‘Stuck between a rock and a hard place:’ Corporate travel’s post-COVID comeback is slow
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Americans are once again taking to the friendly skies in droves — thanks to rising vaccine rates, the easing of travel restrictions and a pent-up desire to ditch their screens for long-awaited, face-to-face reunions.
However, the bulk of travel sales has been directed toward domestic leisure — not corporate — travel. A survey last month by the Global Business Travel Association revealed 50% of respondents have canceled or postponed most or all of their domestic business travel and 83% of their international business travel.
A Wall Street Journal analysis concluded that between 19% and 36% of all business trips are likely to disappear permanently. Many organizations are pushing video conference calls in lieu of in-person visits in an effort to slash costs, cut carbon emissions and contain the transmission of the highly contagious COVID-19 delta variant.
There are also the weary road warriors who are not ready, or are unwilling, to return to their former frantic lifestyles, transatlantic treks and stuffy business suits. For some, the hours spent on the road, chasing flights and being away from partners, family and pets, no longer seems worth it.
“I’ve been to 113 countries, stayed in over 600 hotels, and the pandemic was the first time I had to sit still,” said Jeremy Im, director of public relations for Appetize and founder of the travel site TravelBinger.com. “When you’re in it, there’s no stopping you. You feel like it’s your job, you have to do it and you have to be constantly on the move.”
“But the pandemic put the brakes on all that,” Im added. “Now, I look back and think: ‘How did I ever go on eight flights in one month?’”
Although corporate travel is on the upswing and expected to swell following a return to office life, it’s been sharply curtailed and is projected to remain at only 30% of its 2019 levels by the end of 2021, according to a recent Deloitte survey of 150 travel managers. New virus variants and surges, continued mask requirements and the onset of cold and flu season could further dampen demand.
Tori Emerson Barnes, evp of public affairs and policy at the U.S. Travel Association, anticipates corporate travel won’t fully rebound until 2025. Airlines’ flight schedules, routes, terminals and even gates are being reevaluated or overhauled to reflect the shifting demand.
The U.S. experienced a similar hit on business travel following The Great Recession between 2007 and 2009, when international business travel from the U.S. dipped by more than 13% and took five years to recover.
Before the pandemic, business travelers accounted for about half of all revenues for major airlines, but only 30% of the total trip volume, according to the industry trade group Airlines for America.
Why? These high-end fliers, often traveling on someone else’s expense account, tend to prioritize convenience and comfort, and are more likely to splurge on last-minute tickets, non-refundable fares, non-stop flights and premium seating. They are also more willing to purchase additional amenities and enroll in incentive programs, like frequent flier miles, which can be a valuable source of data for airlines.
And, although it may seem counterintuitive, these premium-paying travelers help subsidize travel costs for leisure vacationers. Thanks to their revenue and influence, airlines can offer cheaper tickets to help fill remaining seats and will even add additional routes to help meet their demand.
“Airlines are definitely stuck between a rock and a hard place,” said The Washington Post’s travel reporter Andrea Sachs. “The fares are now skewed because they want to charge leisure travelers like they did business travelers, but they can’t. They need to draw nervous fliers back in, and there are still a lot of places they can’t go.”
Since airlines first sandwiched a premium business class between first and coach seating in the late 1970s, it has been a lucrative arm of the global travel industry, exceeding trillions of dollars. Millions of jobs at airlines, convention centers, hotels and travel agencies, hinge on its expedited return.
However, the downtime caused by the pandemic has offered workers — and their employers — a rare opportunity to reset, reevaluate and proactively plan for the future. Many companies are reimagining their organizational arrangements, including when, why and how their employees are sent on the road — including Amazon, who announced it saved nearly $1 billion on employee travel expenses last year.
Some have welcomed the chance to rein in their spending, embrace the available technology and explore more sustainable options for their employees and the planet — from the types of trips employees take, and their environmental impacts, to their length, location and frequency.
And while the pandemic has shown how much work can be accomplished more easily, and cheaply, behind a screen at home, there is still a need and desire for face-to-face meetings for business purposes. According to U.S. Travel Association’s Barnes, 85% of American workers view in-person meetings and events as irreplaceable. “Businesses that got back to in-person events following the Great Recession were more profitable and productive,” she said.
