Corporate travel has been hard hit by the pandemic, with huge commercial implications for airlines, as well as event organizers, trade shows and the hospitality sector. What does the future hold for business travel?
The business travel sector had never looked so rosy at the end of 2019.
The Global Business Travel Association estimated work travel spending was rude with health, with a spend of US$ 1.4 trillion capping out its best year ever. There were more than 400 million business trips in the United States alone.
The focus at the start of 2020 was continuing to develop an ever more personalized service and the business-leisure (bleisure) trend, adding vacation time to business trips, was gaining more traction, particularly among the younger business cohort.
In 2019, a car rental company reported that as many as 90% of millennial business travelers were now adding leisure components to their trips.
There was no reason to think the industry wouldn’t power on. But COVID-19 wasn’t in anyone’s reckoning.
Red numbers flowed from the International Air Transport Association (IATA). The most recent data shows air travel, measured in revenue passenger kilometers, has declined 67.2% in March 2021, compared to March 2019.
That data includes domestic travel – which has all but returned to pre-COVID levels in places such as China and Russia – but when international travel is isolated, the devastation that the pandemic has wreaked is laid bare – a fall of 87.8%.
Passenger traffic between countries is down 94.8% among Asia Pacific airlines compared with March 2019, while European carriers are faring little better with an 88.3% decline.
The loss of spending on business airfares, hotels, restaurants, and entertainment amounts to more than $2 trillion globally in 2020. Business travelers are just 12% of airline passengers, but they account for as much as 75% of profits.
But while airlines are keen to get moving again, confidence from employees and employers to step on a plane may be slower to follow. Can business continue to be done without face-to-face meetings?
International travel is starting to inch forward as vaccines are rolled out. The US has formed working groups with Canada, Mexico, the European Union, and the United Kingdom to restart travel, while authorities have eased travel recommendations for more than 110 countries.
The EU itself is establishing vaccine passports for travel within the bloc, while the UK has a green list of quarantine-free travel destinations, and Australia, Singapore and South Korea are establishing travel bubbles.
Travel options becoming available is the first step but there remains a reluctance by employers to allow business flights, as well as among individuals to board a plane.
This hesitancy was evident in Jordan, which shut down international travel for few months in 2020 except by special exemption to return citizens to their countries. Jordan has clearly suffered from the pandemic, with about 772,000 cases among the 10 million population, and 10,000 deaths.
Sharhabeel Mansour, Partner with Baker Tilly in Jordan, says Jordan’s strategy has not worked well to keep the virus under control and the appetite for the risks associated with travel has returned as people are not able to handle the lockdown and restrictions.
Many businesses have survived without travel, with millions of people taking up video conferencing platforms such as Zoom and Microsoft Teams to stay in touch with clients and get deals done.
While acknowledging that businesses did what needed to be done, relying solely on remote meetings and digital collaboration won’t last. Clients continue to want physical interactions and not many are able to continue communicating digitally alone. The Baker Tilly in Jordan teams and our clients, whatever industry they are in, are mostly working from home and from a Jordanian and cultural perspective, this doesn’t work too well. You lose a lot of that human touch and communication. “We started to notice many of our clients in Jordan and regionally are starting to move back to physical meetings.” Sharhabeel Mansour, Partner in Baker Tilly Jordan said.
COVID-19 is not going away, and people must find a way to regain that human touch, where they can lead teams, and where clients can go meet. Business people are finding that human touch cannot be replaced with digital platforms for the longer time as it is difficult to build long lasting relationships without being there in person.
The pandemic has delivered a realization that not all the travel being done was necessary but that does not mean it will all dry up. There have been some things that we thought we had to travel for, and meet somebody face to face, but we have been able to achieve results without being there in person
The conference and events industry did its best to push through in the absence of travel, investing in platforms for virtual gatherings to bring experts and networks together.
While associated industries such as hotels and airlines were unable to benefit – corporate travel accounts for about 70 percent of revenue for major hotel chains – the virtual conference thrived, with some online conference companies seeing growth of up to 1,000%.
Among participants, people were able to attend more events than prior to the pandemic, increasing the reach of organizers, and virtual events have gathered overwhelming support, meaning they are likely to continue for the foreseeable future.
Many of the training firms moved client workshops and strategy sessions online over the last 12 months, but those firms are starting to recognize that the human element now missing was perhaps the most important component of the event. No matter whether you are using breakout rooms, online whiteboards, there’s so many applications and tools, but it is just not the same. People have got to come back together. Whether we are networking so that people can form new business relationships or whether they are trying to service our clients and give them value for what they are paying, it’s got to come back.