The coronavirus crisis will have long-lasting effects on travel. I don’t think travel companies have internalized this reality yet, with many still projecting a bounce back in the summer and fall and a return to 2019 levels of travel next year or at least by the year after. That’s unlikely.
We can expect fewer ‘must do’ business trips in the future, since videoconferencing is becoming more of an accepted alternative to many meetings that would have been done in person. While the normalization of videoconferencing makes us more location-independent, it also means fewer ‘pay any price’ last minute trips. And don’t expect international travel to open back up to previous levels any time soon.
Bill Gates, who has spent as much time and money studying and preparing for pandemics as anyone, says that business travel will never be the same. Social distancing is going to persist, and that means fewer big conferences and trade shows. It means fewer big restaurant events. It means fewer open bar receptions.
“There are a few things, like business trips, that I doubt will ever go back,” he said. It’s simply a measure of necessity and risk, Gates said.
“In the case of high school, I think the social activity — you know, making friends, hanging out — that you get by being there physically, that’s totally irreplaceable,” he said.
But business trips? Not so much. “There will still be business trips,” he said, “but, you know, less.”
Without a vaccine we’ll travel again, but big group events are going to continue to suffer. Initially a vaccine will probably only be available to health care workers (and politicians, who are more important than we are) in any case.
I do think that Gates is right though that we’ll see a new equilibrium where business trips – even one on one – won’t be as necessary. There will still be trips, but not all the trips we used to make will be considered necessary in the future.
Coronavirus will mean lasting changes in our lives and our politics. I favor more immigration, but for the same reasons that international travel will face barriers we’ll get less immigration ‘for safety and screening’. We’ll accept greater state surveillance, for tracing infections – tracking movements and whom is meeting with whom, to know who might have been exposed to a disease. Arguments over ‘medicare for all’ as a solution to unnecessary high costs for too many doctors and a wasteful oversupply of ICU beds won’t resonate for some time. Breaking up big tech companies providing us online staples, and pharmaceutical companies working on vaccines, will seem anachronistic. (Democrats are lucky then that neither Bernie Sanders nor Elizabeth Warren became their candidate.)
The idea that we’re just going to go back to the way things were seems unlikely at best. Even as people go back to work they won’t do so in close proximity, and that means lasting limitations on entire industries – not just sporting events but also travel. How does continued densification of aircraft, squeezing more passengers in closer together, look in the current environment? And with a return to normal unlikely any time soon, and facing 20% unemployment in the short term, how are financial markets off ‘only’ 17% at present?
Too many trickle down economies to shut these trade show and large sporting event gatherings down. You don’t play college football and you have no money for ANY other sports in college, save basketball that’s profitable at a select few schools is an example. The world will stop doing things they never wanted to do to begin with and will keep doing things that feel good to them regardless of the consequences, how else do you explain smoking?
Companies will use this as an excuse, just like 9/11 allowed FAs to be there only “for your safety” and for hotels to stop using single containers and daily housekeeping under the guise of being “green.”
for the first time in quite a while of me browsing VOTW daily, this was a well written piece. kudos gary.
I have though about this as well. The thing I think will return is sales business travel , but not other types of business travel. That will have to be face to face in order to work. If your competition does a face to face meeting and you don’t you loose. For trainings, meetings, and other types of travel a lot of that can and will be done online.
Gary,
There are many of us out there that are reviewing these very issues with an agreement that travel will change gone will be the days of “hopping on a plane” to go see a client as well as a marked down turn in attendance at trade shows, conferences and seminars. Hotel stays will be down as well. I estimate at least a 25% or more drop in travel expenses within my company alone along with chopping those trade shows etc.
I also question wonder how the airlines will handle the concerns of main cabins packed like sardines in a can? Are people ready for that amount of close contact? I think not. maybe they can do away with the high cost of FF programs using that to reduce the load factors like the old days.
Just saying
What do you think the VP of sales will do when he misses growth projections by a lot? Unless marketing is much more efficient, knocking on doors will always be THE way to get sales.
Agreed on all points, Gary. I do think may be some tweaks as we learn more about the virus – such as if surviving it grants immunity or if it proves to be seasonal in nature – and if anti-virals that mitigate the effects are developed. And above and beyond the risk factor, lots of businesses and other organizations will cut back on travel simply because of the cost savings as video-conferencing becomes more firmly established. One big upside to all this will be environmental, due even more to reduced commuting than to reduced air travel.
Given the unemployment projections you cite, it’s a bit difficult to understand your support for even *more* immigration right now.
