managed corporate travel down — and likely never to come back exactly pre-crisis levels — small and medium-sized enterprises lead the way in business travel’s recovery.
This is also visible at Forenom, as the growth of accommodation bookings from small and medium-sized enterprises did not decrease during the pandemic but instead increased. In 2020, bookings stayed steady — increasing 3% — but from 2020 to 2021 bookings increased 30%.
One reason for this is that smaller companies started to return to the office faster, and as part of this, put their people on the road sooner. Another is that SMEs likely had fewer restrictions and more flexible travel policies. For example smaller consulting agencies, law and accounting firms and retailers are quicker to adapt to new kinds of traveling. The American Hotel and Lodging Association sees that speed and convenience will likely continue to be important, but SME business travelers will most certainly focus on health and safety issues more so now than before.
In 2017, Forenom wrote an article about ‘’bleisure’’ (Business + Leisure), which means combining leisure activities on your business trip or even bringing your family for an extended period overseas. While we have not seen massive popularity of this approach during the past five years, it seems that the new hybrid model has caused a change in this area. At Forenom, we see an increase in stays that start on Thursday and continue until Sunday. From 2021 to 2022 these stays alone increased by 24%.
The Year of the ‘’New’’ Traveler report estimates that the rise of bleisure travel could be one of the most significant outcomes of the demographic shift in corporate travel. The report states that more than half of international business travelers plan to extend business trips to accommodate leisure activities at their destination. As the workforce is becoming younger, more employees are looking to do more than work during their trips away from the office.
We interviewed a couple of bleisure travelers and they identified these three factors as being most important when choosing accommodation for both business and leisure:
- Good internet connection so you can, for example, hold virtual meetings
- Kitchen facilities so you can cook your own food
- Space to work comfortably
‘’I spent my autumn in Southern Europe, where I was mixing work and vacation. During daytime I was working remotely with my colleagues in the Nordics and in the evenings and weekends I was exploring the local life. In my opinion, the most important things when finding accommodation for bleisure trips is making sure there is strong wifi for working and also good facilities to cook and do laundry, especially if you stay longer. I was enjoying my time and getting a little more vitamin D from the sun!’’
— Anni, Office employee from Vaasa, Finland
“I’m three years into working remotely full time, unlike my colleagues who work on a hybrid model. I sometimes regret not working alongside my colleagues in real life. So some months after starting my new role, I thought it would be beneficial to do an on-site visit and meet the team in the Stockholm office. I combined business and leisure travel, and gave myself some extra days to sightsee, relax and live the local life.”
— Tayla, Office employee from South Africa with colleagues in Sweden and Finland
It is possible that a new type of business travel will be created when people work remotely but visit headquarters every month or quarter for a longer period.
Unconventional and non-traditional accommodation options were booming well before covid, both for leisure and business travel. We have seen an increase in accommodation provided by local hosts, boutique hotels, design hostels, apartment hotels and serviced living solutions.
The Year of the ‘’New’’ Traveler report says that business travelers are now more open to considering staying somewhere other than traditional chain hotels. More of them are ‘’opting to stay in apartments and other accommodations that have a more homey feel’’. It is also stated that travelers are willing to stay even further away from the city center, as comfort and proximity to leisure activities are prioritized. Business travelers, like travelers in general, are interested in exploring destinations in new ways. A traditional hotel chain in the middle of the city is not always priority number one, even when traveling for business.
We can see that there are numerous changes to the booking habits of individuals and corporations that are booking accommodation. Some companies seem to be willing to give more power to individual employees to select their own accommodation while some companies rely on help from organizations in the accommodation industry to manage their business travel. What seems certain, is that the business travel policies are under evaluation or construction in many organizations. It is likely that companies search to partner with organizations that can help find ways to cut business travel emissions.
Global research sees that people will book their business trips by themselves rather than a company. It is said that millennials especially prefer self-booking when they travel so that they can select accommodation according to their preferences. The trend towards self-booking can also be seen as a sign of the generational shift in corporate travelers, and companies need to adapt to this increasing need. Naturally, millennials are the most likely to bleisure travel or even become digital nomads.
The covid-19 pandemic shortened the booking window, meaning that companies book accommodation closer to the actual trip. We see this is a natural consequence of people being more uncertain about whether they can travel, and so they postpone their decision-making. When comparing 2022 to 2021, we can see from Forenom data that the booking window has clearly increased and companies are booking accommodation on average 2,5 weeks before their actual business trips start.
Sources:
Forenom: Forenom’s forecast 2022
Forenom: What is bleasure?
Alha & Accenture: The Year of the ‘’New’’ traveler
Alha & Accenture: Top 6 Business Travel Trends for 2022-2023
Deloitte insights: How the pandemic is reshaping corporate travel
Deloitte insights: Corporate travel in 2022 and beyond