Business travel is one of the most impacted sectors because of Covid-19. To give some context, in 2019, the entire business travel market, valued at $1.3 Tn, was expected to top $1.7 Tn in 2023. All of that is now impacted by 85-90%! The next 6-8 months are crucial and depend a lot on how well governments execute vaccination drives. We can predict only what might happen once we are out of this pandemic.
Let’s do a qualitative deep dive into how much corporate travel would return back.
Why do we travel?
But first, it is important to understand why do we travel for work. I would like to tell a personal story here:
Within the first 3 months of starting our venture, we landed with one of the largest retail customers (65,000+ employees) . Few days before the go-live, the executives at the company started feeling anxious if the new customizations will be deployed on time. Soon it exacerbated to the extent they started contemplating a plan-B. Being tech-first, we stressed on the Zoom calls to resolve this but things would often heat up there. Mid-week, we decided to fly for an urgent in-person meeting. Being face-to-face calmed them enough. And they started noticing the extra features we delivered without even asking. The impromptu local lunch helped us learn their mindset and culture at the company.
At the heart of everything are relationships. It is too difficult to develop a relationship or deeper connection remotely. Face to face meeting reinforces relationships. On the other hand, travel that happened for mere information exchange or transactional will reduce drastically.
At Zoliday, we categorize corporate travel into 4 buckets: Sales / Client relationships, Internal Collaboration, Hiring, and, Events.
Sales / Client relationships
For salespeople, meeting customers is like meeting Roger Federer in person. Imagine interacting with Roger Federer on Twitter vs IRL. I recently spoke to a VP at one of the Big Fours. He was anxious and worried about the delays in closing sales by more than 4 months. And these were evergreen products in security and data. Just one in-person meeting with each of them would help him close 30% of the pipeline.
Sales will move to hybrid with the initial qualification happening remotely and closing happening in person. Competitive pressures will push the sales teams to restart travel. In fact, we expect salespeople to drive the return of business travel to almost 75-80% eventually.
Last week, a CHRO of one of the largest automotive parts manufacturers, with over 90 operating plants spread across 6 states and 3 countries, told how his operational managers now monitor internal records through ERP directly. Previously, they used to visit every manufacturing plant once in 3 days. It would take them 2 months to cover the allotted plants. 30% of the time was spent in transit.
Digital adoption will help move a good part of the internal collaboration online. This trend would continue to accelerate. We expect the recovery to be a low 25-40% given improving collaboration tools now in the market. The recovery here will be driven by non-tech sectors: construction, infrastructure, insurance, pharma, logistics, and more.
Companies that want to embrace a complete remote culture, pure-tech companies largely, will look to move most of their hiring online. However, 75% of the companies we talked to would look to return or embrace the hybrid culture. Mark Zuckerberg highlighted how important it is for the new employees need to be in the office at least for the first 2 years to inculcate culture completely. Hiring and onboarding both have a big relationship-building component. 75% of the hiring and new joins related travel should return back once the pandemic is over.
Events and Offsites
I strongly believe that IRL events would come back when it is safer. Frankly, more than the sessions, it is the networking that both guests and companies look forward to. Events are the sky-diving for business travelers. I miss the in-person WWDC or MWC events, which were so much fun. Recovery here will start last but should be the strongest.
In summary, internal collaboration would continue to shift online. But the rest three should recover to 75% of the pre-pandemic market eventually. Sales will drive the recovery first and Events the last. What’s more important for the travel managers now is to help their companies adapt to the new world – tightening policies, setting budgets, and more by adopting the latest digital platforms.