Since the start of the pandemic, thousands of people who would usually travel for business have switched the passports and passenger lounges for virtual meetings and video calls. As the worst fears of the lucrative business travel industry are realised, we look at whether it will ever make a full recovery.
Nine months into the pandemic, Brandon Contreras, a partner account executive at a U.S. tech firm, is working from home and joining Zoom meetings instead of jetting around the globe.
Contreras manages his North American accounts from Sacramento, California and doesn’t expect to travel for work again until the middle of next year. Even then, he’s not sure whether he’ll need to.
“Maybe it’s just the acceptance of the new normal. I have all of the resources necessary to be on the calls, all of the communicative devices to make sure I can do my job,” he said. “There’s an element of face-to-face that’s necessary, but I would be okay without it.”
That trend could spell big trouble for hotels, airlines, convention centres and other industries that rely so heavily on business travellers like Contreras.
Work travel represented 21 per cent of the 7.5 trillion euros spent on global travel and tourism in 2019, according to the World Travel and Tourism Council.
“I do think corporate travel is going to come back faster than people suspect. I just don’t know if it will return to what we were used to before,” says Delta Air Lines CEO, Ed Bastian. Right now, Delta’s business travel revenue is down by 85 per cent.
Is there less demand for business travel?
Dubai-based MBC Group, which operates 18 television stations, says it’s unlikely employees will travel as often once the pandemic ends, because they simply don’t need to anymore.
“We have managed to deliver projects and negotiate deals very successfully remotely,” says MBC spokesman Mazen Hayek.
Online shopping giant Amazon has saved nearly 850 million euros in travel expenses so far this year, after telling its 1.1 million employees to stop travelling in March.
At Southwest Airlines, CEO Gary Kelly said while overall passenger revenue is down by 70 per cent, business travel — normally more than one-third of Southwest’s traffic – is down by 90 per cent.
“I think that’s going to continue for a long time. I’m very confident it will recover and pass 2019 levels, I just don’t know when,” Kelly says.
The cutback in travel has been a boom for video-conferencing services. Zoom says it had 370,200 customer businesses with at least 10 employees at the end of July, more than triple the number it had at the end of April.
New trends in business travel
Sam Clarke, an assistant professor in the College of Business at California State University San Marcos, believes that some in-person events will still be critical for business productivity in the future. But he thinks new kinds of business travel could also emerge.
“Lockdowns have taught employees how to adapt to different work environments”, says Clarke, so hotels, airlines and even cruise ships should do more to cater to business travellers. Marriott recently introduced flexible options aimed at business travellers, including one-day stays with an evening check-out.”
Clarke also expects some companies will change the way their employees travel. Instead of letting a few executives travel a lot, he predicts companies could let most employees work from home and fly them all back to their headquarters once a year.
Some businesses are already changing the way their work is done. Cynthia Kay and Co., a media production company based in Grand Rapids, Michigan, previously sent its seven employees around the country to make videos for clients like Siemens.
When travel came to a halt in March, the company invested in proprietary software and sent iPads and other equipment to clients so it could coach them through their own video shoots.
As a result, the company’s sales are down by only 15-20 per cent even though its travel spending has dropped 75 per cent.
Still, Kay and her staff were eager to get back on the road once they felt they could do that safely. Kay began travelling again in October.
“For some people, this is the way they will work going forward,” Kay said. “But you can’t replace the spark that happens when you get people in the same room.”