The Insider’s Guide To Resuming Business Travel

Recently McKinsey and Company, a renowned global consultancy group, declared, “It seems thatfinally, the light at the end of the pandemic tunnel is in sight—at least in some parts of the world.” After total global business travel expenses contracted by 52 percent, and managed corporate-travel spending in the United States plummeted 71 percent, or $94 billion in 2020, the second part of 2021 may see a return to some corporate travel spending.

Inspire of the rise of the Delta variant, McKinsey believes that the US, Canada, UK and Europe which all have high vaccination rates, are likely to see a form of herd immunity later this year. According to their thinking, this should spur pent up corporate travel demand.

McKinsey goes into great length to detail four key segments for the return of corporate travel.

Breaking down corporate trips into different segments can help travel planners and suppliers plan for the return of corporate travel. We’ve identified four different business-travel profiles, each sitting at a different point on the travel-resilience spectrum. Three indicators were used to define each archetype and determine its position on the spectrum: sector, travel purpose, and whether the trip was domestic or international. For travel purpose, if in-person interactions remain critical for a company, then the more resilient such business trips are. Some assumptions were made on how likely it was that some forms of corporate travel would recover rather than be substituted by videoconference technology.

The profile mix varies from company to company, and it’s possible for all four to coexist within the same organization, although some might feature more prominently in some companies and less in others.

  • The “never left” segment. On one end of the spectrum, employees for whom travel is deemed essential for conducting business resumed their trips as soon as lockdowns eased. This category accounted for around 15 percent of all corporate travel expenses in 2019 and includes managers in manufacturing companies with a wide distribution of factories and plants and field-operation workers. Those who were reluctant to fly opted for rail and private cars instead.
  • The “never returning” segment. On the other end, business travelers that contributed to one-fifth of business travel spending in 2019 present an enticing opportunity for corporations to permanently slash their corporate-travel budgets. Digital adopters who are able to maintain high levels of effectiveness while working remotely may never return to corporate travel. Furthermore, advances made in digital technologies that enhance oversight of outposts have paved the way for corporate travel to be further reduced. For instance, many chain restaurants found ways to minimize corporate travel by replacing in-person visits with virtual alternatives, as well as establishing more local oversight systems. They are likely to want to keep these significant cost savings; although a certain number of business trips will continue after the pandemic even in this segment, they will do so at much lower levels than before.
  • The “fear of missing out” (FOMO) segment. The bulk of business travel (60 percent of business-travel expenditure in 2019)—which will likely drive the rebound of corporate travel—will be fueled by the FOMO segment: those traveling to cultivate important client relationships. Small and medium-size enterprises (SMEs) will likely increase corporate travel at much faster rates, as they are not subject to the heightened approval process that large enterprises have to follow. SMEs are likely to trigger a domino effect where one company’s resumption of business trips will catalyze its rivals’ return to work-related travel. Faced with intense competition, different players in the company (leadership, management, staff) coalesce to reinstate corporate travel at scale to seize a first-mover advantage over rival businesses. An April Global Business Travel Association (GBTA) member survey reported that more than 50 percent of respondents are developing or plan to develop a timeline for resuming travel, updated travel policies, or new safety resources and information for travelers.
  • The “wait and see” segment. This segment consists of workers in relatively noncompetitive industries and roles; it contributed 5 percent of total business-travel spending in 2019. These corporate travelers tend to come from the public sector, professional associations, and nonprofits. During the pandemic, many professional associations were able to hold virtual events to replace in-person conferences and will likely be more cautious in their return to travel.

Taken together, the trajectories of the four travel categories confirm our earlier projection of an uneven recovery for corporate travel. Overall, we can expect a 20 percent reduction in corporate travel spending by 2023.

THE KEY IS FLEXIBILITY

McKinsey sums up their report on the return if corporate business travel with some helpful advice.

It pays to have a detailed plan and strategy for different recovery scenarios in place. When demand picks up, many firms may find that they don’t have the time to pause and think through their strategies.

When it comes to organizing business trips for employees, corporate-travel planners will need to take into account four considerations:

  • First, the factors that affect whether corporate travel should increase: for example, local and regional infection levels, customer demand, and competitive actions.
  • Second, the relevant data sources used to evaluate these factors: these could include public-health indicators, customer surveys, data from travel partners on industry trends and competitor behavior, and real-time pricing from GDSs consistent with typical corporate agreements, even as airline-fare classes go through realignments.
  • Third, company policies on business travel: What distance-based policies should staff adhere to? Should they use rental cars, rideshares, taxis, or flights? When should they wear masks or engage in group gatherings? How (and should) companies distinguish between what activities vaccinated and unvaccinated employees can participate in?
  • Fourth, information needed by travelers: this includes websites, travel help desks, and messaging.