On the up and up - continued incremental growth for business travel

Sep 26, 2024 2:09:27 PM

"International passenger demand saw the largest growth of 12.3 percent and passenger load factors were 85 per cent, an increase of 12.7 per cent year-on-year. Domestic passenger demand was 4.3 per cent, and passenger load factors were 85 percent, an increase of 2.1 per cent year-on-year."

On the up and up - continued incremental growth for business travel

By Bonnie Smith & Felicity Burke

Strong passenger demand, the desire for in-person meetings, conferences, and events, and positive travel industry momentum over the last six months continues to drive growth for business travel incrementally, according to FCM Consulting’s latest Global Trends Report.

Global passenger demand, as reported by IATA, was up 9.1 per cent in June 2024 compared to the same month in 2023.

International passenger demand saw the largest growth of 12.3 percent and passenger load factors were 85 per cent, an increase of 12.7 per cent year-on-year. Domestic passenger demand was 4.3 per cent, and passenger load factors were 85 percent, an increase of 2.1 per cent year-on-year.

Total seats offered for calendar year 2024 is up 3.04 per cent (175 million increase) on 2019 levels and up 6.15 per cent (352 million rise) on 2023. This calendar year is the new baseline for aviation growth after 2023. And 2025 airline schedules are forecast to be positive with continued increases.

Global hotel occupancy climbed to nearly 70 per cent by the end of H1-2024, and air travel demand grew steadily throughout the same period. As the northern hemisphere summer emerges, we forecast travel demand to grow steadily through the next quarter.

The forecast seats offered across the top corporate global airlines in 2024 are set to be five per cent above 2019 and, in comparison, seats offered in 2023 were two per cent below 2019 levels – 11 of the top corporate airlines are also forecast to exceed their 2019 levels by the end of 2024.

As for accommodation, the hotel average room rate across the top 100 corporate cities reported by FCM Consulting’s business analytics team was US$182, a US$5 drop versus H1-2023. As reported by STR on 6 July 2024, the global hotel occupancy rates were forecast to reach 70 per cent during July.

In the car hire sector, The H1-2024 global average daily rate was US$54, a decrease of 26 per cent, when compared to 2023.

This report highlights some promising trends for South African business travellers. The 9% increase in seat availability on flights within Africa is a clear sign of the growing accessibility and connectivity across the continent, which will be beneficial for companies expanding their footprint regionally. Additionally, while Johannesburg's Average Room Rate (ARR) has seen a 13% rise, Cape Town’s 7% decrease offers a more affordable option for accommodation, which could balance costs for travel programmes.

However, it’s important for businesses to keep an eye on airfare trends, particularly the significant increases in both economy and business class fares on key routes like Cape Town to Dubai and Johannesburg to London. These rising costs could impact travel budgets, making it crucial for companies to re-evaluate their travel programmes and consider strategies for managing these expenses, such as advanced booking and exploring alternative routes or classes.

Overall, while there are positives in terms of increased connectivity and accommodation options, South African businesses must remain vigilant about rising travel costs and adapt their travel programmes accordingly to maintain cost efficiency while ensuring effective travel for their teams.

Bonnie Smith is the GM of FCM and Corporate Traveller South Africa. Felicity Burke is the Head of FCM Consulting, APAC.

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