Traditional managed business travel has returned to about 75% of what it was prior to the pandemic. And a return to 100% wouldn’t even be a return to trend. Before the pandemic business travel was growing. Yet it’s remained stubbornly stuck, three and a half years after companies sent everyone home.
There are many reasons why business travel has not fully returned.
- Some business travel wasn’t actually necessary, and Zoom is a reasonable substitute at least once you account for the value of peoples’ time and also for cultural expectations of people you’re visiting.
- Employees have an enduring preference not to travel.
- Coordination problems persist – since not everyone is back in the office all the time, there’s not as much visiting them or flying out to work with them in their offices.
At the same time other forms of travel has backfilled, including some business travel. For instance companies that have gone remote may bring in teams more often for retreat weeks, to norm everyone and help maintain the culture. And people may do more business trips that combine with leisure, working from the resort where they want to spend a long weekend for instance. This may even mean net more travelers, taking family trips together while one person works for a day or two. (For years commentators wanted to make ‘bleisure’ a thing and as awful a word as it is, the pandemic sort of gave them what they wanted.)
This stubborn refusal for business travel to return to trend is persistent. There’s some speculation though that all it will take is another economic cycle to get back to where we were before. Employers will gain leverage to do the thing they want to do. But that does not seem correct.
Many companies are pushing employees back to the office, but that’s frequently not every day. Even financial services firms where the push has been among the hardest haven’t gone back every day.
Two-thirds of executives at US financial services firms would quit if they had to return to the office 5 days a week, per Deloitte.
— unusual_whales (@unusual_whales) August 18, 2023
Worrkers making over $150,000 a year prefer working from home and would be willing to take a 20% pay cut to continue doing so, per McKinsey.
— unusual_whales (@unusual_whales) August 18, 2023
And that means coordination issues for business travel are real. Your in-office days may be different from the person at the next company over. There will remain fewer visits to clients in the office and more importantly fewer trips out to work at a client site for the foreseeable future.
However there’s a theory:
- If the economy enters recession
- If the unemployment rate rises
- Then companies will have more leverage over employees
- And employees will be more willing to go back into office to get a job, rather than holding out for one that entails primarily work from home
And there may be some truth to that, but there’s an underlying trend that it misses. There are entire companies that have gone remote and stayed remote, and entire companies that have started out in the past three years as wholly remote. Those are younger companies. Rather than having new in-office companies replacing sunsetting in-office companies, there are more remote work companies entering the pipeline which will replace older companies that die off.
Of course many older companies succeed! They’ll still have their in-office culture, but over time we can expect more and more competition from companies that do not insist on in-office work. And especially in the next boom as companies compete for workers, more again still will do so on the basis of out of office work.
A key reason why #WFH will grow over time – cohort effects. Young firms are much more remote. As they grow some of them will turn into the medium and larger firms of the future. This cohort effect is slow but steady, driving WFH levels up in the next few years. pic.twitter.com/GukcEv21Yu
— Nick Bloom (@I_Am_NickBloom) August 17, 2023
Budgets are being drawn for 2024, with full business travel likely not in those plans. As a result we may not see the return of managed business travel much higher until 2025. In the long-term though we’re likely to see work from home, and thus reduced levels of managed business travel, persist and grow in the future – even if there’s increased return to office along the way. I was never among the extreme pessimists but at the start of the pandemic I wrote that some business trips would never return and that still seems right.
The slices of business travel that are not coming back are: the discretionary, client-stroking diplomatic missions, which always yielded dubious value … and the Q4 flurry of not-strictly-necessary trips we used to invent reasons to take in order to requalify for Gold or Platinum or whatever.
The death of the former is down to business travel being a lot less fun: the airlines are unreliable, upgrades and perks are a thing of the past, and Zoom is now a culturally acceptable diplomatic channel.
The (quite rational) death of the unjustified Q4 junket is down to status not giving enough value to justify chasing it.
In both cases and more, the airlines and hotel chains do not seem to realize they could stimulate business travel, at least somewhat, by making it less miserable and more welcoming. But they are marching further, defiantly, in the opposite direction. Who would choose an eight-hour EWR delay over an hour on Zoom from home in a dress shirt plus pajama bottoms?
Interesting statement: “Employees have an enduring preference not to travel”. If I had to summarize my impressions after 42 years with a Multinational, it would be this: 1) Nearly 100 % of the single professionals enjoyed both Domestic and International Travel; 2) Nearly 100 % of the married professionals with young children hated both Domestic and International Travel; and 3) Over 50 % of the married professionals with older children moderately enjoyed Domestic or International Travel.
If we assume a typical corporate mix of 20 % single and 80 % married, I’m not sure we get to the point that “Employees have an enduring preference not to travel”, but I could be wrong (I’m biased). What I would say (having seen the policy change over the years) is that all employees have a particularly strong dislike of International Travel via Economy (Warthog) Class.
I am a lawyer and with the implementation of zoom/remote hearings, I have only been to Court once since March 2020. No need to travel for meditations, court appearances, etc.
What @Evan said.
Used to be common for a dozen or more lawyers to fly in the evening before a 30 minute Hearing or Conference (that sometimes would have been over in 10 minutes) that’s now almost always done remotely. Not good for the travel industry, (the airlines, the hotels, the restaurants, the rental cars, etc.) and not good for the bottom line of the law firms that used to get paid for all that travel time and now get to bill for 30 minutes. It’s nothing less than a revolution in the way things are done.
