Key takeaways

• Corporate travel spend in the U.S. and Europe is projected to surpass half of 2019 levels in the first half of 2023 and rise to two-thirds by the end of the year. Full recovery following the pandemic appears likely by late 2024 or early 2025.

• Live events are set to comprise a significant share of corporate travel, advancing from the fifth biggest driver of increased spend in 2022 to the top spot in 2023. More than half of travel managers in both the U.S. and Europe expect industry events to spur travel growth this year.

• International trips will account for a larger portion of the recovery this year: The international share of travel costs for U.S. companies is expected to rise from 21% in 2022 to 33% in 2023.

• Amid increased workplace flexibility and use of technology, travel for clients outweighs travel for team building and internal meetings.

• Travel buyers are renegotiating contracts with suppliers and balancing lower expected trip volumes with higher rates for hotel rooms and airfare.

• One-third of U.S. companies and 4 in 10 European companies say they need to reduce travel per employee by more than 20% to meet their 2030 sustainability targets.

Why this matters
Though leisure travel reached pre-pandemic levels, corporate travel has been slower to return. A variety of factors appear to impact the decision to travel for business including employee safety, client interest in meeting in person, the value of attending a conference, and whether virtual conferencing platforms can replace a trip. Although pandemic concerns and testing regulations generally waned in the second half of 2022, financial concerns seem to continue to create uncertainty for the sector. The third edition of Deloitte's corporate travel study, "Navigating Toward a New Normal," examines why and when employees are expected to travel for business, as well as the dynamics creating headwinds and opportunity for the sector.

The study is based on a survey of 334 U.S.-based and European executives with travel budget oversight, fielded between Feb. 7 and Feb. 23, 2023.

International travel and events account for much of expected growth in 2023
While full recovery to 2019 levels appears possible by late 2024 or early 2025, accounting for inflation and lost gains would potentially leave the corporate travel market between 10% to 20% smaller than it was prior to the pandemic. Amid higher airfares and room rates, the number of trips is likely to lag even further behind. However, international trips and live events are set to account for much of expected growth in 2023.

• Corporate travel spend across the U.S. and Europe is expected to rise to more than half (57%) of pre-pandemic levels in the first half of 2023 and surge to 71% by the end of the year.

• Most companies surveyed – 71% of U.S. companies and 68% of those in Europe – expect a full recovery in travel spend by the end of 2024.

• U.S. respondents expect international trips to account for 33% of 2023 spend, up from 21% in 2022 and similar to 2019 levels.

• The top reason reported for international trips involves connecting with clients and prospects: in the U.S., the main drivers are to connect with global industry colleagues at conferences and to build client relationships; in Europe, client project work, followed by sales meetings are the biggest reasons for trips beyond the continent.

• While higher travel prices are the most significant factor deterring companies from travel, live events are poised to be the major driver of business travel demand, leapfrogging to the top reason for international travel from the U.S. in 2023, up from fifth in 2022.

• With events top of mind, companies are adjusting their internal plans: Half report splitting larger gatherings into smaller, regional, virtually connected events, and 44% have adopted a hybrid approach. Further, 42% of those surveyed in the U.S. and 54% in Europe plan to integrate more clients into internal events.

• A majority of companies surveyed (70%) strategically evaluate and weigh potential outcomes of business travel, such as revenue generation, alongside the side effects of cost, health risks and emissions.

Workplace flexibility and technology continue to shift the course of business travel
Although pandemic concerns about travel generally declined among those surveyed, the ability to leverage technology in lieu of trips, ultimately reducing costs, continues to impact business travel's growth trajectory. According to the survey, technology can support nearly every business need travel serves – to some degree. In addition, a future work from home rate is expected to be 3.2 times higher than before the pandemic. Together these factors will continue to impact how and when employees travel for work.

• Business leaders are weighing the benefit of in-person interactions, as internal trainings and team meetings (44%) are rated the most replaceable by technology, compared to client rapport building (11%) and client acquisition (7%).

• Two-thirds (67%) of respondents say their employees are traveling more to cities within driving distance of their location.

• Trips to company headquarters by relocated employees are also on the rise, most of which (70%) are either completely or partially paid for by the company.

• U.S. companies are increasingly incorporating non-hotel lodging, including private rentals, into their corporate travel policies. Nearly half (45%) of those surveyed have non-hotel lodging in their corporate booking tools, up from 9% last year, and 57% have agreements with specific branded apartment or home rental providers, up from 23% in 2022. Only 10% of U.S. companies surveyed do not reimburse for non-hotel accommodations, down from half (49%) in 2022.