Considering pent-up demand, the effects of evolving traveler demographics and newfound wiggle room in corporate budgets, Brandon Strauss of KesselRun Corporate Travel Solutions is bullish about the industry’s recovery.
While the corporate travel industry may still face a multiyear return to normalcy, we are seeing a lot of evidence that points to a faster recovery than predicted, one that positions business travel to prosper beyond our expectations.
Recent news of three highly effective vaccines may not only help wipe Covid-19 out of existence but also help us all psychologically get back to normal. Recent articles discussed that some leisure agencies reported an uptick in vacation bookings on the heels of the vaccine announcements. The Global Business Travel Association recently released a study finding that 50 percent of travel buyers were willing to travel for business in the current environment. By many accounts, people are itching to get back to travel and there is a lot of data to support the motivation.
Oxford Economics in 2009 did a study on the relationship between business travel and corporate return on investment. In short, it found that every dollar a company spent on corporate travel generated a $12.50 revenue increase. Further, it showed that curbing business travel could have an adverse revenue impact for years. Both executives and business travelers estimated that 28 percent of their business would be lost without in-person meetings. Now 12 years old, the study was conducted at a time when heavy travelers were of the Gen X demographic. They widely viewed business travel dimly, as a necessity.
Today, Millennials make up the largest percentage of our workforce. Most of the major management consulting firms — including PwC and the Boston Consulting Group — have studied Millennials’ corporate travel habits. The results are revealing. Based on these studies, we know that Millennials love to travel for work and tend to spend more money than their predecessors. A Hilton Hotels study from 2018 found that 75 percent of this demographic saw business travel as a major job perk, 65 percent saw travel as a status symbol, 56 percent created reasons for business travel and 39 percent said they wouldn’t take a job that disallowed travel. A 2019 study by TravelPerk went a step further, indicating that Millennials preferred face-to-face business meetings over virtual ones on platforms like Zoom.
These statistics bode well not only for the corporate travel industry but for businesses alike. In short, businesses see a significant return on investment by traveling and Millennials are more than happy to oblige.
Even better, the pandemic has pushed major organizations to implement permanent work-from-home policies. Might we see corporate travel budgets increase as a result of decreased office overhead? A recent CNBC article discussed the impact of office shutdowns at major companies — Nationwide, Barclays and Morgan Stanley, among others — on business practices and corporate real estate. The impact in March 2020 on corporate real estate pricing was an unprecedented 1.3 percent decline after years of soaring prices, according to Green Street’s Commercial Property Price Index. The article pointed out that technology investment over the years has helped enable at-home work; workers tend to work more when working from home and take fewer sick days.
Unlike for corporate travel, I can find no empirical evidence that possessing physical office space yields a compelling return on investment. Millennials have their home offices, want to travel, show a significant return on investment by doing so and may have unprecedented budgets as companies shed infrastructure. Getting past the pandemic may open the floodgates.
There is no doubt that we have a long way to go and that the worst is most likely right in front of us. I am hopeful, however, that we are closer to the end of our nightmare than the beginning, and it does seem like the industry has a lot of the right ingredients for a strong turnaround. It’s easy to forget the massive investments made in the industry pre-pandemic, anticipating building better solutions around existing practices and leveraging the untapped small-to-midmarket business demand for corporate travel services. The corporate travel industry would be in a hyper-growth mode right now but for the pandemic.
For now, I remain hopeful that 2021 surprises us all and that everyone stays safe and healthy.
• Op Ed: Tony D’Astolfo On Why It Should Be Us Leading The Return To Business Travel
• Op Ed: John Harvey On The Future Of Business Travel Demand
• Op Ed: Scott Gillespie On The Surprisingly Strong Case For Meeting In Person
• A Dose Of Optimism, As The Pandemic Rages On