Corporate demand is returning and with it a boost in demand for air travel, according to the GBTA CWT Global Business Travel Forecast 2022. Where there’s demand for flying, there’s demand for car hire, set to increase 3.9% per cent globally in 2022.
As travel picks up, fleet challenges and alternatives to car hire will put ground transportation considerations at the top of the list of priorities for travel buyers. Here are three trends to note when building and budget your program.
Ground transportation is no longer an afterthought
Historically, ground transportation hasn’t been as critical to travel policy planning as air travel and hotel stays. That’s set to change and corporates should consider reviewing the ground transportation aspect of their travel policy. New challenges in supply and demand dynamics in the car rental sector mean that travel managers should explore whether they are physically able to provide business travelers with a vehicle at their location, and whether they need to add a secondary provider to support growing demand, along with encouraging travelers to book early and cancel in a timely manner. Travel policies may need to adjust accordingly to reflect these issues as well as hygiene measures that are expected to continue throughout 2022.
Fleet challenges set to continue
In the early months of the pandemic, car rental services saw demand decline and many rental agencies right-sized their inventory to align with demand. As demand rose, at first driven by revitalized domestic tourism and late by an uptick in regional tourism, car rental services were challenged to boost their fleet. Supply chain shortages that limited vehicle production have made it difficult for rental agencies to increase their fleet sizes which has exacerbated this supply-demand mismatch.
Looking forward, rental fleet sizes are likely to remain constrained. This impact will likely be most pronounced in leisure destinations, first-tier destinations, as well as destinations with poor public transportation alternatives.
Will the engines come off the ‘final mile’?
There is much discussion about how travelers are making the so-called ‘final mile’ from the terminal or station to their meeting location or hotel. California air quality officials last year claimed more than 600,000 ride-hail vehicles emitted about 50% more greenhouse gases per passenger mile than an average car. In addition, travelers have experienced increased prices as driver shortages have reduced availability. Bids to encourage sharing journeys and getting more people into fewer cars have yet to materialize. As a result, there has been an increase in micro-mobility options to accommodate these final mile journeys, such as city bike rentals as seen in Paris and London along with the trialing of e-scooters. Such solutions aren’t currently incorporated into travel policies but the broadening options and encouragement from governments to walk and cycle throughout the pandemic will usher in a shift in how ‘the final mile’ is taken in the future.