Hush about those markets only being off by 17% 😉
I disagree completely — as long as the antibody/herd theory holds true. Once enough people have been exposed to the virus, the virus will no longer spread easily since enough people will have virus antibodies — according to the herd-immunity theory.
We are presently on lockdown because no health system in the world can handle a sudden surge of COVID-19 cases. Vaccine availability or not (and vaccines are not always completely effective, such as the flu vaccine), the spread of the virus will run out of steam over time and life will be back to normal. How long before normalcy return? That’s still unknown, but it will happen (unless herd immunity doesn’t apply to COVID-19; then all bets may be off.)
I agree, however, that the stock market is still overpriced.
OH BS! I heard this when email started; after 9/11; after the Great Recession; etc. . . If Bill Gates knew as much as he thinks he does, CNTL/ALT/DELETE would have never come into being.
Will it be different, yes; will we teleconference, yes; but I worked at home and did all that for 5 years and travelled more during those 5 years then when I worked in the office. It will be back Bill. . .now go back into your bunker and be afraid of the world.
I still think there will be business travel when you really need to be there, like touring a plant or seeing your team in another location. But I agree more of the low priority business travel that can be more easily done with video will not come back.
@Gary —> There are several different issues at hand here, and an extensive time line. And as with everything, there is a worst-case scenario, a best-case scenario, and everything in between.
I am not questioning the fact that Covid-19 has impacted the world, and (perhaps) changed things permanently. (That has yet to be proven, of course, but I do not question the possibility.) There are certain business sectors that can (or will learn to) handle meetings via tele-/video-conference in lieu of face-to-face, and not miss a beat. High-tech is the easiest sector to adapt, as there is already a large amount of this — both intra-office collaborative teamwork as well as international meetings — going on. Certainly there will always be the need to meet, but I agree this can be minimized.
However, some industrial sectors will still need to meet…especially those segments requiring in-person product demonstrations — there are times when watching a demo via the internet just doesn’t cut it! So, too, in the wine trade…the people in (e.g.) Boston will need to taste the new vintage of _________________, and while one can ship the bottles from, say, Napa to Boston, the winemaker will want to taste with them, to answer questions, and — yes — shape their opinions by voicing his or her own. Internationally, I have traveled to Europe on buying trips, tasting wines at the producer’s property — typically *before* the wine is bottled — and placed orders for cases in the future.
In other words, some businesses can all but eliminate travel, while there are others that cannot (to any large degree).
Plus, people generally have a short attention span, and the moment things SEEM to be returning to normal, too many people will rush towards normalcy…and that scares the heck out of me! Too many people are already gathering in large groups and ignoring social distancing, the wearing of masks, or taking other precautions. When things begin returning to some as semblance of normalcy, look out! (This has little to do with travel, per se, but everything to do with human nature.)
We are also looking at business travel both pre-and post-development of a vaccine. Clearly prior to that, all travel will be restricted. Once a vaccine has been developed, however, proof of vaccination may be required for people to travel, but travel they will. That said, along with leisure travel — which I honestly expect to recover first — airline travel will return…but it *will* be different.
The cruise ship industry however…
Things will return to normal gradually as a vaccine is introduced and more people have immunity. In 3-4 years this will be a distant memory similar to roaring 20s after the 1918 pandemic (which by all accounts was magnitudes worse than what we are experiencing now).
Too many people were taking unnecessary business trips and COVID19 will provide an opportunity to companies to re-evaluate their policies.
Over the years I ran into many colleagues where I questioned whether they really had to fly to all these places for the simple tasks they were assigned to do.
I agree that many, if not most, companies will reduce business travels significantly.
@ ghostrider5408: How can you read this blog and somehow think FF programs are a cost center for the airline? They’re a marketing tool that drives revenue through loyalty and cobranded credit card agreements
Of course the Jew favors more immigration
Regarding “herd theory”: There is absolutely no evidence so far of whether, how strong, or low long a survivor will have immunity. The common cold is caused by human coronaviruses. How many times have you had a cold in your lifetime? If coronavirus immunity endured—even from season to season or winter to summer—then you would have had exactly one cold in your life—your first one when a baby. And Covid-19 isn’t even a human virus so we don’t know what it’s going to do. Anyone who believes they know right now is a fool.
While this is well written, and I know you love to travel yourself, I think there’s way too much exaggeration and fear built into this piece. I was hoping the title was just clickbait but you really went for it. Business travel, conferences, trade shows, sports, and stadiums are not just going to cease to exist. Will they change and be drastically different in the next 12-36 months? Of course, but I don’t think they’ll be shut down altogether forever. The world has recovered from countless plagues, outbreaks, and pandemics since the beginning of time. I look forward to being able to attend large events again. There’s ALWAYS been a risk in that. My wife got the flu once about 3-years ago after we flew around Christmas time and attended a 4-day conference with 20,000 people at New Years. There’s always risks of catching viral bugs like cold, flu, coronavirus, and much more. Life will have to go on. I’m not saying throw caution to the wind, but I do not think business travel and large conferences are over as we know it.
