A year ago this month, the Centers for Disease Control & Prevention declared that COVID-19 was heading towards pandemic status. Today, we’re lucky enough to start seeing green shoots of recovery—slowly, but surely.
We all know that in business, the travel industry was one of the hardest hit. It’s also got one of the most difficult roads to recovery. It’s still very hard to say when international borders will be opened again, and what requirements we’ll need to fulfill in order to get back on the road. The question on everybody’s lips is— when will businesses travel again?
Without a crystal ball, we can’t know for sure. What we can do, however, is use our data and industry knowledge to try and make reasonable predictions. And that’s exactly what we did. Check out some of the main recovery trends we see emerging today, and what that actually means!
General trends shaping the road to recovery
Domestic business travel is making a faster comeback than international travel. From our own data, we can see that domestic travel is returning at a faster rate than international travel. In November 2020, for example, domestic recovery rose to 13.3%, whereas international travel was almost half that at 7.1%. That could mostly be attributed to the fact that international travel restrictions tend to be more stringent. The movement of people and “know-how” is, for the time being, starting to make a comeback domestically.
We’re also seeing that leisure travel is coming back quicker than business travel which is consistent with recovery patterns on previous occasions. After the 2008 financial crisis, leisure travel took 2 years to recover. Business travel, on the other hand, took 5. That could be due to leisure travel’s more discretionary nature, or the duty of care implications that business travel has for a company. That being said, business travel and the travel sector as a whole bounced back once—and it will again, although it may take some time.
Travel behavior in China, for example, gives us a glimpse of hope. Hotel occupancy and the number of travelers on domestic flights had recovered to 90% of their 2019 levels at the end of August (McKinsey).
Yes, people do want to go back to traveling for business!
What are some of the reasons people want to go back to traveling for business?
1. Essential travel for things that cannot be done online
We're already starting to see a strong recovery in some core industries:
Machinery & engineering
Deployment and maintenance of machinery simply has to be done on-site and there are similar patterns in related fields like manufacturing, energy, and transportation. In fact, our machinery customers are traveling more than anyone else and lead recovery at 45%.
Amid a global pandemic, it makes sense that the healthcare industry needs to start moving again. From bringing personnel like doctors and nurses to areas that need them, to distributing medicine and vaccinations, healthcare companies need to continue traveling. Our healthcare customers are back to 37% of pre-pandemic travel. We’re also seeing similar trends with biotechnology companies, and anticipate that they’ll have to continue traveling throughout the pandemic and after.
Consulting and professional services
While these industries aren’t traveling a lot just yet, I anticipate that as of the latter half of 2021, the rate of recovery for those industries will be a lot quicker than any other. That’s mainly because, in my opinion at least, these industries rely heavily on the movement of know-how and the people are the product. If a customer is paying thousands of dollars a day for a consulting team, chances are they will want to see them face to face at some point.
2. To deepen sales relationships
For those working in sales, building more meaningful relationships with customers just can’t be done on Zoom. 27% of respondents to an Oliver Wyman survey stated that they would need to travel more in the future to rekindle existing business relationships.
3. To win new customers
Customers with an emotional relationship with a brand have a 306% higher lifetime value and are likely to recommend that brand to a colleague or friend at a rate of 71% (Hubspot). How do you create emotional relationships? You guessed it, through human connections.
4. To gather their teams and meet co-workers
A recent survey we conducted in-house revealed that 47% of regular travelers do so in large part to get together with their co-workers. As remote work and “work from anywhere” become increasingly normalized, teams will need to travel more to come together, strengthen relationships and build a company culture.
5. To foster cross-cultural communication
Meeting face-to-face and developing interpersonal relationships with colleagues is more important in relationship-focused cultures, where it can make or break your business deal. The ability to travel and create these relationships can be a great business opportunity and competitive advantage.
6. To attend networking events, trade shows, and conferences
There’s no doubt that these kinds of gatherings will take the longest to recover. But pre-pandemic, business people loved attending events like these! In fact, the trade show and exhibition industries were valued at $81 billion back in 2018 (Forbes). The extent to which such a huge, face-to-face industry will recover remains to be seen. It will take it a long time to get back to the same strength as before, purely because of the scale of in-person interaction that comes with it.
Based on all that, it’s a pretty safe assumption that aside from essential travel, sales roles will be among the keenest to return to business travel. That being said, such a return is completely contingent on all parties involved being comfortable with the travel required. It also depends on the speed with which vaccines and other COVID-19 safety measures will be implemented. As we enter the “next normal”, traveler safety is paramount. Companies need to keep themselves and their travelers informed of all of the latest travel restrictions and safety measures before any trip.
Business travel recovery
While we can’t say for certain when and how business travel will return, we’re seeing interesting trends that will shape recovery. So, how might it actually look?
A recent McKinsey report outlined a possible path to recovery, which I happen to agree with. We’ll start by traveling locally, to places we can drive to from the comfort and safety of private or rented cars. Then, as restrictions ease and traveler trust starts to return, we’ll begin to travel for business domestically on trains and planes. International air travel will come back last. That will take the longest to recover so that we can contain the further spread of the virus across borders.
Professionals will also start going back to business travel for different reasons. The most pressing issues will be to do with essential travel, critical in-person meetings, and sales opportunities. Then, companies will encourage employees to travel for internal meetings, networking with colleagues, and other small gatherings. Things like conferences and trade shows will take the longest to come back due to the number of people and contact they imply.
Our own data shows that the machinery and healthcare industries will go back to business travel the quickest. McKinsey’s report indicates that manufacturing, pharmaceuticals, tech, real estate, and energy will also be among the first industries to make a comeback to business travel.
It would take an act of magic to predict the future and accurately state when business travel will come back for sure. What I am certain of is that it will come back. The question is how much of it and by when, and what the needs of companies and business travelers will be in the new normal. And that’s what we’re here for at TravelPerk - to find solutions to these emerging needs and future-proof business travel.
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