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Business travel lagging behind tourism as Gulf goes virtual

The Middle East is yet to catch up with the upward global business flight booking trend, which exceeded pre-pandemic levels in March
  • Medium/long-haul and domestic bookings well below 2019
  • “Bleisure travel” rises as business travellers extend visit for leisure 
  • Optimism that international travel recovery will gain momentum

An estimated 115 million more passengers in the Middle East and Africa will fly during 2022 compared to last year if flight booking trends continue at their current pace, according to new research.

However, business travel in the region is returning at a much slower pace with medium/long-haul and domestic bookings remaining well below 2019 pre-pandemic levels, as of April.

After two turbulent years global leisure and business flight bookings have surpassed pre-pandemic levels, while spending on cruise lines, buses and trains saw sharp improvements this year, analysis by the Mastercard Economics Institute has revealed. 

In the Middle East recovery in international leisure travel bookings has accelerated from mid-2021 after the launch of coronavirus vaccination campaigns and relaxed travel requirements in the Western hemisphere.

Regional travel has also been bolstered by Middle Eastern national carriers increasing their scheduled flights to more destinations, leading to domestic bookings up by 17.5 percent, short-haul up by over 38 percent and medium/long-haul rising by 18.3 percent compared to 2019.

But business travel in the Middle East and Africa is returning at a much slower pace.

While short-haul bookings are leading the recovery and rose above 2019 levels for the first time in March, medium/long-haul and domestic bookings remain 16 percent and 43 percent below 2019 levels, respectively, as of April.

By comparison, global business flight bookings exceeded pre-pandemic levels in March while long-haul specifically grew double-digits in April. The return to the office was an important driver, the research noted.

“Despite reasons to be optimistic about the future of business travel, the recovery will continue to lag behind that of leisure travel,” Scott Livermore, chief economist, Oxford Economics Middle East, told AGBI.

“Business travel will eventually regain 2019 levels with domestic business travel leading internationally as virtual meetings are an imperfect substitute for in-person meetings. But some meetings will remain virtual or hybrid.” 

Livermore said he expects travel budgets to remain under pressure in the coming years. “Business events will recover but in-person attendees will likely be lower.”

David Tarsh, a spokesperson for ForwardKeys, a global travel data and analytics company, said: “Throughout the pandemic, we have seen leisure travel recover faster and more strongly than business travel.

“However, as live conferences, exhibitions and other business events are now coming back into the calendar, we expect business travel to pick up.

“We are likely to gain a much better understanding in September, once the summer holiday season is over.”

According to the Mastercard research, since the onset of the pandemic domestic leisure travel has been the itinerary of choice for consumers in the Middle East and Africa, although the recovery has been haphazard. 

“The recovery in travel and tourism is underway and is being driven by domestic travel which have already risen to pre-crisis peaks,” Livermore said.

“This has been a marked shift in the travel and tourism market in the Middle East where domestic accounted for around 55 percent of the market prior to the crisis but rose to nearly 80 percent during the crisis.”

Tourism up for Mena travellers to Europe

For travellers from the Middle East and Africa the UK has been the choice destination in the ongoing recovery, with demand exceeding that for the US, according to the report.

The UK’s “Freedom Day” lifting of restrictions in July 2021 contributed to this trend, while European destinations make up most of the top 10 destinations for travellers from the region.

Livermore predicts that international travel recovery is expected to gather momentum in 2022, as restrictions which were imposed during the Omicron variant surge continue to ease. “We expect across the region international travel will return to pre-crisis levels some time in 2023,” he said.

The report showed that by the end of April global leisure flight bookings surpassed 2019 levels by 25 percent while short- and medium-haul leisure flight bookings were up 25 percent and 27 percent, respectively. 

The report comes less than a month after the UAE’s tourism sector exceeded growth rates recorded not only in 2020 and 2021, but also during the same period in 2019.

According to tourism figures for the first quarter of 2022, the country’s hotel establishments attracted nearly six million visitors who spent 25 million hotel nights in the country, reflecting a growth of 10 percent compared to the same period in 2019.

Additionally, the average duration of hotel guest stays reached 25 percent during the same period, up from three nights to four nights.

The occupancy rate of hotel establishments in the country during this period achieved 80 percent growth, which is one of the highest globally.

Hotel establishments also generated revenue of AED11 billion with a 20 percent growth compared to the same period in 2019 and resumed operations at full capacity of approximately 200,000 hotel rooms.

“Q1 has been promising for the Middle East market, which has recovered by 65 percent as compared to pre-Covid,” Raheesh Babu, COO, Musafir.com, a Sharjah-based internet-based travel agency, said.

“Post COVID there has been an increase in bleisure travel. People are travelling for business and they are extending this with a few days of leisure as well.

“We’ve noticed that five to seven percent of UAE corporate travellers are opting for bleisure travel and see this trend increasing.”

According to the Mastercard data, recent spending levels point to greater comfort with group travel.

Global spending on cruises gained 62 percent from January to the end of April, although remains below 2019 levels. 

Buses are back at pre-pandemic levels, while passenger rail spend remains seven percent below.

Meanwhile, car road trips maintain their appeal, with spending on tolls and auto rentals up nearly 19 percent and 12 percent respectively. 

Among consumers in the Middle East and Africa, spend on passenger railways outperformed the rest of the world since January 2021, and the region has a much higher sustained spend increase over the same period in 2019. 

Within auto-rentals, tourist spend has also been on a gradual recovery, exceeding 2019 levels on a more sustained basis from January.

Experiential spending up

For the better part of a year international tourists spent more on experiences instead of souvenirs when in a destination.

Experiential spending is now 34 percent above 2019 levels with food and beverage outlets, amusement parks, museums and concerts seeing big increases. 

The global trend towards the experience economy has also reached the Middle East and Africa, although half a year later than the global aggregate, the report noted.  

“Like any flight, the travel recovery has faced both headwinds and tailwinds,” Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute, said.

“As the ‘great rebalancing’ takes place around the world, this mobility is critical to a return to pre-pandemic life.

“The resilience of the consumer to return to normal and make up for lost time gives us optimism that the recovery will continue directionally, even if there are bumps along the way.”

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