Business travel risk surges as 68% of companies cancel trips amid Middle East strikes, inflation

Muhammad Asghar | GlobalBeat

London. Business travel confidence collapsed in the first quarter as 68 percent of multinational firms cancelled or restricted trips because of rising geopolitical violence and runaway costs, the Global Business Travel Association reported Tuesday.

The 68 percent cancellation rate marks the worst quarter for corporate travel since the COVID-19 shutdowns of 2020, according to GBTA’s survey of 635 travel managers across 37 countries between January 15 and March 30.

Airfares jumped 22 percent year-over-year while hotel rates climbed 18 percent, the association said. The spike coincided with Houthi missile attacks on Red Sea shipping lanes, Israeli strikes on Iranian targets, and renewed Russian bombardment of Ukrainian energy infrastructure.

“We’re seeing a perfect storm,” GBTA chief executive Suzanne Neufang told reporters in London. “Security concerns that kept people home during the pandemic have returned, but now they’re layered on top of cost inflation that makes every trip a board-level decision.”

The transportation sector absorbed the hardest hit. Maritime insurers raised war-risk premiums for vessels transiting the Red Sea by 400 percent after the Houthis sank the Rubymar cargo ship in February, according to London-based P&I Club records reviewed by GlobalBeat. Airlines rerouted Asia-Europe flights around the Arabian Peninsula, adding 2.3 hours and $12,000 in fuel costs per wide-body jet, the International Air Transport Association calculated.

“Our Bangkok-Frankfurt rotation now costs $47,000 more in fuel alone,” Lufthansa cargo chief Ashwin Bhat said during a Frankfurt briefing last week. “Customers either pay or postpone.”

Postponement became the dominant choice. European executives slashed non-essential travel budgets by 41 percent in March compared with December levels, according to corporate expense data compiled by Sweden’s CWT travel management firm. Technology companies led the retreat, with Microsoft, SAP and Spotify each confirming internal policies restricting staff movement to “business-critical” trips only.

The restrictions ripple through service economies. Hotel occupancy in Dubai dropped to 62 percent in March from 84 percent a year earlier, STR hospitality data showed. Singapore’s Changi Airport processed 4.2 million fewer transit passengers during the quarter, the city-state’s transport ministry announced April 10.

“Every cancelled meeting destroys downstream revenue,” said Devina Chatterjee, who manages corporate accounts for the Oberoi hotel group in Mumbai. “A single scrapped pharmaceutical conference cost us 2,400 room nights. That’s $480,000 gone.”

Energy sector travel proved the exception. Oil company executives increased travel budgets by 15 percent as they scrambled to replace Red Sea shipping with costlier rail routes through Russia and China, according to energy consultancy Wood Mackenzie. Shell chief financial officer Sinead Gorman told investors April 3 that “face-to-face negotiations in Astana and Baku became unavoidable” after traditional maritime routes grew unreliable.

Government travel also rose. U.S. Treasury officials conducted 28 overseas missions in March aimed at tightening sanctions enforcement on Iranian oil exports, department travel records show. British trade envoys logged 19,000 more air miles than the quarterly average as they courted alternative suppliers for critical minerals, the Foreign Office confirmed.

Small businesses lacked such flexibility. London-based architectural firm Havelock Studio cancelled a Shenzhen factory visit scheduled for April after quotes for business-class tickets hit $4,800 per person, quadruple the 2023 fare. “We design buildings remotely now,” partner Maria Havelock said. “The client accepts delays because every supplier faces the same constraints.”

Background

Corporate travel spending reached $1.4 trillion globally in 2023 as pandemic restrictions lifted, according to GBTA data. The recovery proved short-lived. Russia’s February 2022 invasion of Ukraine triggered the first wave of cancellations as insurers declared Ukrainian and Russian airspace off-limits. The Israel-Hamas war that began October 2023 prompted a second retreat, particularly affecting travel to the Middle East.

Cost inflation compounded security worries. Jet fuel prices rose 38 percent between January 2024 and March 2025, IATA figures show. Pilot shortages in the United States and Europe drove wage bills up 19 percent at major carriers, costs passed directly to corporate clients through fuel surcharges and fare increases. Hotel construction lagged demand recovery, with Middle East room supply growing only 2 percent while visitor numbers rose 12 percent, STR data indicated.

What’s Next

GBTA forecasts a 25 percent drop in global business travel spending during the second quarter if current security and pricing conditions persist. The association will release updated guidance May 15 after reviewing April booking data. Major airlines including Emirates, Qatar Airways and Lufthansa plan to announce summer schedules by April 30, decisions that hinge on whether Red Sea shipping lanes reopen and fuel prices stabilize below $100 per barrel.

Corporate travel managers now measure trip value against concrete revenue targets rather than relationship-building goals, a shift that could permanently shrink the sector even if security improves. “The era of flying to Bangkok for a two-hour meeting is over,” CWT senior vice-president Michel Rousseau said. “Executives need ROI calculations that justify the risk and the fare.”