Business Finance

Will Business Travel Make a Comeback?

Apr 02, 2021 • 6 min read
Businesswoman sitting in the airport
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      Travel bans don’t just hurt tourism dollars. They’re bad for business, too.

      In 2018, business travel spending exceeded $1.4 trillion, representing 20% of the travel and hospitality sector. That’s partially because business travelers travel more regularly and partially because they spend more—driving up to 75% of profit for top airlines while accounting for only 10% of passengers. 

      With conferences and other business events canceled or postponed, typical business travelers like executives, consultants, and sales and field teams remain at home. 43% of survey respondents told Oliver Wyman that they planned to travel less for business in the future due to health concerns, access to telecommunication software, and a lower travel budget.

       

      Business Travel Plans Post-Pandemic Graph

      Source: “Anticipating the Travel Recover,” Exhibit 3, Oliver Wyman.

      As hope arrives on the horizon with a vaccine rollout, will business travel bounce back?

      Can Zoom Replace Business Travel?

      With 300 million daily active users on Zoom (and competitors Google Meet at 100 million and Microsoft Teams at 40 million, respectively), employees now conduct most of their meetings over video.

      “People are comfortable using video. For external meetings, it wasn’t so comfortable before,” Susan Lichtenstein, managing partner at DigiTravel Consulting, told Skift. “But now their customers are also not traveling, so people are aware of whether they need to get on a plane for 2 hours if they can service this person remotely. Do they need to do that? The answer’s probably no.”

      One-off meetings flying executives halfway around the world to close a deal are less likely to continue in this “new normal.” On some level, it’s hard to believe that kind of travel happened every single day—especially considering that aviation generates 860 million metric tons of carbon dioxide each year, about 2% of global greenhouse gases. 

      Video calls won’t replace all types of business travel, but widespread adoption of new technologies makes it easier for business owners to evaluate what constitutes “necessary” travel, especially while weighing costs. Now teams must ask themselves, “Could this have been a Zoom meeting?”

      New Business Travel Will Build Sales and Culture

      But there’s really no substitute for in-person interaction. Business travel won’t return all at once but in phases based on industry, sector, and priority within the organization.

      Chart of when business travel will return

      Source: “For Corporate Travel, a Long Recovery Ahead,” Exhibit 2, McKinsey & Company.

      “Travel for sales and client-related meetings is most likely to be among the first to return as domestic travel resumes and more travel is permitted,” writes Andrew Curley for McKinsey. “The timeline for travel for internal in-person meetings to resume is longer, with higher levels of scrutiny on what is considered business-critical and can’t be accommodated with technology.”

      This means that the internal meetings that do happen will be about bringing people together for strategic planning and culture-building rather than for one-off meetings. Large-scale internal travel, such as planning retreats or internal conferences like a sales kickoff or president’s club, represents a new area of what business travel can look like.

      “Those who are offsite by default are always going to want human connection at some point,” Darren Murph, head of remote at GitLab, told Skift. “So what ends up happening is travel becomes a core part of culture building. Business travel should get a lot more dynamic. You’re going to have teams of 10, 15, or 20 people who suddenly need an offsite every quarter or so to build strategy, to bond, or build relationships.”

      Working remotely for long periods can contribute to isolation and burnout. Even if companies continue to foster a distributed workforce, they’ll still need to find ways to come together as a team.

      Virtual Events Are Here to Stay

      Large, public events like trade shows will likely remain digital for the time being, perceived as too risky or too challenging to plan with restrictions changing week-to-week in many states. 76% of event planners told PCMA that they’re planning virtual replacements for previous conferences or meetings for the foreseeable future.

      “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,” Curley writes for McKinsey. “Although conferences and trade shows are critical networking opportunities and difficult to conduct virtually, they are also high-risk, given the number of attendees, which can range from several hundred to more than 100,000.”

      Digital events may not allow for spontaneous networking or a break from the office, but the format provides an engaging, interesting way to learn—which means event planners may choose a hybrid approach. Virtual events can be strategic stepping stones, creating smaller gatherings with out-of-the-box ideas like cooking or yoga classes, roundtable discussions, or community-focused events, rather than large and impersonal trade shows.

      Business Travel Won’t Bounce Back Right Away

      The same kind of pent-up demand across the leisure travel sector won’t necessarily spill over into corporate travel just yet. Bill Gates predicted that 50% of all business travel won’t come back post-COVID-19. 

      In any recession, corporate travel is usually the last area of hospitality to recover. 

      Business-travel recovery graph

      Source: “For Corporate Travel, a Long Recovery Ahead,” Exhibit 4, McKinsey & Company.

      “Travel is always the most obvious thing that CEOs will reach for when there is a profit or revenue problem,” former Thomson-Reuters CEO Tom Glocer told Skift in an interview. “What is different now as opposed to the normal cycle when revenues are down…is that we have seen things work remotely, like job interviews. So it’s apparent there is room to cut.”

      It’s unlikely we’ll ever see the return of pre-pandemic business travel. But the business travel of the future will be intentional and yield a higher return on investment—streamlining operations to focus on the trips that really matter to the bottom line.

      About the author
      Kayla Voigt

      Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.

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