Business travel is an important segment of the tourism sector and contributes to many related service industries. Therefore, the recoverability of business travel post-Covid is one of the topics that many analysts are concerned about and make many different forecasts.
Business travel brings huge revenue for many businesses, especially airlines. As reported by Skyscanner, many airlines’ revenue generates mostly from business class. Business travelers make up only about 12% of total passengers of some airlines, but typically bring in 24% of the total profit. For some others, the profit from this passenger group can be as high as 75%.
According to Certify, a leading company providing expense management solutions for corporates, it is estimated that there are around 445 million business trips each year at the total expenses of approximately 251 billion USD. Also, a study from Oxford Economics shows that each dollar invested in business travel can generate as much as 12.5 USD in revenue.
The above figures show that business travel plays a vital role in contributing to profit for many businesses.
However, the outbreak of Covid-19 causes a lot of damage to the tourism sector, and business travel is no exception.
Government restrictions, border lockdown as well as quarantine requirement and social distancing halted business travel around the globe. According to a survey from the Global Business Travel Association (GBTA) last April, 98% of the association’s member companies have canceled international business trips while 92% of companies cut all domestic business trips. On average, each business traveler takes 6 to 8 trips per year. However, this number is likely to fall between 3 and 4 trips per person per year until 2023, according to FCM Travel Solutions.
The future of business tourism is predicted to change significantly
With the prospect of global economic recession after the pandemic, many businesses will have to find ways to cut cost to maintain their business operation. Therefore, the reduction of unnecessary business trips may be one of the options that businesses will consider. In the time of not being able to resume the travel between countries, many businesses also promptly switch to other alternatives such as working remotely, using online meeting platforms to adapt to the crisis and comply with social distancing regulations.
These above will greatly affect the recovery of business travel in the future. There are different predictions and expectations for the resilience of business travel, but most of the predictions show that this segment has slower recovery than leisure travel.
According to a survey conducted by McKinsey, global travel managers and directors from some businesses think that business travel may gradually recover in phases. In terms of distance, domestic business trips will likely resume first. International business trips will take longer to recover as many governments’ travel restrictions remain complicated as well as mandatory quarantine poses inconveniences. Regarding the purpose of the trip, trips of essential businesses and in-person client meetings will be able to recover sooner. Conferences or events with large numbers of attendees will not be able to recover in the short term since they require higher safety measures to be implemented. Business travel in some sectors such as professional services or retail which is hit harder by Covid-19 will resume more slowly than industrial and production-oriented sectors.
Stuart Middleton, Skyscanner’s Chief Commercial Officer believes business travel will take several years to return and it might look very different as well.
He said: “The economics of air travel are fundamentally changing – airlines that relied on business class for a large proportion of their profits will need to re-think their strategies and cabins will need to be reconfigured. Remote working and private flying are making all the headlines right now, but ultimately innovation – whether in ticketing, pricing or the overall experience – will be key to re-attracting business travelers. In the short term, confidence in health and safety measures will be paramount, but the blurring of lines between business and leisure travel is a key trend I expect to see over the next few years.”