Ajay, a senior sales executive at a top software firm in Bengaluru, made eight trips to Delhi and Kolkata in 2022 to meet clients. In comparison, he’d made just three work trips during all of 2020 and 2021.
Meeting clients at their offices, Ajay says, has helped him build trust and credibility and close deals faster than before when he was talking to clients over the phone during the pandemic.
As employers realise that virtual meetings cannot match the effectiveness of face-to-face meetings, they are increasingly sending their employees to company headquarters, to meet senior management, or to other cities for meetings with clients and customers, thus leading to a rise in corporate travel in 2022. The meetings, incentives, conferences, exhibitions (MICE) segment too has contributed to this.
After two years of subdued sentiments and restricted movement due to the pandemic, corporate travel made a strong comeback in 2022 in India, and online travel agents and booking platforms are reaping rich benefits.
MakeMyTrip said it saw a rise in corporate bookings in 2022 compared with pre-pandemic levels. Lightspeed Ventures-backed rental platform recorded an 83% growth in the number of business bookings between April and November in 2022 over the same period the previous year.
Pandemic effect
The travel and tourism sector was one of the worst-affected industries during the pandemic.
Total domestic air passengers in 2020-21 declined by 61.7% to 105 million, compared with the previous year. Tourist arrivals in the country were down 93% during the first wave of COVID-19, 79% in the second wave, and 64% during the third, according to union ministry data. Over 21 million people in the travel and tourism sector lost their jobs in 2020 and the early months of 2021.
Fortunes, however, turned around by mid-2021, when domestic travel returned in full force.
Airlines, railways, and hotels witnessed an influx of passengers as ‘revenge travel’ became the norm. By the third quarter of the fiscal year 2022, the travel industry saw revenue go up to 60% of the pre-pandemic level, on the back of pent-up demand, according to data from Crisil. Air traffic reached the 2019 level, led by a surge in domestic travel.
Corporate travel too witnessed a gush, with remote working proving to be inadequate, and sometimes ineffective, especially for client-facing roles.
After all, revenge travel does not have to be for leisure alone, clarifies Manav Thadani, Co-founder of hospitality consultancy firm Hotelivate. According to him, most high-end hotels were running at full capacity throughout 2022 and airlines were also overbooked.
Ankit Maheshwari, Chief Technology Officer and President of India Operations, Innovaccer, says he encourages in-person meetings to strengthen cross-collaboration and communication across geographies.
Gains for online and offline travel firms
The year 2022 has been good for both online travel platforms and offline agents.
Like we stated earlier, ‘s business-to-business platform MyBiz doubled its corporate bookings in the last year, growing more than three times compared to the pre-pandemic period (FY2019). Today, MyBiz has over 40,000 clients in just four years of operations.
“Over the last four years, we have expanded both revenue and number of clients. The year 2022 has seen a boost in the business more than any other year,” says Raj Rishi Singh, Chief Business Officer, MakeMyTrip.
Co-founder and group CEO Rajesh Magow, earlier this year, said that the business travel segment progressed from being a negligible contributor to nearly 10% of its GMV in 2022.
Flipkart-owned Cleartrip too witnessed a spike in corporate bookings since its revamp in January 2022, accounting for close to 20% of overall bookings, says Chief Business Officer Prahlad Krishnamurthi.
Rikant Pittie, Co-founder, , a business-to-business travel service provider, says “There continues to be a strong demand for corporate travel from small and medium enterprises in India due to an increase in meetings, conferences and exhibitions.”
The corporate booking segment at EaseMyTrip has grown five times during the first six months of FY23 compared with the same period in the previous fiscal.
Saurabh Juneja, business head at travel management company Paxes, says both online and offline travel agents have been reporting that they have Paxes works closely with both offline and online travel agents and provides technical expertise and travel management tools.
Rising travel budgets
With a rise in the number of work trips after the second wave, corporates have had to stretch their travel budgets. Travel expenses have also expanded due to the rise in hotel tariffs and airfare, on the back of high fuel costs and inflation.
According to Saurabh, corporate firms have expanded their travel budgets by at least 10-20% in the last three years and the average money spent per trip has increased by close to 50%. Ankit of Innovaccer corroborates this, saying overall travel expenses at his company have seen an increase of around 20%.
Tier I cities like Delhi, Mumbai, and Bengaluru remain the top destinations for business travellers while Tier II and II markets are seeing increased corporate travel bookings.
Uncertain future
While online travel agents and platforms have managed to revive their businesses post-pandemic, there are challenges ahead—an impending recession, growing inflation, geo-political climate, and macroeconomic conditions.
Apart from the insignificance of the segment to the overall businesses of OTAs, larger global economic conditions will also play a role in determining the momentum.
The segment generates a very small portion of the overall revenue of travel companies but is likely to increase now as work travel becomes the norm.
The business travel segment contributes to less than 10-15% of total revenue of most OTAs (except EaseMyTrip whose revenue split is unknown).
Looming global recession, newer variants of the coronavirus, rising inflation, and geopolitical tensions are expected to impact corporate travel in the coming months, according to Hotelivate’s Manav.
As travel is one of the discretionary expenses in a business, it usually takes a severe hit in the event of budgetary cuts due to a cash crunch.
However, India could be slightly more resilient to the tough macroeconomic factors than other countries, according to Manav. He notes that the country’s large consumer base can help maintain the momentum with domestic travel while international travel will gradually decline. Rikant too thinks international travel could experience a bigger setback than domestic travel.
Paxes’s Saurabh, who interacts frequently with corporates, says several companies have begun imposing restrictions on international travel, but he expects domestic corporate travel to grow steadily.
While the extent to which corporate travel will be impacted in future is unclear, the revival of the segment has certainly instilled hope in the Indian travel and tourism industry.
