Old-fashioned business travel is dead (but don't blame the pandemic)
- 12 August, 2021 00:45
Everyone knows that business travel nearly stopped during the pandemic. But not everyone agrees about what happens next.
Hotels and airlines are optimistic, saying it's only a matter of time before the sector comes roaring back to its former glory. Former Microsoft CEO Bill Gates splits the difference, saying business travel will come back but stay at only 50 per cent of its former strength.
Sorry, hospitality industry: Gates is right. The Golden Age of wasteful spending on business travel is over.
Business travel in the post-pandemic world
During the pandemic, business travel crashed. Between April and June of this year, companies only spent between 10 per cent and 15 per cent of what they used to spend on business travel before the pandemic, according to Deloitte.
And even with widespread vaccination taking place (albeit unevenly) and studies that show flying is relatively covid-safe, it's not recovering the way leisure travel is. This is a catastrophe for the airline industry: Only 12 per cent of airlines' passengers are business fliers, but they used to provide 75 per cent of the airlines’ profits.
So while the reduction in business travel a year ago was caused directly by the pandemic, the lack of a strong recovery points to something else: During the pandemic, organisations learned some important lessons.
What enterprises learned
A year ago, we assumed that companies like Pfizer would develop a COVID-19 vaccine, which would end the pandemic and bring back some semblance of normal life -- including business travel at pre-pandemic levels.
Pfizer, AstraZeneca, Moderna, Johnson & Johnson and other drug companies did create a vaccine. And the pandemic is winding down in fits and starts. But Pfizer itself is among a large number of global enterprises having second thoughts about business travel in the post-pandemic world.
During the pandemic, companies learned three important lessons:
1 - Technology can replace face-to-face for many kinds of meetings
Videoconferencing and collaboration tools have come a long way. The pandemic forced companies to really try them at scale for the first time. And what everyone discovered is that tools like Zoom, Microsoft Teams, Slack, BigBlueButton, BlueJeans, Whereby, GoToMeeting, Cisco WebEx, Google Meet and others can enable professionals to skip the trip and still reap the benefits of face-to-face meetings.
2 - Business travel used to be absurdly wasteful
Companies like Pfizer realised that pre-pandemic business travel was wasteful in the extreme -- especially the old norms of booking last minute, not caring about price, paying for upgrades to business class, taking junkets to fun conferences -- and doesn't make sense when wasteful spending is being cut for other parts of the business.
The incentive structure for business travel was prone to abuse: 1) travelers were making travel choices without the accountability of having to personally pay for those choices; and 2) managers and leaders and everyone else were "in on it" because everybody enjoys costly travel perks.
3 - Cutting business travel is a powerful way to reduce carbon footprint
Many large organisations are increasingly looking for ways to help the environment -- greener fleet vehicles, greener office parks, using recyclable materials and others. It turns out that taking fewer business trips makes a huge difference in a company's carbon footprint.
As a result of these three realisations, Pfizer and other companies are returning to the practice of business travel with an entirely new mindset.
In the future, more business travel will have to be justified. The concept of justifying ROI for every trip may become the standard practice -- and will have to be booked in advance to lower cost. The idea is being called “purposeful travel” by the travel and meeting management company Festive Road.
Business travel ROI, "purposeful travel" -- whatever you call it, the end result will be fewer trips per company and lower spending per trip.
New kinds of business trips
While the pre-pandemic reasons for business travel will re-examined, the post-pandemic world will offer up new reasons for travel.
With a newfound acceptance of remote work, many employees have or will become digital nomads, living far away from headquarters. They’ll be asked to come to the office from time to time, flying from wherever they are.
We've also slipped into a new acceptance of "bleisure travel" (combining business and leisure on a single trip) and "workations" (continuing to work full time, but temporarily from a vacation-like location). Organisations will pay for some of this as part of new incentive structures.
The technology trends changing business travel
So while business trips in the post-pandemic world will feel more consequential, the experience of traveling will be transformed this year by new technology.
If you travel internationally right now (as I have done recently to both Europe and Latin America), you'll face a Byzantine new world of COVID-19-related rules, vaccine passports, and digital health passes. Spain, for example, won't let you into the country without first downloading its mobile app and completing the requirements therein.
Various airlines each support different third-party apps for communicating vaccination status and other health information (for example, American Airlines supports an app called VeriFLY). As the pandemic wanes in some countries and flares in others, health passes confirming non-contagiousness to a variety of illnesses is likely to become a permanent fixture of international travel.
Both Apple and Google are enabling users to verify vaccination status for travel using their respective wallets. This is in place for Australians now, and other countries later.
Business travelers will also eventually get what is essentially a version of their passport carried on smartphones. The DTC, or digital travel credential, is taking shape at the United Nations International Civil Aviation Organisation, the body that sets global passport standards. Once you’ve got the DTC on your phone you’ll be able to skip customs and enter countries with a phone and face scan. The DTC uses blockchain and biometrics to authenticate travelers.
Starting in May 2023, every person flying domestically in the United States will be required to carry a REAL ID-compliant driver’s licence or state-issued ID.
And there's another big change for business travelers that should cause you to revisit your organization's security polices for mobile devices.
A US appeals court ruled late last year that US Customs and Border Protection agents are allowed by law to search phones and laptops on the spot without a warrant and without any specific reason to do so. This includes so-called “advanced searches” in which the contents of a mobile device are searched, downloaded or copied. This is a big reduction in the right to privacy and security at the airport.
All this adds up to a new reality for business travel: Policies, practices, constraints, assumptions, reasons, technologies, and requirements for traveling on business have all been transformed during -- but not directly because of -- the pandemic.
The new business travel will be more efficient, more justified and more facilitated by advanced technologies. And less frequent. Old-fashioned business travel is dead.