Corporate Travel Will Look a Lot Different in a Post-Pandemic World
While offices are slowly opening back up across the country, corporate travel is going to be hard-pressed to rebound to its pre-pandemic levels anytime soon.
A new survey from Deloitte finds that business travel is set to accelerate in the second half of 2021, but is unlikely to make a full recovery in the next year. In fact, nearly half of the companies that responded said they don’t expect their corporate travel numbers to reach 2019 levels by the end of 2022.
That could be stalled even further with the spread of the Delta variant, say Deloitte officials. (The survey was conducted prior to Delta’s explosion across the country and the CDC’s about-face in mask recommendations for vaccinated individuals.)
“The effects of the pandemic will continue to have an impact on corporate travel’s return,” said Anthony Jackson, principal, Deloitte transactions & business analytics LLP and U.S. airlines leader. “The return to in-office work is seen as a primary conduit for corporate travel, however we are already seeing major companies push that back again due to worries regarding the variants. That said, rising concerns around the Delta variant and others may further slow the recovery.”
Whenever business travel does begin to pick up, expect domestic flights to make up the majority of those initial trips, as immigration policies around the world continue to restrict border crossings and require quarantine periods. In fact, the return to normalcy with international corporate travel could take significantly longer than a domestic revival.
“Even when policies enable better ease of movement, the unpredictable and uneven nature of the pandemic across countries and regions will depress international corporate travel demand,” said Deloitte.
Of course, many companies are pumping the brakes on return to office initiatives these days, as employees worry about the transmissibility of COVID-19’s Delta variant and the efficacy of vaccines against it. Google and Apple have pushed back their returns until at least October – and a growing number of businesses, including Facebook, Disney, Morgan Stanley, Uber, and Lyft, are mandating that employees get vaccinated.
Based on its survey and executive interviews, Deloitte projects we’ll see a gradual increase in business travel, growing from 10-15% of the 2019 spend in the second quarter to 25-35% in the fourth quarter. By the end of 2022, the company says, U.S. corporate travel will reach 65-80% of 2019 levels, which is four times the amount expected to be spent this summer.
Getting all the way to pre-pandemic levels is going to take even longer. Seven in 10 companies plan to reduce travel – and nearly half say they plan to more strictly enforce travel policies to save money. Visits to prospects and clients will lead the comeback. However, while there’s no substitute for face time with clients, businesses are shifting their thinking for things like internal meetings, leaning more heavily into video conferencing, given the success of that platform over the past 18 months.
A growing number, meanwhile, are also focusing on sustainability and their company’s carbon footprint. Over 400 companies signed a pledge at the 2021 Davos World Economic Forum to decarbonize by 2050. And optimizing business travel is one way to decrease their environmental impact.
“The changes adopted and lessons learned during the pandemic, combined with progress toward sustainability commitments, are creating a new normal for corporate travel,” says Jackson. “While companies recognize that travel is crucial to their success, they will continue to hold onto some of the cost savings brought by the pandemic pause. The adoption of tech platforms for meeting and collaboration will mitigate the need for certain trips, and we expect that these services will continue to evolve to better meet some of the needs that travel used to fill. Having said that, external relationship building can clearly not be replaced by technology.”
Still, corporate road warriors should expect to be grounded more often in the coming years and embrace a more hybrid format of meeting with coworkers and clients – especially as the Delta variant runs unchecked. The shift back to what we once thought of as normal is underway, but it’s going to be a long journey before we get there.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.