Pandemic set to change shape of business travel forever

Industry bracing itself for lasting decline of up to 25 per cent

A sign in Charles de Gaulle airport near Paris indicates the way to a sanitary control point for passengers arriving from countries listed as red zones. Photograph: Ian Langsdon/EPA

A sign in Charles de Gaulle airport near Paris indicates the way to a sanitary control point for passengers arriving from countries listed as red zones. Photograph: Ian Langsdon/EPA

 

Scrambling out of bed to catch a red-eye flight is one of the less appealing aspects of business travel and, if industry watchers are correct, there may be a lot less of it post-pandemic. Business-related travel has fallen by more than 50 per cent in the last year and while there are signs of a rebound in some markets, notably Asia and the United States, it is expected to be five years before levels once again approach the $1.4 trillion global business travel peak of 2019.

Before the pandemic, business travel had grown annually for a decade. Now, the industry is bracing itself for a lasting decline of between 10 and 25 per cent, mainly because executives are expected to travel less in the future. People have become used to video conferencing. They have also discovered they don’t need to be physically present for every meeting and they have grown to appreciate that time spent on travel can be better used elsewhere.

And, at a corporate level, the bean counters are happy with the often substantial savings being made on travel budgets. That alone is likely to change the definition of what constitutes an “essential” business trip forever. Add in the commitment by more and more organisations to a net-zero-emissions policy and the business travel market looks set for a bumpy recovery.

Spending by “road warriors” accounts for about a fifth of revenues within the overall global travel and hospitality sectors but it is lucrative business. Consulting firm McKinsey estimates that up to 75 per cent of profits for some major carriers and large city hotels are dependent on corporate users.

Leisure travel tends to recover much more quickly after a crisis than business travel. Within two years of the 2008 global financial crash, holiday-related trips were back on track. By contrast, it took five years for international business travel to rebound. McKinsey predicts the same pattern post-Covid while the annual business travel index from the Global Business Travel Association says 2021 will be a year of survival, with things starting to improve from 2022.

The optimists are expecting a healthy bounce once mass vaccination has taken place. The realists are more cautious, pointing out that most organisations have yet to bring people back into the workplace never mind getting their heads around what their duty-of-care responsibilities on business travel might look like in the post-pandemic era.

Even with mass vaccination it will take time for people to feel comfortable about travelling again and time for countries to reach a stable point where rolling lockdowns and travel rules are not changing daily. On top of this, the pandemic didn’t treat all sectors equally. This means the recovery will be uneven and it may take time before those most badly affected start spending on travel.

The coronavirus decimated the Mice (meetings, incentives, conferences, events) sector and, even when things resume, events may look quite different as venues reconfigure to allow for more physical distancing. According to McKinsey: “Sales-oriented conferences and trade-show exhibitions may be the first to return to in-person formats. But many events will offer virtual, hybrid or multi-local models with abbreviated in-person schedules, and they will move from destination cities to regional industry hubs.”

Another factor expected to fundamentally change how organisations think about travel in the future are issues around environmental and sustainability.

Bob Moritz is the global chairman of PwC and he has committed his firm to achieving zero emissions by 2030. This is going to involve reshaping how the firm works with its clients and halving the emissions associated with its business travel. In 2019, flight-related emissions represented about 85 per cent of PwC’s total carbon footprint and Moritz is on a mission to change this.

“The Covid-19 pandemic has accelerated the shift to remote working and demonstrated the feasibility of new client-delivery models as part of a longer-term transformation of our services,” he said.

Low-emissions fuel

Deloitte too is committed to being net zero within the decade and it recently signed a deal with Delta that will see it buy sustainable, low-emissions aviation fuel to reduce its carbon footprint. The firm is aiming to cut business travel by 11 per cent by 2025 and says the “unexpected forced grounding [by Covid-19] has opened up new examinations of how Deloitte does business while continuing to serve clients effectively.

“As the world emerges from the pandemic, Deloitte is rethinking some of the traditional ways in which it operates, particularly business travel,” it said.

Another unfolding scenario that may affect Irish-based executives used to taking short-hop flights around Europe is a recent decision by French legislators to ban internal flights on routes where the journey that can be made by direct train in less than 2½ hours. The question now is whether other countries will follow suit.

The good news for business travellers who are also rail enthusiasts is that sleeper trains are making a comeback. They had largely gone out of use because the economics didn’t make sense, but climate-change imperatives are forcing a reappraisal. A number of new overnight trains are being launched across Europe, with Brussels set to become the sleeper-train hub because of its Eurostar connections to London.

Rail operators are hoping that people’s reluctance to spend time in long queues at airports and the novelty of snoozing one’s way to a meeting will encourage some business travellers to get back on the rails.

Business Today

Get the latest business news and commentarySIGN UP HERE
The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.