BUSINESS TRAVEL MISSES OUT ON THE RECOVERY
Corporate chiefs see benefits of video meetings, money saved
In much of the economy, the big question is when it will be safe to go back to pre-pandemic patterns of spending. For business travel, it’s more like: Who will want to?
Corporate chiefs have noted the effectiveness of videoconferencing tools and the money they saved. Many have also pledged to reduce carbon emissions. The upshot may be bad news for anyone looking forward to resuming a road-warrior lifestyle.
The Global Business Travel Association estimates that worldwide spending on commercial travel won’t recover to its pre-pandemic peak of $1.4 trillion until 2025. In the U.S., the latest Census Bureau survey of small businesses found that only 27 percent of companies expect to spend money on travel in the next six months.
“The outcomes of meetings held on Zoom vs those held in person are not that much different, but the costs are night-and-day different,” Richard Curtin, director of the University of Michigan Survey of Consumers, said in an interview. “It will be hard to justify the costs that were once supported.”
Most business travelers said they believe they can maintain existing commercial relationships — and develop new ones — via
teleconferencing, according to a study by management consulting firm Oliver Wyman. Business travel bounced back after the Sept. 11 attacks and the 2008 financial crisis, which both led to predictions of a long-term reversal.
But the GBTA estimates that the pandemic’s impact on the industry has been about 10 times as severe as either of those episodes. And this time, companies may have found better substitutes — a theme that surfaced on recent earnings calls. “We were able to save about $1 billion in transportation cost,” Brian Olsavsky, Amazon.com’s chief financial officer, said on Feb. 2. “Our sales teams found new ways to reach customers.”
In 2019, Amazon ranked second after Deloitte among the 100 biggest corporate travel programs measured by U.S.-booked flights, according to Business Travel News. Quasi-public entities such as the World Bank and International Monetary Fund also made the list, and the Church of Jesus Christ of Latter-day Saints ranked No. 44.
The wider travel industry is expecting a lift in the short term from pent-up demand for leisure trips, as the rollout of vaccines makes would-be vacationers feel more comfortable. It’s “our expectation that business travel will lag consumer travel,” said Jeff Campbell, CFO of American Express Co., on an earnings call.
As with other pandemic business trends, like the shift from offices to remote work, there’s also a school of thought that says changes in travel habits will prove temporary.
The debates may not be resolved until the health emergency is over. Even if the return to business travel is slow, companies won’t abandon methods that have worked, said Stephen Berman, chief executive of toy-maker Jakks Pacific, on an earnings call. “Once you’ve got a salesperson win a client with the personal visit, versus someone who just tried to win a client on Zoom, they’re going to have plenty of folks traveling.”