The US corporate travel market is changing. While spending is up, millennials are changing the way business travel is done, from researching air travel via smartphones to staying in AirBnBs and using Uber instead of renting cars. As a result, our industry will have to evolve to meet the challenges ahead.
Chief among these challenges is the importance of providing mobile solutions. A new report from Phocuswright, “Innovation and Opportunity in U.S. Corporate Travel,” looks at market size and perspectives from travelers, travel managers and executives to deliver key findings about the state of corporate travel in the US.
The report shows that by 2017, corporate spending on air travel is projected to reach $70 billion, with lodging expected to reach $40 billion. But millennials’ travel habits are switching things up—nearly 80 percent of 18- to 34-year-old US business travelers are using a smartphone to research air travel, according to the report, and 27 percent of them use their phones to book travel.
On the size of the market, Phocuswright found that:
- One third of the total US travel market was represented in the managed segment, and is projected to have reached $112 billion in 2015, a four percent gain over the previous year. Growth will moderate slightly to three percent annually through 2017, when the market will reach $119 billion.
- Online channels will continue to expand their share of US-managed travel spend, but at a slow pace. Online bookings of $74 billion in 2017 will represent 62 percent of the total corporate market.
- Intermediaries’ share of total managed spend will rise from 78 percent in 2015 to 79 percent in 2017. However, as ancillary distribution through NDC and similar schema become more widespread, intermediaries are likely to make further gains.
And survey findings showed that:
- Online booking tools are nearing saturation, with 92 percent of corporates using at least one such tool. Many smaller players have exited the market in recent years to the benefit of Concur Travel. Nearly seven in 10 corporates use Concur’s online booking tool.
- Cost reduction and policy compliance remain top of travel managers’ strategic priorities followed by duty of care considerations.
- Enhancing mobile capabilities for travelers remains a key focus for travel programs, with 77 percent of travel managers placing it among their top three technological priorities. Expense management functionality is a close second at 73 percent.
The technological and behavioral changes already happening in the US corporate travel environment will require everyone in the industry to adapt to become more mobile across the board, offering ways to reduce costs and ensure compliance while carrying out duty of care responsibilities.