Yet, although there will always be value in face-to-face exchanges, traveling across the country for a one-hour meeting may no longer be a productive or sustainable use of time or funds.
“Companies really need to ask themselves: ‘Do we want to or need to put this person on a plane and potentially risk their heath, our company and the broader community?’” Sachs added.
3 Questions with Marcus Krembs, head of sustainability, energy group Enel
The renewable energy sector is growing fast, but outside of that what’s changed the most for Enel and its workforce over the last year?
We’ve historically had a centralized workforce. Throughout 2020 and 2021 we didn’t experience a lag in the delivery of energy products and services, and we delivered those services with an exclusively distributed workforce. That has proven to be highly effective and is enabling better opportunities internally like work-life balance and recruitment potential for individuals from a variety of backgrounds. So no longer will the company, for all positions, require relocation to our headquarters or to certain satellite or regional office locations. But increasingly, we’re seeing the company allow for remote workers that can then be recruited and retained in a wide variety of geographies around the country [the U.S]. So from a sustainability and community development standpoint, that type of workforce development and talent acquisition aligns well with the company’s diversity, equity and inclusion objectives.
How has your hybrid-working model for office workers [60% of workforce], affected your real estate needs?
In terms of square footage, our real estate plan has remained the same, if not slightly reduced due to optimizations. However, without the pandemic forces the office real estate plan would have likely doubled in square footage. In our North American workspaces we’re able to accommodate hybrid-working models with greater flexibility, as opposed to having a dedicated workspace for each of our newly planned employees. The clean energy goals this country has, along with the urgency needed to act against the global climate crisis – means we’re going to see the quadrupling of solar power workers up to 2035, to the tune of around 900,000 new jobs created just in solar industry alone. In the U.S., Enel is looking to add — just for our renewable energies business alone — another 650 employees by the end of 2022. But the real estate footprint is not expanding at the same rate as the acquisition of employees, but will remain flat, because of the flexibility model for our workforce.
What are the environmental benefits that hybrid working setups can create?
There is a major environmental case to be made for the hybridization of the workforce. We did a commuting survey in 2019 to look at alternate ways to get people more efficiently into the office from the Metropolitan Boston area, which is where we have the majority of our workforce. And what we learned is that the average employee at Enel North America [pre-pandemic] spent 22 hours commuting each month, adding up to 33 work days per year. Obviously, there are stressors that go along with commuting — some would call it soul crushing. And they consumed the equivalent of 130,000 gallons of gasoline, to enable that commuting. We’re now seeing excellent examples of companies taking strong commitments to green to support distributed workforces. On a personal note, I’ve been able to drive both of my sons to school every day, and still be home in time for my first morning meetings. Not having to go into an office, but instead help my children get ready for their school days, was invaluable for me as a father and as someone who does value work-life balance. And there have been similar stories across the company. I think if surveyed, most people would say that the time extra time spent with family or friends — that flexibility would probably outweigh the loss of collaborative experience with coworkers.
By the numbers
- 45% of Americans plan to avoid crowded places and public transport while on holiday this year, 71% plan on getting themselves tested upon returning.
[Source of data: Piplsay report.]
- 22% of 1,000 U.S. workers said they would like AI to help improve their ability to interpret the mood or interest of the person they were conversing with on video meetings.
[Source of data: Uniphore survey.]
- 7 in 10 professionals said the pandemic increased their access to networking opportunities, using platforms like LinkedIn and Facebook.
[Source of data: Skynova report.]
What else we’ve covered
- Figuring out the right model for hybrid-working set ups, will take time and a willingness to experiment. Microsoft has been testing different approaches for some time and has clocked up some useful lessons, including how to capitalize on asynchronous working and how to make hybrid meetings work well.
- One of the unintended consequences of implementing a hybrid working setup, in which employees get to choose which days they’re in the office is the creation of a “culture of cliques.” Some bosses fears that if people pick the same office days as their friends, diversity of thought and ideas will be diluted and this will ultimately water down an organization’s culture.
- We spoke with academic and industry experts to find out what communicative skills are necessary to navigate these new waters successfully and lead happy, productive teams.
This newsletter is edited by Jessica Davies, managing editor, Future of Work.
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