Companies Already Reconsidering Loosening Tightened Travel Budgets

Companies like Microsoft, Pinterest and insurance firm Anthem are putting corporate culture back on the agenda, which is leading to spikes in internal travel.

And it’s got some travel managers a little concerned: how long will the boom last exactly? And can they afford it? Travel budgets, tightened up considerably during the pandemic’s lull, are now being reevaluated as leaders look to get teams back together, inside or outside the office.

“That’s the travel we see coming back now,” said Ann Kloepfer, global travel agency service delivery manager at Microsoft. “We hired 25,000 people during the pandemic, who’ve never met their colleagues, their leaders. As soon as we announced the reopening of offices, we saw a huge uptick in travel. There’s pent-up demand for in-person engagement, especially with new hires.”

Alaska Airlines on Thursday reported a boost in corporate bookings. “There’s just been this material, as in a 50-point change, in booking levels for some of these big [tech] guys in the last few weeks,” said chief commercial officer Andrew Harrison during the airline’s first-quarter earnings call. He didn’t cite any names, but given the airline’s headquarters in Seattle and hub in San Francisco, these probably include larger firms like Microsoft, as well Amazon and Facebook.

‘Booking Travel Like Crazy’

Kloepfer was speaking at a webinar on Tuesday, organized by corporate travel rebooking and auditing platform Tripbam, which has warned of rising prices in “secondary markets” outside traditional cities.

Another company, corporate gifts provider Sendoso, is “booking travel like crazy.” It has just opened a new office in San Francisco, and seems keen to show it off. “We absolutely want people in person,” said Sarah Lowery, its head of culture and facilities. “Getting people back in here, hosting events … we had about 150 people in the office having a great time, happy hours, you name it, we’re about it. We flew people in from all over the states.”

Hosting regular events involves flying at least 50 people a week, if not more, into different locations, she said while attending an Office Hours webinar hosted by corporate travel agency TripActions. It was also flying them out to Arizona for three days for a golf event to meet their manager for lunch, or sending them to San Francisco for a week “to hang out in a Sendosa environment” — even if that meant meeting colleagues across different departments.

Mira Rosenweig, global travel manager at Pinterest, noted her company’s leadership was also pushing in-person meetings to drive company culture. “If you feel more connected to your company, (the) hope is there will be less turnover,” she said. “My travel budget is higher than ever before. And we expanded travel benefits such as allowing business class.”

Staffing Up

However, some experts have voiced concerns over what new patterns will emerge next.

“Are they going to want to come in every month, every couple of months, what does that rhythm turn out to be?” said Steven Mandelbaum, vice president, business solutions at Washington, D.C.’s Education Advisory Board at the Tripbam virtual event. “We’ve added acquisitions that weren’t locally based. That’s the things that worries me, it’s that internal travel.”

Another expert said traveling for internal purposes had now taken the top spot.

“What used to be 3-4 percent of our traffic was conferences, seminars and education, we’re seeing that pick up as the highest percentage,” added Cindy Heston, director, travel and events at Anthem.

Part of the reason was that Anthem’s clients didn’t want to meet in person yet. “If everything picks up in two or a month, we don’t have the resources to support a 40 percent swing in 60 days. For internal events, we’ll probably be within 70 percent by the end of the year, if we continue to see that trend.”

The demand for in-person events in more leisure-focused destinations could be driving up rates outside cities. “My gut feel is that it’s a lot of internal meetings, meeting the first time, it’s secondary markets,” said Steve Reynolds, CEO and founder of Tripbam. “They’re not going to headquarters, because they’re closed, so let’s go play golf, let’s go to Scottsdale, let’s go to Orlando. That’s why we’re seeing rates go though the roof in secondary markets”.

According to reports, consulting company EY recently flew 2,000 employees and their companions “for a shindig at a Universal Studios theme park.”

Reynolds added that hotels rates in places like downtown New York, Dallas and Chicago were still down 10 or 20 percent on 2019 levels.

A new report published by the American Hotel & Lodging Association and Kalibri Labs said business travel in New York hotels in 2022 was likely to end up 55 percent down on the amount spent in 2019, falling from $4.5 billion to $2 billion. For the Washington, D.C. area it predicted a decrease of 54 percent, dropping from $2.7 billion to $1.2 billion.

Sidenotes

While the pandemic spurred a new generation of travel risk and security apps, including Sherpa, entrepreneurs should now look to the softer parts of business travel.

Microsoft is now looking to integrate third parties into its app for travelers, to better look after employees. Speaking at the Tripbam webinar, Ann Kloepfer, global travel agency service delivery manager, said the company regards its employees as “athletes and performers” because they need to produce on a daily basis.

“If we’ve learnt nothing else from the pandemic, it’s how important health and wellness are and we need to support that,” she said.

The company feels it’s an untapped area, and travelers now expect the tech giant to provide them better support, especially when it comes to meal planning for restaurants, at hotels, or on campus.

“We’re looking at new metrics that will help us cover that, because we feel it’s going to be really key, whether it’s productivity or health and wellness”, she said. “There’s huge costs on the company when you’re not supporting your employees’ mental and physical health and wellbeing.”

As hotel groups like Accor up their focus on lifestyle properties and dining experiences, there’s potential for a new wave of apps to help bridge the gap between corporations, travel agencies and the hungry travelers themselves.

10-Second Corporate Travel Catch-Up

Who and what Skift has covered over the past week: Accor, Branded hotels, Cape Air, Cvent, Deloitte, Delta Air Lines, Play, Qatar.

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