The cost-of-living crisis won’t kill the business travel sector
The world is lurching from one crisis to another and the leisure sector can’t seem to catch a break. Just as forecasts showed a measured return for post-COVID travel (business or otherwise), rapid inflation and surging costs are threatening to put the brakes back on.
But while businesses and consumers everywhere are feeling the pinch and there will be inevitable cutbacks, it’s not 2020 all over again. Consumers and businesses are determined to stretch their wallets in the midst of the cost-of-living crisis by downtrading to own-brand goods, cheaper shops or less expensive restaurants. Discount supermarket chain Aldi, following record sales over Christmas, also recently announced its plans to hire a further 6,000 employees, as shoppers turned to discounters to counteract soaring food prices.
A Mckinsey report found that three out of five consumers has changed their shopping behaviour, with almost 75% downtrading to low-cost or private-label household products. Even our pets are finding their luxury treats replaced by cheaper store-brand meals – 57% of survey respondents have down traded their pet food and supplies.
This effort to maintain an equally full lifestyle but at a lower cost is pervasive in the hospitality sector too, seeping through travel and hotels into holidays and business trips.
This trend comes hot on the heels of the great lockdown ‘reset’. Hybrid working, conference call platforms and the realisation that some deals and relationships can still flourish from across continents has fundamentally changed business models, but it didn’t eliminate the business trip.
The Global Business Travel Association’s 2023 outlook showed that business travel continues to rebound, on average to between 50% and 76% of pre-pandemic levels. Their research also found that 78% of travel managers expect the number of business trips taken by employees at their company will be higher or much higher next year compared to 2022.
Clearly demand is returning, but businesses have been forced to find a balance between feast (pre-pandemic) and famine (mid-pandemic), and they’ve settled on moderation.
The superfluous journeys have already been eliminated. What’s left are only the essential face-to-face discussions, the absolutely necessary conferences, the indispensable team meetings or the remote workers’ periodic trips into the office. Business stays are still happening with Tuesday-Thursday being a typical pattern as companies ask their employees to come into the office two to three days a week.
This means business travel as it pertains to the hybrid working model will survive this latest crisis, but it may be fundamentally changed. Economic considerations have eclipsed COVID as the more likely reason business travel may be limited next year according to the GBTA. Where business trips must happen, travel budgets will need to be pruned, which means business accommodation will go the same way as business class flights.
‘Business class’ has long since lost its etymological roots. You’re more likely to find a business traveller in economy or on a budget airline these days. This form of downtrading has been happening for some time in the airline industry, and now the business accommodation sector is catching up. Today 36% of easyHotel’s customers are business travellers. While the in-person meeting may be essential, the marble bathroom isn’t and companies don’t want to pay for it or be seen to be wasting money on luxuries that aren’t necessary.
Inflationary pressure is as pernicious to businesses as it is to consumers, and they are responding by downtrading as much of their travel costs as possible. Their employees need a safe, comfortable, accessible place to stay, and affordable hotels offer just that. easyHotel is even seeing more people book stays from Sunday- Wednesday to manage business trip costs.
Accommodation needs to be in local hubs with food and drink nearby, transport links and easy access to corporate offices or conference centres. Comfort is also a must, but everything else is just bells and whistles.
Well nearly everything… Businesses today have a moral and regulatory obligation to improve sustainability, including in their business travel footprint. So along with location and comfort, even affordable hotels must enhance the sustainability credentials of their business customers. easyHotel prioritises sustainability as a matter of course because we recognise the urgency of protecting the environment, but this is also a natural consequence of our budget offering which is lower in carbon.
Each new crisis, whether global or local, forces change on the industry. While covid and other pressures have been a catalyst, we are now seeing the consequences, and what is clear is that business travel is here to stay, but certainly with less frills, and more budgeting.
