Anticipated Rise in Travel Spending Fueled by Hybrid and Remote Work Trends
Travel professionals in large corporate programs view business travel as a “bedrock of growth” for their company, with more than half expecting their annual travel spending will cross the billion-dollar threshold within the next few years, according to a Mastercard-led research paper on evolving trends in business travel.
The research—in which Mastercard and The Harris Poll in April interviewed 541 travel decision makers in the U.S., Canada, Italy, Germany, Australia and India—showed that 31 percent said they currently spend more than $1 billion on travel annually, while only 11 percent said they did so prior to the Covid-19 pandemic. By 2025, 52 percent of respondents expect they’ll spend at least $1 billion annually, and 24 percent said their annual spending would cross the $2 billion line, a threshold currently crossed by only 4 percent of respondents.
Interviewed travel professionals cited building new clients and prospects as the top benefit of business travel, noted by 62 percent of respondents as a key benefit, and they indicated cutting travel would be detrimental to their companies. Forty-three percent said cutting back on travel would cut their company’s revenues by more than 10 percent over the next three years, and nearly half said doing so would increase employee turnover by more than 10 percent, according to the research.
Travel is viewed nearly equally as beneficial, however, for strengthening corporate strategy and in building internal connections through team bonding, cited by 61 percent and 60 percent of respondents as key benefits, respectively. The post-pandemic dispersed workforce is a factor here, with 90 percent of respondents saying that a hybrid or remote workforce will “significantly increase” business travel at their company over the next 10 years.
“People are trying to get together to build culture at their company, really focusing on the moments that matter,” Mastercard global head of commercial solutions Chad Wallace said. “Travel related to the internal culture-building capability has been a big factor of growth over the past year or year and a half.”
Respondents also indicated that the new hybrid and remote work environments are requiring an overhaul of processes. Top challenges included communicating about T&E policies, ensuring compliance, managing a distributed workforce’s needs and providing payment support to non-employees, according to the report.
Tracking and managing spending was cited as a high priority among respondents. About half said they expected sending real-time alerts to travelers about their spending activities will be commonplace in the next five years, and 91 percent of respondents said they planned to link their corporate cards to spending limits to prevent unnecessary spending. More than 90 percent also said they planned to invest in AI and machine learnings to help personalize the travel experience for employees.
Virtual cards appear poised for growth in corporate programs as well, with about half of respondents saying having virtual cards will be commonplace in most companies and an additional 42 percent saying it will be “a differentiator for innovative companies.”
Respondents also indicated that the need for collaboration across a company on the travel program has increased in the past three years, which could change the structure of how travel is managed. Eighty-five percent of respondents said they expect it will be commonplace to have a “chief travel officer” at companies in the next 10 years who can help lead that collaboration.
“That person would be able to look across the organization on how spend happens, managing suppliers from a sustainability perspective, coordinating across the procurement teams, the HR teams, the finance teams and the C-suite to make sure that travel experience for the employees is very solid,” Wallace said.
Michael B. Baker www.businesstravelnews.com