Business travel: The 2023 Trends that will Shape How You Stay, Fly and Buy

14th December 2022

Business travel: The 2023 Trends that will Shape How You Stay, Fly and Buy

Business travel is back with a bang – at least in South Africa – with business travel numbers exceeding 2019 levels. This according to Euan McNeil, MD Flight Centre Travel Group South Africa, who says in a recent whitepaper, SME Travel Trends for 2023, that demand has returned a lot quicker and more aggressively than initially anticipated.

“Business travel is back to pre-pandemic levels in terms of yield, while the cost-per-transaction is at record level highs,” explains McNeil. This means South Africa’s trajectory looks very different to the rest of the world where business travel is still lagging behind leisure travel, with global business travel spend unlikely to fully recover until at least 2026.

It bodes well for the South African travel industry as we move into 2023 – especially if airline capacity increases and prices start to stabilise as supply catches up with demand.

Of course, there are other factors at play, and while both McNeil and Bonnie Smith, GM Corporate Traveller, agree that the past two years have proved exactly how hard it is to predict the future, they believe the following will be important for businesses, bookers and travellers in 2023:

Airfares will continue to be driven by market dynamics and the fuel price (with McKinsey reporting that the price of jet fuel has increased by approximately 90 per cent since the start of 2022). But Smith says that as flight capacity is added to meet demand in South Africa, prices should start stabilising within the first few months of the new year. Until then? Book early, says Smith, and chat to your travel management company (TMC) about the best time to travel.

Although available rental cars were in limited supply over the past two years, there are clear signs that the capacity of the South African car rental market will recover strongly. New car sales attributed to the car rental industry increased from 15.3% in January 2022 (4,596 cars) to 17.4% in October 2022 (7,988 cars).

The return of international visitors is driving demand for car rentals, and the local car rental market is on the verge of full recovery. However, "true normalcy" (based on the delivery of required vehicles) is not expected to be reached until the third or fourth quarter of 2023.

But with fuel prices soaring, global figures show a rise in demand for smaller, more fuel-efficient cars. This trend is prompting rental companies to look for more small, fuel-efficient vehicles to add to their fleets. In South Africa, business travellers continue renting smaller cars, while international visitors have increased demand for larger vehicles for group travel.

Smith says that Corporate Traveller is seeing more accommodation options come online, including an increase in guesthouses and serviced, self-catering accommodation. “Travellers are definitely more health-conscious post-pandemic, and they’re looking for flexibility, space, and the option to cook their own meals. It’s becoming a popular option for longer stays.”

Hotels are also reporting longer stays as businesses opt for “quality over quantity” when it comes to their trips. And hotels are rising to the challenge, offering everything from extended stay packages to multi-purpose gathering spaces and tours and excursions to add value to a trip.

Notably, says Smith, the latest global data shows that hotel rates worldwide will increase next year – albeit at a slower rate to 2022 – with indications that 2023 rates will, on average, climb 7% across all markets. What does this mean? “Businesses will need to revisit their travel budgets,” says Smith. “Work closely with your TMC to get more bang for your buck – as they will be able to use their own buying power to negotiate and secure special rates on your behalf wherever possible.”

In terms of travel tech, AI-enhanced booking platforms, mobile apps and chatbot functionality will continue to dominate as travellers enjoy the ease and convenience of having all their travel information at their fingertips. But as McNeil explains, human connection is still very important – especially in South Africa.

“As South Africans, we enjoy interacting with people and see travel as a person-to-person experience. Our travellers want someone to talk to and help them through the travel journey – because travel has become complicated, and they have concerns around it. The traveller response to crisis has been to lean on people. That is why the focus for Corporate Traveller has always been to offer a blended tech/touch approach,” he says.

Although travel programmes in South Africa are still largely cost-driven, Smith says this will change as organisations start to get serious about sustainability, including offsetting their flights, selecting ‘green’ suppliers and being more conscious of their travel behaviour.

A 2022 poll conducted by Business Travel Show Europe revealed that 66% of travel programmes don’t make provision for the LGBTQ+ community; more than half of companies don’t have special conditions in place for solo women travellers; and 41% of travel programmes don’t consider people with accessibility requirements. Smith says this will change as DEI (diversity, equity and inclusion) is now a non-negotiable – and key when it comes to attracting and retaining talent. 

Today’s travellers are more focussed on health, wellbeing and work-life balance than ever before. And yet, says Smith, for SMEs trying to make ends meet and grow their business, health and wellbeing often falls to the bottom of the list of priorities. 

“A TMC can help you create a ‘health-centric’ travel policy, in other words, one which supports a happy, well-rested and productive team,” says Smith. “Risk management and duty of care will always be important, but 2023 is the year of traveller wellbeing – and we’ll see more premium-class bookings for long-haul flights; guesthouses or serviced apartments for longer stays; and more perks (including lounge access) for frequent fliers.”