How will COVID-19 Affect Business Travel In The Future
I don’t think anybody would argue that 2020 was a challenging year. COVID has turned everything upside down including how we operate as consumers and businesses. In the end, things may change for the good and you keep hearing about this “New Normal.” With everything going on, you may ask yourself, “What is this new normal going to look like?”
In order to focus on the most dynamic and provoking impacts, we can look at three areas: business travel, business technology and business real estate.
First, travel. The travel industry has been decimated by the economic impacts of the Coronavirus. When business shut down in-person meetings in March 2020, all travel was cancelled out of an abundance of caution. Countries closed their borders and people in some countries were stuck and not allowed to return to their homes. According to the Global Newswire, “In April 2020, during the early days of global COVID-19 spread, 98% of the member countries of GBTA (Global Business Travel Association) cancelled their international business tours and 92% of them halted all or most of their domestic trips.”[1] Many people thought that this would be temporary, however in November 2020, GBTA stated that “the global market for business travel is expected to decline by -54% in the year 2020.”[1]
So, based on these impacts, what does the future of travel look like due to the Coronavirus?
- Capacity and Inventory Will Decrease Through Business Failures BUT Businesses Will Expect Low Prices, and Low Prices Will Stimulate Traffic: The days of having many options in hotels, car rentals and airlines are numbered and, unfortunately, not all businesses will make it. Airlines will get rid of older planes and therefore reduce the number of seats that they have available. However, this does not translate to higher prices because they will need to give incentives to traveler via lower prices.[2] I think that businesses that choose to travel more will be able to get extremely low prices as they negotiate with airlines based on travel volume.
- Closer To Home Will Define Business Travel For The Near Term: Overall, both business travel will be more focused locally, meaning that U.S. travelers will travel more in the U.S., Europeans will travel more to Europe etc.[3] Businesses will rethink their travel strategy. I predict that those day meetings to Europe, Asia etc. will be limited only to those that are critical and technology (ex. Zoom & Teams) will be preferred since they do not cost anything additional.
- Health Safety Will Become An Ever Present Factor: Airlines, hotels and businesses have been fiercely focused on cleanliness.[3] Airlines like Delta, Southwest and United have implemented cleaning standards that include but are not limited to:
- Using electrostatic disinfectants
- Deep cleaning planes after (inside and out) daily
- Implementing cabin air filters
- Requiring every passenger wear a mask (when not eating or drinking) regardless of the flight length
- Installing plexiglass at customer service counters[3] [4]
Businesses reputations will be defined by how clean they are and how safe they make their customers. A good example are hotels who have had to quickly implement new cleaning policies. When you stay at a hotel today you may be greeted with a “Freshly Cleaned” sticker on your door showing that the room was just cleaned using the new cleaning standards. Unfortunately, the incremental cost of health safety may be the catalyst for the demise of some hotel businesses.
Some airports and countries may also require health visas requiring employees to obtain vaccinations and tests prior to travelling. A current example is the Bahamas, which requires a health passport prior to entering.[5] I believe that businesses will be more cognizant of their employees’ health and safety and will have to implement new travel processes and programs to accommodate new travel requirements as they surface. At risk employees may start pushing back on travel due to health risks. Businesses will have to be more accommodating to their employees’ concerns.
Airlines and Hotels Will Continue To Allow Flexibility With Bookings
We can all attest to calling an airline to change a reservation and being hit with a change fee. This has always been unpopular with consumers, but the airlines have never changed the policy. A lot of the revenue from change fees came from business travelers as their meetings and priorities change frequently and at the last minute. In October 2020, most U.S airlines eliminated the change fee which was met with applause from businesses and consumers. For example, Delta is applying this policy for any flights purchased prior to April 17, 2020.[6] Hotels are applying the same policy, allowing people to cancel reservations with short notice for full refunds. I see this trend remaining in the near future as hotels and airlines try to attract customers back. For businesses, this means that their travel budgets can stretch farther as their travel needs change.
Additionally, even though the hotels and airlines may not keep these policies in the future for normal travelers, I believe that they will keep them for frequent business travels as an incentive for them to purchase their services.
Lastly, we must come to the realization that a portion of business travel will never return.[3] The COVID-19 pandemic has forced businesses to adapt without travel and to utilize technology. I heard a doctor mention that they implemented 10 years of telemedicine technology in 2 months. New technology will fill in a gap that was not there previously, and as businesses have fewer customers with less revenue, they will move to lower cost options. I believe technology will prevail when it hasn’t before.
In conclusion, these predictions are exactly that, predictions. However, current trends along with how the world continues to react to COVID-19 and other pandemics will predict how travel and other industries are impacted. Your organization needs to think differently and to determine your next steps due to the changes in travel. Are you aligned on travel policies and costs? Do you have defined strategies for how you will handle travel and employee health/safety going forward?
Collective Insights can help you through our Business Transformation services, including Strategic Planning and Business Architecture, which are supported through our Technology, Information and Security services. We will analyze your business model, the current business landscape, build a roadmap with your goals and objectives (operational and financial) and help you implement them into your business.
Ensuring these changes are fully communicated and integrated into your organization are also important. Through our Organizational Change Services, we will help drive adoption and create strategic communications and design any necessary training to establish full integration in your business.
Please contact us at info@collectiveinsights.com for additional information and we will love to partner with you.
Look out for my next blog post regarding the future of business technology due to COVID-19.
References:
[1] Report Linker (2020, November 19) Travel Receives a Knockout Blow from the Pandemic. Business Travel Crumbles to New Lows at -54%. The global market for Business Travel is expected to decline by -54% in the year 2020 and -4. From https://www.globenewswire.com/news-release/2020/11/19/2130098/0/en/Global-Business-Travel-Industry.html
[2] Reed, Dan (2020, April 15) Coronavirus Won’t Kill Leisure Or Business Travel, But It Will Change Them Significantly, Perhaps Forever. From https://www.forbes.com/sites/danielreed/2020/04/15/covid-19-wont-kill-leisure-or-business-travel-but-it-will-change-it-significantly-perhaps-forever/
[3] Southwest Website: The Southwest® Promise from check-in to deplaning. From https://www.southwest.com/airline-cleanliness-social-distance/
[4] Delta Website: Delta CareStandard. From https://www.delta.com/us/en/travel-update-center/ways-we-are-keeping-you-safe/setting-the-standard-for-safer-travel
[5] Bahamian Government Website: Health Visa Application. From https://travel.gov.bs/
[6] Delta Website: Can I Cancel/Change My Flight Without Fees? From: https://www.delta.com/us/en/travel-update-center/cancel-change-requirements