Lebogang unpacks what travel looked like in 2022, and what’s in store for 2023.
We recently sat down with Corporate Traveller South Africa supply and distribution director Lebogang Ntoagae, and asked her for a snapshot of business travel in 2022, as well as a look ahead at what’s to come in 2023.
1. What is the sector’s recovery looking like as we approach the end of the year?
Interestingly, South Africa’s trajectory has looked very different to the rest of the world. International predictions have been conservative at best, with industry leaders saying global business travel spend is unlikely to fully recover until at least 2026.
It’s a different story in South Africa. Demand came back a lot quicker than any of us anticipated. According to Corporate Traveller’s latest data, we’re already well ahead of 2019 numbers. And not only that, but cost-per-transaction is also at record highs.
This might be because the South African SME sector had to start travelling as soon as restrictions eased. It makes sense, as business travel would have been essential to their own business’s recovery. Of course, SMEs are also more flexible than large corporates in terms of their travel policies, duty of care policies, and approvals processes – so they were first out of the gates. In addition, the region hasn’t experienced the same level of service level disruption as seen in the Northern Hemisphere’s ‘summer of chaos’. Ultimately, our recovery has been smoother and quicker than anyone expected.
2. What were the biggest talking points of 2022?
Obviously the ‘summer of chaos’ was a big one. Who can forget the images of snaking queues at airports across Europe or Heathrow’s ‘baggage mountain’? It was a huge concern for international travellers.
But unsurprisingly, the war in Ukraine, rising oil prices and skyrocketing inflation have dominated the conversation. It’s had a massive impact, particularly on the aviation sector, with McKinsey reporting that the price of jet fuel has increased by approximately 90 percent since the start of 2022.
3. What does that mean for the price of an air ticket in 2023?
Airfares will continue to fluctuate in response to market dynamics and the fuel price. On a more positive note, more planes (domestic and international) will grace South African skies, and prices should settle as capacity increases.
4. What’s changed in terms of accommodation?
We’re definitely seeing more accommodation options come online, including an increase in serviced, self-catering accommodation. Travellers are more health-conscious post-pandemic, and they’re looking for more flexibility, space, and the option to cook their own meals. It’s becoming a popular option for longer stays.
Notably, guest house content now makes up 50% of the accommodation landscape. Previously guest houses did not form part of the OBT tech. It was always booked manually or through third parties. This has changed and going through tech decreases the number of intermediaries and saves the customer money!
There has also been a reshuffle of management rights and leasing agreements across international and local hotel brands – and we’re seeing a resurgence of South African independent hotel brands.
5. What can you tell us about the latest car rental stats?
Thanks to limited car sales and disruption of the supply chain, the car rental industry started 2022 with half the number of rental cars compared to 2019 – and rental prices soared thanks to supply and demand. But there have been positive signs of recovery, for example, our suppliers reported a 146 percent rise in car rental website visits in May 2022 as compared to May 2020. And new car sales attributed to the car rental industry increased from 15.3 percent in January 2022 (4,596 cars) to 17.4 percent in October 2022 (7,988 cars).
We’ve also noted an increase in the number of days spent renting a car, but as airline capacity increases we expect to see average car rental days come down.
In terms of trends in the car rental space, we’re seeing more speed limit monitoring as car hire companies ensure that their assets are looked after. In addition, monthly leasing is on the rise as companies opt to sign lease agreements with car hire companies rather than purchasing their own cars. In this way they don’t have to maintain the car, worry about depreciation or pay off vehicles.
Overall, things are looking up. The return of international visitors is driving demand for car rentals, and the local car rental market looks to be on the verge of full recovery. However, ‘true normalcy’ (based on the delivery of required vehicles) is not expected to be reached until the third or fourth quarter of 2023.
6. In terms of the biggest trends for 2023, what’s expected to shape business travel programmes?
Corporate Traveller is expecting to see a greater focus on sustainability, DEI, and health and wellbeing. Most – if not all – travel programmes in South Africa are still cost-driven, but this will change. Sustainability is no longer a ‘nice to have’ and DEI credentials are important when it comes to attracting and retaining key talent, so you’ll see these policies reflected in travel programmes.
From a traveller perspective, work-life balance has never been more important. We expect to see a rise in ‘health-centric’ travel policies, in other words, one which supports a happy, well-rested and productive team. Think premium-class bookings for long-haul flights, selecting serviced apartments for longer stays, and negotiating free upgrades and perks (including lounge access) for frequent fliers. Risk management and duty of care will always be important – but 2023 is the year of traveller wellbeing.