In this blog post I’ll continue looking into “The New Normal” and this time I’ll concentrate on business travel. An activity that, by the current nature of things, has been strongly affected by the COVID-19 pandemic and the accompanying restrictions across the world. Back in the spring, when the initial shock after the lockdown of the world had settled in, many businesses and their employees were quick to adapt, and we saw that face-to-face activity and in-person events moved to online based platforms.
The question is how business travel will look when the pandemic loosens its grip of the world? How will business travel return if it will return at all? No one can give a definitive answer to those questions right now, but I will provide my perspectives – supported by some research within the area.
A large economy has been hit
Altogether, the travel whole industry, e.g. both the private part (meaning leisure travel) and the business-related part, has been hit hard by the corona pandemic. Here, you can talk about a crisis. In its whole, this economy is huge and business travel, in isolation, is also a very big economy. This economy has a value of more than USD 1.4 trillion per year and where airline operators, hotels, conference providers etc. are hit very hard, many other suppliers to the economy are also affected. It’s also a fact, that profitability with business travelers are typically also better than it is with private travelers.
A McKinsey study shows that business travel historically has been slower to recover from crisis situations compared to its counterpart of private and leisure travel. This was, last time, seen in the wake of the financial crisis in 2008-2009, where private international travel activity had fully recovered in 2 years. For business related international travel, however, it took 4 years to fully recover.
I’m sure that international business travel eventually will return again. Yes, technology that supports virtual meeting formats will claim its share of the cake going forward, we will probably also see a period with increased prices and different supply of e.g. flight tickets and most likely the route networks won’t be as fine meshed for a period of time. It’ll all affect the recovery of international business travel. However, we’ll have to remember that face-to-face contact and the relational upsides through this form of contact does something special. And I believe that one shouldn’t underestimate this.
Recovery in phases
As of now, public authorities across the world and hereafter the adapted travel policies in organizations are dictating how business travel can happen. We all know that restrictions and travel guidance are currently changing by the hour in accordance with the development of the pandemic. Provided that spread of the disease can be kept under control, we’ll get to a point where the international travel infrastructure can be utilized again. This means that business travelers will get their mobility back again.
When this happens, research indicates that the recovery will roll in phases. The length of the trip, the reason for the trip and the sector of the given business will be factors that determines whether recovery will happen sooner or later. Short trips and domestic trips will be the first to return. Face-to-face sales or client meetings will return before conferences, trade shows and exhibitions. Business travel for manufacturing companies and within the construction and engineering industry will return sooner than it will for organizations the healthcare and education sector, as examples.
Those of us who’re providing technology that, amongst others, are used by business travelers and the organizations that they represent, have obviously also felt the consequences of COVID-19. However, I fully believe that the above phasing of the recovery will prove correct – we can already read this in our data. In our solution, that’s designed to handle employee-initiated expenses, we’re back at 70 % of the volume, when we compare the customers’ current usage and spend pattern with the pattern before the corona hit. This is primarily driven by domestic business travel and handling of expenses that aren’t travel related.
The new reality for business travel
As the pandemic hopefully will loosen its grip and the professional travel activity once again will resume, I believe that the approach businesses have towards travel will change dramatically. Company rules and policies around business travel will change. Even though that some businesses, before the corona virus, already worked with special security protocols and processes, we’ll see even more of this in the future – also for the small and medium sized organizations. We’ll simply see much more focus on assessing current conditions for travel destinations from a security perspective. And this isn’t just about assessing risks related to political situation, potential terror acts or natural disasters for a given destination – no, this is also about assessing current healthcare risks for the destination.
Therefore, I also believe that tools that’ll provide overview and control of this, will be more relevant than ever before. This is applicable for all types and sizes of organizations, not just the large corporates, which traditionally have many employees in transit across the globe. That’s why we’ve made a partnership with Safeture, who’re providing a platform for managing employee safety, risk control and crisis management – especially related to business travel. Going forward, businesses will spend more time to collect and monitor travel guidance, security instructions and other information from public authorities related to the destinations whereto employees are dispatched. It’s an important piece of work, but it’s also a piece of time-consuming administrative work. That’s why tools, that’ll both secure the appropriate quality and optimize the process, are needed.
When will we see an end to the pandemic?
Well, that’s another question where a definitive answer obviously can’t be given. But once again, I’ll refer to McKinsey, who, in another great article, gives a few good quality perspectives on that question. In the article, two end scenarios are discussed. The first one is the epidemiologic end, where heard immunity has been achieved, so that uncontrolled spread of the disease isn’t seen anymore. Thereby, restrictions to social and economic life will no longer be needed. The other scenario is a transition to a form of normality state. E.g. it’s a point, where almost all social and economic life has been resumed without the achievement of heard immunity. This state can be reached through the implementation of various tools and mechanisms to control behavior and public health, which obviously will make the world a different place, but at the same time also allow even the hardest affected industries, like the travel and hospitality industry, to recover and operate at higher capacity again. This is what can be characterized as “New Normal”.
It’ll take time to reach “New Normal” and when we can expect it to happen, I’ll leave you wit reading about over at McKinsey. One thing is certain though; for all business leaders, it’s more important than ever before to seek qualified information about the outside world and its development, in order to navigate and adapt the conditions for running a business.