The type of business travel has changed, so I think business travel in some form will recover 100%. People who work remotely now routinely attend offsites several times a year to get together with their companies. These is a whole segment of travel that didn’t exist before. There are also many more digital nomads traveling around constantly.
there is also the insane prices of biz class vs. before which suppresses demand. Transpacific used to be ~$3k return, now can easily be $8k for the same product. These prices are due to limited supply as mostly biz cabins are full.
@rdover: As crazy as international J prices have risen, domestic F is much more reasonably priced compared to a decade ago. Hence no free upgrades, because customers buy the product.
I know for me, business travel is 15% compared to pre-pandemic and might eventually increase to 25%. If the business grows, it will reach or exceed pre-pandemic in absolute levels but not per capita levels.
Business travel as it was before the pandemic will likely not recover. But there will still be business travel, with more travelers and more income than might have been predicted before the pandemic.
That travel will be in some respects different from what business travel used to be. Don’t be hasty with your prediction, Gary. I suggest you have too few data on which make a good prediction.
The ramifications are interesting too. Less need for laundries to clean and press business suits, less needs for hotels and conference sites, and so on. The readjustments are hard on those businesses, but I think the pandemic just accelerated by a decade or two a trend that was happening anyway.
@Mak: If lawyers traveling is good for the law firm, why isn’t it requiring it? Are they afraid the lawyers would balk? Or the clients? I’m not doubting you, just curious.
I am personally happy that business travel has gone down. Now us regular FC pleasure passengers don’t have to put up with the arrogant, self centered
“Don’t you know who I am ” crowd.
I flew from the west coast to a Midwest city last week. The flight was full, no drama. Both ways. Also the hotel was full.
@Tom and rdover1: Well said. Business class is over priced. Let’s see how long flyers can keep chasing worthless status. 1K is nothing when flying with UA. I am sure AA, DL top-tiers are in same boat. In 2023, I decided not to chase status with UA as it definitely not worth. Flying 5 international trips to Asia in Economy. I saved thousands and it is not that difference (except the seat of course). Very happy with my decision NOT to chase UA status.
As a new head of a software company, I realized I that “discretionary” client stroking that many claim is unnecessary resulted in a lot of lost business and goodwill.
I took over our airline tickets in my pocket and visited every major or at risk client over 120 days.
People are people and they want to feel important and heard. I encourage all companies to not forget that if you leave your clients unattended someone else will steal your cheese
Many firms are penny wise and dollar foolish
@ Mets Fan in NC: And some firms still confuse motion with action and progress. There was an agency head in my past who wore a rut in the sky up and down the west coast, schmoozing with clients and prospects, taking them out to lunch and dinner, etc. but rarely landing a new account or preventing existing ones from slipping away owing to meta forces we could not control (market fortunes, cut budgets, etc.) 75% of the man’s job was sitting in F on Alaska. Our organization spent untold thousands flying the big guy around to no avail. If there’s a silver lining to the new world order it’s that such behavior earns an even more jaundiced eye.
I traveled by air for business only once if I remember correctly and that was with my boss. We flew coach but were treated well in the 1980s. With the problems of full flights and canceled flights added on top of the knowledge that some meetings can be done remotely, I would also expect that some business travel will no longer be done.
As a consultant who travelled 45+ weeks pre-pandemic, clients have figured out they did not need us on-site every week and are enjoying the savings on expenses which was usually at least 20% of the overall consulting costs.
While I kind of miss having the top elite status everywhere, I do not miss the grind of airports, restaurants and hotels.
Earlier this month Zoom itself announced it was requiring its workers who live near a company office to report back to the office twice a week, saying that it’s essential to keep teams connected and working efficiently. There are lots of moving parts here as companies balance employees’ preferences, pay, efficiency, culture, the competition, and many other factors. It’s going to become an important part of the recruitment and hiring processes going forward. I think it’s impossible to predict the future for business travel.
Very good.
OPM flyers please stay home.
Us real travellers and the general public will not miss your I m special attitude when reality you’re just another drone doing your corporate bossman’s bidding.
Since when do business executives work 5 days a week anyway?
Haven’t heard of the bleisure concept before – not surprised there is a catchy term for it. Bleisure is clearly pushed by many people for different reasons. Here is my take on ‘bleisure’; by mixing business and pleasure – and living vicariously through your business, individuals can make personal pleasures a business write-off.
Anyone can start an llc, take a trip, vlog it, and start deducting expenses – because that trip now has a business element that lives up to IRS guidelines.
I think this bleisure concept will grow in popularity for a variety of reasons. Some reasons will be more sincere and well-intentioned, others might not be.
I do think there will be a new type of business travel that takes place due to the pandemic. Remote / hybrid staff have shifted society in countless ways. Remote staff who live in unexpected places (remote or low cost of living areas that are away from corporate offices) are traveling to their corporate HQ or regional offices. Where I think this will be most noticeable is in flights out of 2nd/3rd tier cities, along with hotel occupancy rates. These flights and hotels are busier than ever, as the “tentacles of society” have spread farther (geographically speaking). I look forward to watching the data unfold over the years to come, as I imagine business travel will have a slow – but steady growth rate over the years to come (providing no new pandemics or large recessions)
Unless one is observing an manufacturing facility (very few these days) most “consulting”, auditing, accounting, engineering and other heavy travel jobs are basically taking data from one computer system, analyzing it and sticking it back into another computer system. Really no need to be onsite anymore…