The COVID-19 pandemic crushed the business travel industry, hammering trade shows, hotels, airlines, and other services. As video meetings went mainstream, the industry’s loss was Zoom’s gain.
But now, restrictions are being lifted. As a result, business travel is coming back.
Travel management company TripActions says business travel bookings for the first quarter of this year exceeded all bookings for the entire previous year.
Unsurprisingly, the “return” of business travel, in fact, is less of a return and more of a new world of trends.
For example, TripActions says more than one-third of business travelers are now booking longer “bleisure” trips, combining business with leisure. Some business travel will be workcations. Other trips will be remote workers visiting the office.
Despite the changes, some companies are still sending employees and executives on good old-fashioned business trips.
A recent Global Business Travel Association (GBTA) poll found that three-quarters of respondents’ companies (74%) now allow international travel, up 48% in February.
The only difference is the price.
Supply, demand, and inflation
Prices for all aspects of business travel are far higher than they were before the pandemic for three reasons:
- Sudden demand and limited supply.
- Companies raise prices to make up for lost revenue.
Hertz CEO Stephen Scherr told CNBC’s Jim Cramer last week that the recovery of business travel “could constrain already tight supplies of rental cars…, demand is outstripping the amount of fleet that the industry has,” he said.
(This is something I experienced myself while renting two cars in Barcelona last week — one from Hertz, the other from Enterprise.)
Leisure travel will also affect business travelers.
As flights fill up with vacation travelers, those flights will be more constrained than before, raising prices far higher than pre-pandemic levels.
Major US airlines say business travel has already substantially recovered, but they don’t expect a full recovery.
American Airlines CEO Robert Isom said during a recent earnings call, for example, that while travel demand is at 80% of 2019 levels, business travel for large corporate clients is only at around 50% of pre-pandemic numbers.
Inflation is also hitting business travel. Food prices are up. Fuel prices are higher. Pretty much everything is more expensive. And it’s affecting corporate budgets.
The GBTA poll found that two in five (41%) said they had increased employee travel spending for flights and 34% for hotel stays because of inflation.
And across the world, travel industry providers — from airlines to drivers to hotels to restaurants — who went into deep debt now have to charge more for their services to get out.
AirBnB is charging vastly higher fees, for example.
More than half of what guests pay now does not go to the host but is charged for cleaning, “service,” occupancy tax, and other fees. So, for example, if the host gets $200 per night for a room, the guest will typically pay more than $425.
I’ve noticed it myself this year; AirBnB rentals are much more expensive than they used to be.
Interestingly, 80% of travel managers said that the pandemic had prompted changes in company travel policies. Majorities said these changes include fewer business trips would be approved.
In a nutshell, travel managers and business leaders can expect employees to take fewer, more expensive, and longer trips that are more difficult to book, have to be set up further in advance and will combine business with leisure or workcation time.
So make sure you and your employees are justifying travel. Then, get serious about travel ROI.
And get creative with how you combine the need to travel with employee satisfaction.
Copyright © 2022 IDG Communications, Inc.