Back in April I wrote that there’s a portion of business travel that will never return. And I’ve offered all the reasons why business travel won’t be back soon. With offices bringing back only a portion of employees at a time, there’s no client visits that can happen. And large events won’t return for the foreseeable future, until the virus is no longer a meaningful threat.
However business travel is going to change. Remote work brings its own kind of business travel, with companies bringing employees in – at least in groups – to build and maintain a common culture. And we’re already seeing banks bringing traders and investment bankers back into the office in greater numbers.
I’ve been overall a pessimist about business travel, but Southwest’s CEO takes it too far, arguing that he “wouldn’t be surprised to see business travel languish for a decade before it gets back to 2019 levels.”
Sure, he’s signaling that with their relatively strong balance sheet and largely domestic travel exposure they’re better-positioned than rivals to withstand a long travel recession. But we’re already starting to see cracks in the ‘indefinite work from home’ model.
J.P. Morgan led the way growing their in-office presence from 25% to 50%, with Goldman Sachs quickly moving to match. They want to signal that they’re willing to make sacrifices for their clients and face time now is a way of signaling machismo against the threat of the virus. And this is a competitive position – when one business demonstrates to clients they’ll visibly deliver an in-person service, others have to match or lose business or at least be afraid that they will.
Tech companies may not take that position but for the most part they’re serving large numbers of relatively equal low value customers rather than winning a sweepstakes for high value clients and deals. But once investment banks are back and traveling, who comes next?