IN most major coporations travel for work occupies a major facility for the worker of all types. Will business travel ever fully recover? I believe that the answer is no, but with some caveats.
Timothy O’Neil-Dunne
Interaction between teams has long been part of the work life we are used to. So has meeting with customers, suppliers and colleagues. Travel for work is the function that creates a significant part of the economic activity for airlines and other travel vendors. Enter the pandemic. Travel comes to a screeching halt in a very short time. In some parts of the world it has recovered, in many others it has not. Recent prognostications are welcoming back Travel but as we are seeing with the Omicron variant it is uneven, both at the government and the individual level.
There has been a fundamental change in how we deal with work. WFH – Work from Home has become a norm for vast swaths of the workforce. Just about everyone has reduced their frequency of trips to the office and for some there is almost no office. For a smaller number there is the WFA – Work from Anywhere change. Strangely enough it is perverse in that those most able to WFA were the biggest travellers, now they are the most able.
This change has already manifested itself in some major cities such as New York where office vacancy levels are at an all-time high of 20%.
But there has been another major change. We have decided that we can connect virtually without that familiarity of face-to-face. While I personally regret this change, it is an inescapable result that we will do less business travel.
Diving into this topic and the justification for my hypothesis, there is not a lot of research on the topic. Consequently, there needs to be some theorizing which is where the caveats kick in. Let’s consider different categories of travel which will be adversely affected.
- Small Meetings
- Conventions and exhibitions
- Internal meeting trips
- Commuting trips
Each of these will see a drop off. After 9/11 there was a cut back that was pretty severe but that didn’t last very long. Why then and why not now? The answer is driven by two factors:
Factor 1 – The technology is immeasurably better today than it was then.
Factor 2 – learned behaviour changes with more permanence when it occurs over time. IE we have been WFH for nearly 2 years. Some of our colleagues have never spent much time in offices at all.
WFH and WFA are also changing work travel. Less use of the main central office will be powered by those who will expect to pay for their “commutes” (as they do today for near travel). When the individual pays – he chooses cheaper options. The reverse of OPM – Other People’s Money travel.
Travel will be more difficult. The travel itself will appear to carry more risk and will require more planning. It will engender friction which will itself reduce the total volume of travel. Cheaper options and lower budgets will also mean less spent and more hunting for value. IE less trips in the front of the cabin and in 4- and 5-star hospitality in favour of fewer nights away and use of less expensive options which will boost Airbnb et al.
Travel will also come back slower in terms of transportation inventory. The global ASKs (capacity of airlines) will come back slower so that the airlines can both make money and address their labour shortages.
In my view, there is an inevitability that Business Travel must be reduced. Its share of total spend will diminish. Eventually it will come back to the same level as 2019 but as the global share of travel spend, it is my belief that it will never reach the same as that year. When will that “recovery” be in place?
I believe we are looking at 2024/5. That means on pure broad numbers, a five year loss of travel. Global population growth is approx. 1% so that will mean at a minimum loss of market share of at least 5% of business travel that will never return. Personally, I think the loss will be much larger with a global loss of 7.5% for the reasons noted above.
There is however a silver lining for the consumer. Travel vendors will have to compete harder for the consumer’s share of wallet. Will they? Time will tell.
For an interesting read on the future of the geography of work, I commend Professor Raj Choudhury and his co-authors from Harvard Business School. The draft is out for peer review but you can read it here.
* The views expressed in this article are that of the author’s. Timothy O’Neil-Dunne is principal of T2Impact Ltd. He will tell you that he has been a WFA road for more than 2 decades. He can be reached at [email protected].
• Featured image credit: Rawpixel/Getty Images
