In November 2020 Microsoft founder Bill Gates predicted that more than 50% of business travel would disappear as a result of the pandemic. We respectfully disagree.
No doubt, the current downturn will be felt for some time. Since the onset of the pandemic, business travel has shrunk to a fraction of its usual volume as numerous industries have expanded their use of digital services to maintain inter- and intra-organisational communications and workflow. This has indeed cut the amount of travel—both in terms of commuting and longer-distance meetings and events. Many large business events and conferences have also been cancelled, further negating the need for travel. Even after restrictions are lifted, we expect travel for business in 2021 to remain lower than in 2019.
Meanwhile, there is an advancing desire for businesses to be more conscious of their activity within the context of environmental sustainability. The pandemic has provided an opportunity to re-evaluate working practices and the management of business relationships, and business travel in particular. This has led some, including Mr Gates, to question whether there is still a place in the business world for face-to-face meetings, arguing that recent experience has shown that business relationships can function perfectly well online.
We believe that in-person meetings will remain a key tenet of business relationships. Face-to-face contact remains a deep-rooted feature of business activity, and in-person meetings—including at large events—cannot be fully replaced by digital alternatives. Business travel enables more personal interaction and minimises the risk of miscommunication, not least because it is impossible to forget to unmute yourself during an in-person meeting. International business travel also plays a role in overcoming language and cultural barriers. This allows people and businesses to form long-lasting partnerships and maintain a strong rapport with clients.
Research commissioned by SAP Concur in mid-2020 re-iterated the importance of face-to-face contact, with 92% of business travellers expecting their company to experience negative outcomes due to travel restrictions around Covid-19, including a reduced number of deals or contracts signed and declines in new business wins.
While history shows that external shocks adversely impact business travel more than for leisure, subsequent recoveries have also disproved premature predictions of the sector’s demise. Previous global economic shocks, such as 9/11 and the financial crisis, have shown that although business travel is sensitive to external factors, such downturns are not permanent. Business travel was slower to recover from these shocks than leisure travel, but prior peak levels were regained within a comparable time period.
While the standstill in travel has exposed both the negative and positive impacts of the industry and provoked a conversation about future development of travel and tourism in general, there remains a need for a return to in-person meetings—and global travel demand will recover. While recent developments may act as an impetus for more mindful business travel, we don’t foresee a transformation of the kind envisioned by Mr Gates for business travel. We expect global international business spend to recover to pre-coronavirus levels by 2024, and domestic business travel by 2023.
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