Although FCM report highlights 26% increase in business travel, pricing remains a problem

3 min read

Business travel is slowly returning to pre-pandemic levels, according to Bonnie Smith, FCTG Corporate General Manager, who shares the key findings of the FCM Consulting Global Q4 Trend Report.

“The recovery period after Covid was challenging for travellers, but air travel has seen improvements thanks, in part, to more staff being employed at airports and improved boarding processes. The biggest issue is that travellers are no longer travel fit and need reminders about what they can carry on board, for example,” she says.

Globally, there has been an 18% year-on-year increase in airline seat capacity, and specifically in the South African market, there has been a 26% surge in international business travel. “This is a positive sign for the travel industry and suggests that companies are eager to return to face-to-face interactions with their clients,” says Smith. However, in South Africa, the business demand has decreased by 30%, largely due to the high pricing of seats in the domestic market, she says.

While travellers are still price conscious, they don’t have much choice at the moment, and travel costs are expected to remain high for the next six months, she continues.

“When it comes to our corporate clients, price will always be a factor. That’s just the way it is. But the good news is that when you partner with a business travel management supplier company like FCM, you gain access to our global buying power because we can negotiate better fees for our customers,” says Smith.

There have been some very positive developments in the recovery of the travel industry in South Africa, says Smith. “Hotel occupancy rates have improved, with Southern Africa reaching a rate of 92%. Additionally, hotels are selling more room nights,” she says. Furthermore, the MICE industry is returning to non-virtual models.

Car hire has been the most challenged sector, says Smith. “Getting the type of rental car you want isn’t easy, especially if you want an automatic or a specific size vehicle. And availability can be a challenge if you’re in a smaller rural town. We have a lot of customers who travel to mining towns or are road warriors, wanting to rent cars for long periods. But getting a three-month rental has been tough for car companies to support,” she says, stating that FCM is actively engaging with suppliers to help resolve some of the issues.

In terms of destinations for business travellers, London and Dubai remain popular international destinations, while Mali ranks third. Regional business travel for South Africans is strong with Gaborone, Maun and Harare taking the lead. Johannesburg emerged as the winner for domestic travel.

Sustainable business travel has already become a global talking point, and it’s encouraging to see that South Africa is also starting to prioritise this issue, says Smith. She has noted increased demand from clients asking for real-time reporting to give their businesses visibility to inform their travel policies.

“Thanks to reporting like those we offer our customers with our FCM platform, our clients can literally see their carbon emissions associated with travel and then take action based on that information. It’s all about empowering individuals to make a difference,” says Smith.

She notes that more emphasis on the traveller’s well-being is also a key takeaway from the report.

Finally, airline prices in South Africa are unlikely to return to the low prices we saw before 2019, says Smith, which is why procurement managers or anyone running a travel programme should be focussing on having access to data about their travel costs in their business in real-time. “When you have travel reporting, you can see where your leakage is and take steps to redefine your travel programme to cut costs,” she says.