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Off-Roading: Business Travel in 2021

Michael Young Big Thinks December 2020 Predictions for 2021

The first time someone loses a sale to someone who held a face-to-face meeting, Sales Leaders will have to reevaluate the impact of virtual versus face-to-face meetings in their business niche.

Business travelers used to be the golden goose for the travel industry. While business travelers used to deliver up to 75% of the revenue on some airline routes and almost 25% of all profitability, the IATA now predicts a $118.5B loss for 2020. Not surprisingly, hotels have been similarly dependent on business travel and their occupancy rates and revenue per available room have seen sharp decreases as well, with Marriott reporting only 37% occupancy and IHG reportingly 44% occupancy. Clearly, the lion’s share of the industry’s revenue generators has moved off the road.

Replacing this travel is video conferencing as remote work has quickly become standard practice for many skilled professions. Yet the McKinsey Global Institute reports that only 29-39% of all work, and only 24% of selling, can practically be accomplished in remote environments. Upcoming vaccines also give people hope that travel and some degree of normal life will return, possibly as early as May 2021.

So what will happen to business travel in the next 12 months? Clearly, there is a desire by many to engage in physical, face-to-face meetings. They argue that many intangibles can’t be captured on a Zoom call and relationships are built more authentically in person. United Airline’s CEO Scott Kirby is fond of saying, “the first time someone loses a sale to a competitor who showed up in person is the last time they try to make a sales call on Zoom.” Yet, major corporations are already planning to scale back on corporate office space. Moody’s Analytics estimates the office vacancy rate will increase from 16.8% at the end of last year to 19.4% by the end of 2020 and exceed 20% by the end of 2022.

Many people have trouble envisioning a world without some degree of business travel. As a road warrior for over a decade, it doesn’t take long to think about all the networking that happens from industry conferences and all the lessons learned from candid customer conversations over dinner. As a business leader, we realize the importance of periodic strategy formulation meetings and brainstorming sessions as well. Still, business is about getting work done productively and effectively, and multiple studies show that at least some degree of remote work can be associated with increased productivity.

For these reasons and more, I predict the “off-roading” of 2020 will generally continue for international travel due to local quarantine policies. Domestically, the first half of the year will see off-roading continue and will see some recovery in the second half of the year as health risks decrease. Even then, the time and costs required to travel, combined with the greater availability and acceptance of virtual technologies, will elevate the threshold to necessitate a trip for the foreseeable future.

Looking ahead even further, Most airlines are looking at a multi-year recovery, and Delta’s CEO states that the new normal could see a 10-20% reduction in business travel. Bill Gates predicts that 50% of business travel and 30% of time in the office will be eliminated permanently.

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