We last heard expressions like essential and business-critical travel only during the lows of the pandemic, when companies ceased travel to protect their employees. It's not the sort of language the travel industry wants to hear right now.
Google is cutting back on employee travel and wants to limit any trips to “business critical” only, according to a report.
A leaked memo has reportedly warned that any social functions, full-team offsites and employee travel to in-person events that have a virtual option shouldn’t be approved by Google managers.
Google did not respond to Skift’s request for comment.
The company also told some of its senior managers that it will hold a “high bar” for what should be considered business critical travel.
In a statement provided to The Information, Google said: “We recently shared guidance about taking a responsible approach on expense management, including travel and events. Different product areas and functions are implementing this in a way that works best for their teams, given their business needs.”
Should alarm bells be ringing? After all, terms like “essential” and “critical” travel were last used during the peak episodes of the pandemic.
Many technology companies have been slowing down their recruitment, amid lower growth forecasts and lingering concerns of a recession. In August, Microsoft also planned to reduce spending on business travel and employee gatherings, according to a Wall Street Journal report.
But at the same time, company offsites, retreats and social gatherings are being regarded as a key driver of travel.
“So many companies now have more distributed teams, across cities, across regions and across countries,” said Paul Abbott, CEO of the American Express Global Business Travel — which counts Google as a client — at Citi’s 2022 Global Technology Conference on Sept. 7.
“If you want to succeed as a company, you want to strengthen your culture, you want to motivate people, you want to recognize and reward people, you want to drive innovation and creativity, you’ve got bring people together,” he added. “That will create more travel, and we are seeing that today.”
Abbot also revealed that the agency’s meetings and events division was seeing the organization of meetings of under 50 people was now the fastest recovering part of its business.
“There’s a new generation of business travel coming from distributed teams, and I think that will continue,” he said.
Google’s retreat is typical of the wider sector, according to Steve Reynolds, founder and CEO of corporate travel rebooking and auditing platform Tripbam. He has long argued that technology companies have been more cautious than most. In June its data, which covers 2,500 clients, was showing technology companies had not yet fully resumed travel with volumes at 50 percent of pre-pandemic levels, compared to most other sectors that had reached 80 percent.
“While we can’t speak to Google’s policies specifically, we have seen that technology compared to other industries has been more conservative with their travel than they were pre-pandemic,” he said.
As companies plan for the remainder of the year, Reynolds argued that many may have overstretched themselves earlier this year when traveling became easier, but airfares and room rates rocketed.
“The need for companies to restrict travel closing out the third quarter is something we’ve anticipated since the start of 2022 — you have higher-than-expected volumes combined with higher pricing on airfares and hotels, and most travel managers set their 2022 budgets at 50 percent of 2019 levels. It’s no surprise that budgets are being stressed,” he added.
Alaska Airlines has also previously pinpointed a sector that’s been slow to pick up. That sentiment doesn’t appear to have altered, according to one senior exec.
“I think the least recovered for us are the large corporates,” said Shane Tackett, chief financial officer and executive vice president of finance, speaking at Cowen’s Global Transportation & Sustainable Mobility Conference this week. “And certainly, tech is probably the least amongst them. But not doing quarterly, it’s just they are the ones that are sort of lagging the rest.”
Meanwhile, one expert has questioned the raft of industry surveys and reports that relay a pent-up demand to travel.
“While many talk of a desire to return to travel in great numbers, on reflection they are often reminiscing about travel as it used to be pre-pandemic,” said Chris Pouney, owner of Severnside Consulting, citing ongoing airline strikes and delays.
“The way the storm clouds of inflation and poor travel experience are gathering, and companies having to stare down the barrel of a recession, it doesn’t surprise me that companies are starting to pull back on travel,” he added.
This article was updated to include comments from Alaska Airlines, Tripbam and Severnside Consulting.
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Photo credit: A leaked memo has reportedly said that social functions, full-team offsites and employee travel to in-person events that have a virtual option shouldn’t be approved by Google managers. Zeyi Fan / Flickr