Forecasts for 2023 indicate a steady return to business travel across the globe, however the rate of recovery is much debated, as an anticipated recession and potential economic downturn raise concerns with finance directors and travel buyers alike. 

What we hear and what’s happening in reality, however, are quite different. Despite the noise around a recession and budget cuts, I don’t see companies—especially not smaller businesses—cutting back on their business travel or putting a freeze on travel. For these smaller and midsize businesses, in-person interactions facilitated by travel are a "non-negotiable" expense, essential to success. 

This is not the case across the board, however, and there are a handful of larger enterprise companies, particularly in the tech and fintech sectors that publicly have announced cutbacks on business travel in a bid to find cost savings as funding levels decline. Overall unemployment is still low, and while a handful of industries are watching their costs, there are others that are thriving and increasing their travel programs and budgets. 

Looking at TravelPerk’s data, I see no change in the volume or spend of business travel, likely because we are largely looking at the SMB market, which always has been more cost conscious and keen to ensure value and return on investment. As they focus even more on optimizing travel in 2023, they will figure out there is a next-step in terms of travel investment for their organization: a managed travel program.

I predict 2023 will be the year when we see a substantial move from unmanaged to managed business travel, as companies look for ways to keep travelers traveling in 2023, while they weigh up budgets, control costs and focus on generating revenue.

Never Let a Good Crisis Go to Waste

When economic uncertainty is widely discussed, companies of all sizes want to mitigate risk and plan with accuracy and predictability, controlling costs for the year ahead. A managed program is the only way businesses can effectively do this for travel—implementing a policy and full compliance for ultimate cost control, with an array of companies and platforms to help facilitate this process.

I have already started to witness the shift in power from traveler to finance as companies start to prepare for more financial uncertainty. During the pandemic years, employee-focused travel policies and traveler wellbeing took center stage as health and safety became the priority. Fast forward to 2023, the impending news of a recession has changed the focus to finance teams looking for ways to optimize travel programs, control costs and budget for the year ahead. From my own experience talking to clients, we are seeing more requests for API-enabled open technology so businesses can easily integrate travel with existing expense management systems. The overriding objective is to control and manage costs better.

To be sure, travel costs have been volatile post pandemic, but the steep price increases seen mid-2022 have now subsided as energy costs decline and suppliers boost capacity to meet pent up demand. I don’t believe we will see huge price fluctuations in 2023 and as an industry we will experience less turbulence in 2023. This will help finance and travel management teams budget more accurately for the year.

But as they prepare for the economic downturn, the pressure is on to optimize travel programs. After more than two years with little to no travel, the benefits of meeting in person are evident and businesses are realizing the impact on their bottom line. They need to get these budgets right, and among our clients, the perspective seems to be if they aren’t out there meeting potential and existing clients, competitors will. It easily could result in the loss of business. 

The move from unmanaged to managed travel, and from service to technology is going to take time, and new programs will have to account for traveler preferences, not only costs. Digitalization and the demand for consumer-led apps will return to the forefront in 2023 as travel managers look for ways to drive compliance and engagement with travelers for more visibility and control. The impact of sustainability will continue to play a significant component of any travel program and could facilitate moving the SMB sector more quickly toward managed programs as travelers push for more emissions visibility that will only be accomplished systematically via such programs.