In Y 2018, business-travel spending exceeded $1.4-T, that is 21.4% of the global travel and hospitality sector.
More than 50% of business travel is concentrated in 2 economies, the US and China. Business travel encompasses transient travel and travel for meetings, incentives, conferences, and events from large-group offsite gatherings to industry-wide exhibitions.
Corporate travel is significant for airlines and hotels not only in traffic but in profitability. While some travel providers have limited exposure to business travel; ultra-low-cost carriers, for example, it is a Key driver of profitability for many major carriers.
Because corporate travelers are more willing to purchase higher class or refundable fares, they can drive between 55 and 75% of profit for Top airlines but account for as few as 10% of passengers.
Similarly, some convention-focused hotels depend almost entirely on corporate travelers for their occupancy, while other resorts in vacation destinations are likely to be unaffected by reduced corporate demand.
Historically, business travel has been more volatile and slower to recover than leisure travel after economic downturns and other disruptions to travel patterns.
During the Y 2008–09 Great Recession, international business travel from the United States declined more than 8%, compared with a decline of just 2% for international leisure travel from the United States. And although international leisure travel fully recovered in 2 yrs, international business travel did not fully rebound to pre-recession levels for 5 yrs.
Given the volatility of business-travel patterns on Top of significant modern technological and connectivity advancements, the economic disruption from the C-19 chaos will have critical implications for the rebound of business travel and indicates a long road ahead for the sector.
Once companies and their employees are prepared to return to the use of airports and hotels, research indicates that they will do so in phases.
Global travel managers and directors say that they are closely monitoring local indicators of public health and government regulations, vendors’ health and safety policies, and employees’ willingness to travel.
All 3 areas can help inform decisions on easing travel-policy restrictions. Several managers indicated a need to institute 1-3 months of buffer time on top of any government guidance to ensure safety.
Travel planners also identified the segments of business travel that are likely to return 1st, as determined by the length and purpose of a trip and the sector in which travelers work, even those travel segments likely to return 1st are on a slow, long timeline for recovery, subject to geographical considerations such as stabilization of C-19 outbreaks and governments’ readiness to open up travel.
Looking 1st at the distance of business travel, regional and domestic trips will likely see a return before international travel does.
According to a Global Business Travel Association survey of its member organizations, companies are 2X as likely to have halted international travel as have halted domestic travel as of July 2020. Within domestic travel, trips that can happen in personal or rental vehicles may replace short regional flights until companies’ comfort with sending employees via airplanes increases.
Travel managers with operations in Asia–Pacific say they have begun to see an uptick in domestic travel in countries where outbreaks have stabilized but that it is not near a full return to scale in any region.
International travel will take longer to rebound because of the complexity of government regulations, mandatory quarantines, and the high risk of fast-changing policies.
In Asia, to help facilitate economic development, some governments such as Malaysia and Singapore are exploring the creation of business-travel corridors under strict protocols that allow exceptions to quarantine measures.
Examining next the purpose for travel, other than for mission-critical use cases, travel for sales and client-related meetings is most likely to be among the 1st to return as domestic travel resumes and more travel is permitted, according to the managers.
Sales-focused organizations expressed an urgency to return to face-to-face meetings, with the understanding that doing so will require both parties to be comfortable with the travel required.
Whether client offices will reopen to workers and allow guests will be a major indicator of the likelihood of that type of travel returning.
Other managers expressed a need to keep up with their competitors, once peers begin traveling for sales meetings or pitches, companies will face increased pressure to return to travel to win business among Key customers.
The time frame for travel for internal in-person meetings to resume is longer, with higher levels of scrutiny on what is considered business critical and cannot be accommodated with technology.
Travel to interact with physical assets will take priority. But economic constraints across industries, especially those hit hardest by the virus chaos economic disruption, will decimate internal travel as budgets get disproportionately cut.
Travel for internal needs and other off-site gatherings may not return until well into Y 2021 or later. And some travel for internal purposes will be permanently replaced by virtual meetings and online collaboration.
Business travel for major industry events will most likely be the last to return, as it requires a higher degree of confidence in public safety.
Conferences and trade shows are Key networking opportunities and difficult to conduct virtually, they are also high-risk, given the number of attendees. When surveyed about what measures will most boost confidence in business-travel bookings for major internal events, US travel planners ranked the availability of a C-19 vaccine highest, above stable-public-health indicators and lifted government restrictions.
Once events do resume, they may look different.
Sales-oriented conferences and trade-show exhibitions may be the 1st to return to in-person formats. But many events will offer virtual, hybrid, or multilocal models with abbreviated in-person schedules, and they will move from destination cities to regional industry hubs.
As the business-travel sector recovers, its providers must modify operations and policies to accommodate new customer needs. They should overinvest to ensure 100% compliance with health and safety measures and seek global accreditations.
Proper execution will make or break customer confidence at a time when traveler reluctance is high.
Hotels and airlines must innovate the customer experience specifically for the business traveler. Airlines should evaluate loyalty-program benefits. Hotels can reevaluate amenity offerings by partnering with digital players in the food-service and fitness spaces.
Business-travel planners should shift their commercial models to accommodate disruption. With limited resources and a slow recovery, travel companies must ensure lean, efficient models in the near term without sacrificing long-term capabilities.
They must identify opportunities for cross-industry collaboration to minimize losses through resource sharing, when permitted by regulators. local sales cycles are long, from 6 to 18 months or longer.
Hotel chains and event spaces will need to maintain frontline sellers to stimulate long-term demand but may need to centralize or share resources across properties and adjust incentives and targets.
Many industry participants have announced organizational restructuring, which may prompt a resegmentation or reallocation of resources against changing priorities.
“I personally think that the travel industry will need ensuing subsidies, not one but several, by the U.S Government to survive. This will include both hotels and airlines for I believe that the travel industry has been permanently damaged at least in the short and interim term. Alternative substitutes, such as zoom and videoing conferencing, have been employed but we all know nothing can replaced a face-to-face meeting or hands-on interface and inter-play necessary for effective management. “
However, my real concern is that Congress, particularly the House, has not only pork-barreled the current attempt to help the transportation industry but have also used the excuse that Transportation is the single biggest source of carbon emissions. As they continue to contaminate their efforts under the disguise for environment reform, a non-acceptable stalemate, aggregated by the fact that we are in a highly partisan Election Year, has now developed between the over-spending House and the more realistic Senate.“
To me, the only current solution to help this critical and major employment Industry and to circumvent Party differences will be only by a Presidential Executive Order for this US lead and dominated industry is at a critical condition for its mere survival.“
Personally I believe that our President will do this, not for personal reasons as the media has implied, in order to cause the return to viability of a much needed industry, which by itself, might take longer to revived than most people believe,” says recognized transportation expert Bruce WD Barren.
Have a healthy weekend, Keep the Faith!