What Does the Future Hold for Business Travel?
The skies are getting friendlier once again.
Americans, en masse, are traveling once again, thanks to widespread vaccine availability and the easing of COVID-19 restrictions. So far, though, the majority of travel has been leisure, not business.
The ease and convenience of teleconferencing (not to mention the tremendous savings of a Zoom call vs. a real-world trip) have slowed the return of corporate road warriors. And it could be a while before things get back to normal.
"Global business travel is unlikely to make a full recovery before 2024," says Martin Hallmark, senior vice president at Moody's Investors Service. "Around 20%-25% of business travel involves meeting people from within a company's own organization - these trips are most at risk of being replaced."
The Global Business Travel Association (GBTA) is even more pessimistic, saying it doesn’t expect full recovery until 2025. Business travel fell 60% in North America last year and 79% from April 1 through the end of the year. And the impact on the travel industry can’t be ignored. The GBTA estimates losses will be 10 times larger than the impact of 9/11 or the 2008 recession.
There is some good news, though.
Business travel spending is expected to increase 21% this year. And an SAP Concur study found that 96% of global business travelers are once again willing to travel for business. There are some conditions, though.
“After a year of being grounded by events beyond their control, employees are ready to return to business travel, but on their own terms,” said SAP. “The actions that companies take in the next 12 months could make or break their ability to acquire and retain valuable employees amid a competitive market for talent.”
Specifically, business travelers want flexibility. They want to choose their own travel dates and accommodations. And they want that even more than vaccine-related assurances about colleagues and people they’re meeting. Many also plan to add personal vacation time to their trips.
Being willing to fly and actually doing it are two different things, of course. In a survey of over 1,000 U.S. consumers, Adobe Analytics found that only 11% plan to travel for work in the next 6 months and 29% still don’t feel safe traveling at all.
Airlines, however, remain optimistic that business travel will show significant recoveries, and they think it will happen before the analysts expect.
“I've been fond of saying the first time someone loses a sale to a competitor who showed up in person is the last time they tried to make a sales call on Zoom,” United CEO Scott Kirby said during the company’s third-quarter earnings call.
Even Kirby, though, concedes that it’s going to be a few years before business travel “comes back in earnest.”
A big catalyst for that return could be the resumption of major conventions, something that’s already underway. As many as 30,000 streamed into Las Vegas in early June for World of Concrete 2021, the first large-scale convention to return to the city. While that was 50% below the usual number of attendees, it was a hurdle cleared, and business travel managers are carefully watching news about the after-effects of that show. And the National Association of Broadcasters is expected to bring over 100,000 to the city in October.
FOMO could be another factor. Companies are likely to closely watch competitors, and won’t want to be the last one making in-person sales calls. Some companies, like JPMorgan, are encouraging their employees to get back on the road.
"There are a bunch of clients who gave business to somebody else because the bankers from the other guys visited and ours didn’t,” said Jamie Dimon, CEO of JPMorgan at the Wall Street Journal’s CEO Council in May. “OK, well, that’s a lesson.”
There’s big money at stake for both businesses and the travel and hospitality industries. Business travelers spent $334.2 billion in 2019 on hotels, transportation, restaurants, retail and recreation, says the U.S. Travel Association. This year, even with the recent travel surge, that number is only expected to hit $125.1 billion.
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