Business travel has been an essential component for the success of companies and organizations since, well, business began. Because of its perceived importance, it has become a multibillion-dollar industry. According to McKinsey, business travel spending peaked at $1.4 trillion in 2018, two years before the global health crisis. It was projected to increase even more as the economy was growing and international trade became robust despite the U.S.-China trade war.
But that was a period before the coronavirus pandemic that changed the global economy, businesses, lifestyle, and social relations. The 21st century is going to be remembered as the pre-COVID-19 and post-COVID-19 eras. It has implications for business travel – and business – moving forward.
Travel restrictions and social distancing
With governments imposing travel restrictions and social distancing measures, both domestic and international business travel took a hard blow. While some companies thrive, adapt, and evolve through the crisis, it will take years for badly hit businesses — especially in the hospitality, tourism, and travel industry — to recover, and some may never fully recover as ways of doing business change. Indeed, the pandemic may have transformed business permanently more than we think.
Health safety protocols have made companies resilient and creative in maintaining their operations. Video calls, chats, and video conferences enable agents to connect with customers. Teleconferencing helps managers to keep in touch with their staff. Meetings that require travel to the venue have switched to online. And workers haven’t had to commute to the office daily to perform their duties and responsibilities.
Organizations have slowly become accustomed to the ‘new normal’ in productivity and operations, drawing a clear line between the essentials and non-essentials, between preferences and necessity.
As the notion of work evolves — remote work and a hybrid workplace are here to stay — so does business travel.
Domestic and international business travel
When countries started to relax travel restrictions, domestic and regional leisure travel experienced a resurgence. While discretionary leisure travel slowly bounces back, business travel continues to struggle.
McKinsey’s observation gives us context: it took five years for international business travel to rebound after the financial crisis of 2008-2009. But with the pandemic that disrupted economies worldwide, it will likely take longer than that to recover; and likely, differently. Domestic and regional business travel will be the first to pick up when it becomes safer to do in-person customer meetings. But international travel, not as likely. Business travel spending in 2021 will be 50 percent less than the pre-pandemic 2019 level.
Also, organizations are rethinking their approach to business travel.
Due to varying health protocols and restrictions imposed in different countries, and with the availability of communication technologies, business meetings are trimmed down to what is necessary, down to the essentials. A physical, face-to-face meeting can be time-consuming and costly. Using video conferencing and other collaboration tools is more economical and safe and could permanently shrink the business travel market.
Technology in the travel industry
With business travel streamlined, the travel business is reinventing itself. More companies are leveraging (and harnessing) technology to improve their processes, communication, data management, operations, and services.
On the rise in the business travel industry are new trends like process automation, artificial intelligence (AI), virtual reality, intelligent assistants, and blockchain technologies that companies adopt to stay competitive in a rapidly changing business environment.
Process automation is trending in the travel business, offering a range of solutions for the industry, from booking flights or hotels to advertising and real-time information. It makes travel business management simple, less costly, and more efficient.
And AI is critical in many automation initiatives, which will dramatically change industries, including the travel industry. Predictive analytics helps travel operators and suppliers understand travelers’ behavior and preferences.
AI can also be an excellent travel assistant. It can book flights or hotels and even provide detailed information on the itinerary.
Virtual reality enables travelers to personalize their hotel room preferences or get a virtual experience of their destination. It is a promising trend that will transform the travel industry and the nature of travel as we know it.
The built-in security protocols that blockchain provides will be valuable to business travelers. It will help ensure a safe and convenient travel experience. Travel companies, such as hotels and airlines, that rely on the exchange of customer information will benefit from the security that blockchain technology provides. By decentralizing data security through a chain of secure and permanent blocks, corporate information will be secure and safe.
Blockchain also paves the way for cryptocurrencies to slowly gain traction in online payments by hotels, travel companies, and airlines.
The future of business travel
While travel businesses embrace the latest technology trends, business travel will not be returning to its pre-pandemic level any time soon, if ever. That’s due to technologies that make it easier to limit the frequency of business travel by executives, sales agents and others who can accomplish their goals with greater efficiency remotely. With communication and collaboration tools, deals will be done online, and meetings in virtual rooms. Perhaps physical meetings will be dedicated to socialization, establishing deeper business relationships, and ceremonial signings. The future of business travel will be different from that of the past. When business travel resumes in volume, it will likely be combined with leisure.
Technology and the pandemic made businesses rethink which meetings are absolutely necessary. But traveling is deeply rooted in human culture. The desire to explore places, learn new cultures, and meet people in foreign environments remains the primary driver of travel, whether it’s for leisure or business. And that may turn out to be a key driver of future business travel.