Corporate travel and hotel occupancy inching to 2019 levels

MENA, GCC business aviation, and hospitality rebound despite global struggles 
Corporate travel and hotel occupancy inching to 2019 levels
Business traveler

Business travel is progressively taking to the air in this region, as spending increases, allowing corporate hospitality to hang on its coattails.

The picture is gloomier globally though, as the days of reckoning close in on debtors.

Business  flying high


Business travel expenditure in the Middle East is forecast to rise by 32% this year, a November 2021 report by the World Travel & Tourism Council (WTTC) revealed.

Danielle Curtis, Exhibition Director ME for Arabian Travel Market (ATM), said, “This is a welcome boost for business travel and tourism professionals throughout the Middle East region, as economies around the world begin to relax travel restrictions, despite the disruption caused by the outbreak of the Omicron variant.”

“During 2021, the increase in business spending for the full year is expected to have actually outpaced spending on leisure travel by 13%, 10%, and 1% in the Middle East, Europe, and Africa respectively.

The WTTC report was compiled in collaboration with McKinsey & Company called ‘Adapting to Endemic Covid-19: The Outlook for Business Travel’.

The report said business travel experienced a surprising 49% rise during 2021 over 2020, showing that the corporate segment is revving towards pre-pandemic levels.

Business travel spending


The report positions the Middle East region first with an increase of 49% in business travel spending in 2021, followed by Europe and Africa (36%), Asia Pacific (32%), and the Americas (14%).

In 2022, the region will record growth in spending of 32%, the report indicated.

The report concluded, “…our research shows room for optimism with Asia Pacific and the Middle East first off the starting blocks.”

UAE well positioned


The UAE is arguably one of the most Covid-secure countries on the globe keeping COVID-19 cases at very low rates and putting in place robust measures to ensure travelers’ safety at every stage of their visit.

The World Travel and Tourism Council (WTTC) endorsed UAE’s pandemic management, awarding the city a ‘Safe Travels’ stamp.

Hospitality recovers quickly


Hotel demand across the MENA is expected to be at par with 2019 performance levels in 2022, according to Colliers International.

Corporate travel and regional first-rate events will support hotel occupancies of 70 percent growth year on year (yoy).

Corporate demand, including MICE events, is helping the MENA hotel industry recover, according to the Colliers report.

However, the region’s domestic segments will also weigh in on the sector in 2022, as changes in operational practices for global business flying are implemented.

Large events, including Expo 2020 Dubai and FIFA World Cup Qatar 2022 attract tourist inflows, with observers predicting the UAE’s hotel sector will experience 12 percent yoy growth in 2022.

The Colliers research pointed to the persistence of regional governments’ support for tourism throughout COVID-19 as a key element in the sector’s recovery.

Global aviation struggles


The global travel industry is facing a “debt mountain” that today reaches over $540 billion.

The sub-sectors involved include airlines, hotels, ground transportation firms, and travel management companies.

Around $490 billion of that amount comes from government and bank loans, plus cash injections from venture capitalists, private equity, and hedge funds.

The global airline liability amounts to $350 billion, that of hotels is $110 billion, while ground transport companies owe $20 billion.

Corporate travel agencies are also $10 billion in the red, according to Mark O’Brien, managing partner of Avenue5 Consulting.

The debt also involves travel and mobility tech startups, numbering some 2,800, which have raised $48 billion in investments in 2021.

The numbers were based on public reports and financial statements, alongside data from the likes of Moody’s, Bloomberg, Fitch, and S&P Global.

As governments, banks and investors start demanding their money back. Travel companies will start increasing their prices as the travel industry tries to seek out profits to pay debts.

By Q3 of 2022, airlines will begin pricing airfares on key routes at 3.5 and 4.5 percent premium over 2019 levels.

On the hotel side, O’Brien said rates could be up to 5 to 9 percent in the Q3 of this year, compared to 2019 levels.