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Nobody has any real visibility on the pandemic’s short-term impact on corporate travel, but there is a picture emerging of the longer-term trends now that the dust is settling.
And when the boss of the world’s biggest corporate travel agency outlines one of these trends, it’s worth taking notice.
It relates to the recent rise of virtual meetings and remote working. That may seem contradictory at first, in particular with travel budget cuts looming, but it’s the reported demise of the traditional office, and associated commute, that could lead to a long-term boom in corporate travel.
“You will see more companies look at their real estate strategy,” said Paul Abbott, CEO of American Express Global Business Travel. “Having a more dispersed workforce is going to accelerate. But with a more dispersed workforce, you reduce commuting, you reduce your real estate costs, but you actually increase business travel.”
Out of Office
This idea of mass workforce dispersement was reinforced on May 12 when Twitter made the news, after CEO Jack Dorsey emailed employees notifying them the work-from-home model would remain in place even after the crisis had ended.
Headlines like “Twitter announces employees will be allowed to work from home ‘forever'” aren’t good news for the corporate real estate sector; but it does represent an opportunity for travel agencies to step up.
Global Workplace Analytics also predicts many workers won’t be returning to the office. “Our best estimate is that 25-30 percent of the workforce will be working-from-home multiple days a week by the end of 2021,” said its president Kate Lister.
Last year, Egencia was seemingly ahead of the curve with its “Travel culture: Your competitive advantage in a global market” report, produced with Harvard Business Review Analytic Services.
After its release, then president Rob Greyber discussed how clients were investing in “travel blitzes” to certain destinations instead of setting up offices to build their business in new markets. With so many staff in the city at one time, he argued those organisations had a perceived presence, despite no actual physical address.
Abbott, who was speaking at the Institute of Travel Management‘s virtual conference this week, said: “I have a leadership team in six different cities in five different countries, and it’s fantastic because I can recruit people anywhere in the world. And I do recruit people anywhere in the world. But because of that, they have to travel more. I have to bring them together for planning, for reviews, for board meetings.
“As the workforce moves more and more virtual, people’s home base obviously becomes their home. So every time you bring people together, it’s a business trip. Commuting will reduce, but business travel may well increase over time.”
Globally, commuting has plummeted along with most other forms of travel. Public transport authorities are now assessing the fallout, including the UK’s Transport for London which secured a $2 billion bailout from the government on Friday. But there are some reports it actually needed double that amount.
Global Talent Pool
With the acceleration of remote working, more focus will be placed on recruitment. And travel management platform TravelPerk is already eyeing the opportunities around this area.
“I actually hope it will happen, it’s a fantastic trend,” CEO Avi Meir told Skift. “In a way it opens up the entire word in terms of the talent pool.
“We have an office in London. You typically hire people who commute to London, or want to relocate to London. If everything is remote, the world is your talent pool. It’s fantastic for humanity.”
He cited recruitment company Andela, which has based its business model on building remote teams, as an early adopter of this trend. “They train software engineers in Africa. It’s not an outsourcing company, you’ll pay the same rate you would in Silicon Valley. You just get great talent, because you didn’t have access to engineers in Nigeria before.”
He argues that with the rise of virtual teamwork, employers will place more emphasis on those initial physical interviews and meetings with potential new hires.
“The implication for business travel is obvious. Human nature will not change because of the virus. You need to spend time with someone to create a good bond, and I don’t know how that’s going to be done on Zoom,” Meir said.
“We’ve all seen over the past two months that Zoom is great for transactional conversations, but if you want a real bond, you have to meet in person. People will have to travel more, so it will be a really good move for the business travel industry if companies allow people to work remotely.”
He said TravelPerk’s product team was already exploring the trend. “We have a few interesting things in the pipeline. We move fast in product development and we try to match what customers need.”
Every Journey Has Just Turned into an Event
Another byproduct of coronavirus that American Express GBT has pinpointed is a heightened level of scrutiny.
Abbott said smart corporate travel agencies will adapt their services to reassure clients — echoing Egencia’s views that the sector needs to rebuild trust with its customers.
“Business travel is going to look more like an event,” Abbott said. “It’s been pretty transactional in the past, and going forward we’re going to have to have a much more end-to-end view of the entire travel experience. Some of our products and services will need to adapt to deal with that.
“By event, I mean pre-trip registration, pre-trip health screening, making sure the clients are completely aware of the point-of-departure regulations and point-of-arrival regulations.”
He said more work was being done around ground transportation, as well as ensuring hotels meet certain cleanliness standards. The agency even wants to ensure hotels recommend restaurants that are operating with social distancing in place.
“We have to play a broader role in the entire end-to-end management of the trip. We understand that we have to adapt, be more creative, and build more value for our clients, and build more trust and confidence in what will be a more complex environment,” he added.
It turns out that virtual’s ascent might not be bad news for the corporate travel sector after all. However, agencies should act now if they want to capitalize on a trend that looks like it’s here to stay.