Worldwide, the travel industry is in an unpredictable place, both in terms of pricing and travel demand. The world sits on the precipice of a global recession, on the tail end of a global pandemic, which fundamentally changed the way that we work, live and travel. Even so, 2023 travel industry predictions are not bleak.
Due to the new remote work traveler, travel is still growing, albeit slowly, and with much different booking patterns than in the past. Unlike pre-COVID times, many travelers are avoiding traveling during peak periods to cut costs, booking closer to their departure date and a taking longer trips (hello slow travel!).
Bleisure has also taken off this year; in fact, “a 2022 survey of global travelers by the American Hotel & Lodging Association found that 89% of respondents wanted to add some leisure time to their next business trip.” In 2023, this will continue to be a trend that we see growing in popularity, as more companies (slowly) resume business travel and more employees could turn them into bleisure trips.
Travel prices are now dropping worldwide
A recent Skift article showed that overall travel prices have now started decreasing in Europe, which is a positive development for the travel industry: “… travel costs have come down for the first time in 2022, catching up with a travel deflation seen in the U.S. in the third quarter.”
The decrease of rates that we are currently experiencing was likely caused by a combination of factors: partially, a natural course correction from the rapid escalation of rates due to pent up demand (leisure and corporate) during the immediate post-pandemic travel surge, the softening of urgency in travel demand (causing increased buyer prudence due to the sky-high rates), and general recession concerns.
While the outcome of the industry’s current uncertainty is still to be determined, the news of fare decreases happening globally is good news for the overall travel industry, as it signals an eventual return to pre-pandemic conditions.
Will long-term contracts go the distance?
Today, travel buyers and corporate travel management are being more cautious about long-term commitments as urgent demand ebbs, and we expect to see more rate volatility in the coming 12-18 months as all travel segments continue to normalize.
As rates are dropping and as demand remains uncertain over the coming months, planners will have the opportunity to boost ROI on their upcoming events by being more strategic in their planning. For planners who are able, taking advantage of longer booking windows will help them cut costs. We will see travel managers begin to take a much heavier hand in negotiations and holding back on signing longer term contracts unless they get the rates that they want; as the correction continues, we will see more desire to make long-term commitments to suppliers to minimize the future volatility in prices.
Sustainability
While not all hotels or planners are prioritizing “going green” yet, we have seen a substantial shift in consumers’ focus on the importance of the issue, especially for younger travelers, and we only expect it to become more important in 2023.
The latest Institute of Travel Management (ITM) survey of buyer members confirmed that planners will have a “sharper focus on sustainability” in 2023; “24 per cent of respondents said they will introduce carbon budgets in 2023, and [a quarter of] buyers reported the [mandatory] need for suppliers to comply with the following measures:
- Sustainable aviation fuel usage/targets (89 per cent)
- Provision of carbon off-setting solutions (86 per cent)
- Science-based targets (77 per cent)
- Sustainable practice linked to ISO 14001 (76 per cent)
- Carbon emissions dashboard and reporting (60 per cent)”
Although this is a promising sign, the business travel industry still has a long way to go until many properties adopt more sustainable business practices.
For the planners who are prioritizing sustainability in their upcoming travel programs, they are choosing to use sourcing platforms (like Vindow!), which enables them to filter search results to show only properties who are offering “green” initiatives. As consumers’ concern for sustainability continues to grow, these sourcing platforms will become even more important for travel planners to more quickly and easily access properties that will fulfill their corporate sustainability mandates.
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What do you think the travel industry is facing in 2023? Share your thoughts with us by email at info@vindow.com.