You’re very wrong. Business travel will increase in perfect alignment with the economy…. whenever that happens.
“Herd immunity” will only happen when we reach a large majority of people – I’ve heard numbers between 70 and 80 percent- being innoculated,’ NOT “exposed.” For herd immunity to occur solely from people being exposed to this deadly virus, millions and millions of people would have to die. The vaccine is key.
“Never” is a long time. We will see 2019 levels of travel eventually, but it will probably be 3+ years, and maybe (shudder!) more like 7-10. But to say that travel set its high water mark in 2019, and that level will never be exceeded, seems unlikely.
Gary, please explain why you support more immigration when 17 million just filed for unemployment.
Gary,
As someone who before I retired 2019 traveled extensively for business (both as a vendor/consultant and a customer) and participated in hundreds of trade shows and events I agree with you COMPLETELY.
First of all forced video conferencing will let companies see how effective it is and I would expect much tighter travel restrictions even once everything is back to normal (or as close as possible) with respect to health, economics and travel infrastructure. Business travel is VERY expensive and a great way for companies to cut cost (which likely will be needed even more post COVID). Some is definitely required but not all of it and many of the routine status meetings, check points, etc that were done in person could easily be done via videoconferencing.
Then you get to the trade shows. Frankly many are either something the vendors see as an event they have to attend to show they are a “player” in the respective industry or a boondoggle. As a CIO I can tell you when I went to large trade shows it was mainly for the golf and other entertainment with my key vendors. Very little business is actually done at huge trade shows. They will go on but expect vendors (and customers) to maybe send 1/2 -2/3 of the staff they did previously. Also, for the events that are regional I can see them being consolidated to there are fewer such events.
This will definitely occur and people in the trade show industry as well as travel companies dependent in large part on business travel better plan for a reduced level of business even after everything is “back to normal” from all other perspectives.
I guarantee that, in about 2 years, the headline to this thread will seem both absurd and hilarious. Folks: stop worrying. If your governor permits it, go outside for a walk. You’ll be more rational when you return.
I know it’s boring to say but, in a year, life in America will be very much the same as life in America in January 2020. The things that will be different are very unlikely to be the things you currently think will be different. Humans make TERRIBLE futurists. The future is hard to predict. But betting on “normality” is an excellent bet.
I can tell you that without the large trade shows that we attend yearly, we will miss out on ALOT. I don’t expect much travel until there is a vaccine or VERY good treatment, but I do think there is a need for face to face meetings, at least in my business…Video calls work, but trade shows still have a large place in introducing new players/employees/companies, and to handle complex negotiations. I will ignore your anti-progressive slant on this post, and simply say travel will be back, but just like EVERY major event, this will leave a lasting footprint on travel. For a simple one, I have no idea how TSA will function with pat-downs…
Expanding on your point about only healthcare workers getting a vaccine at first, Gates was on CNBC last week saying once a vaccine is ready, we will only be able to manufacture 1 million doses per month, which is only 12 million doses per year in a country of 330 million people. Furthermore, it is unclear whether or not annual boosters may be needed to maintain protection from the virus, which could mean quite a long time before the wider public can get the vaccine.
@ Gary — Yeah, wake me up when the markets are down 45%, which is where they will be within 6-9 months. If Trump loses, they will definitely turn down, as the fraudsters will finally lose their Dear Leader.
The reality is that a decent portion of business travel was NEVER necessary. At times it was almost a perk (yeah, even with the hassles) because some people like being out of the office and either had no family or preferred getting away from them for a few days. In other cases it was simply hand holding to a customer but most of the work can easily be done via telephone or video conferencing.
I brought this up to a company when I was working for them about 10 years ago. We had people fly out in the morning and come back that night or the next morning for a meeting. I asked them “why?” and they said well the customer was paying for it, so we should go. There was no need and nothing that was hands on (i.e., not installing equipment) just discussions.
I never went on a trip and would have refused if ask since it was just a waste of time and money. And there are a lot of travel like this going on.
So business travel will decrease because much of it was never necessary to start with. Kind of like issues with telework. Lots of jobs can be done from home but managers were scared of workers slacking off. Workers slack off at work! And if a manager can’t figure out that an employee doing 40 hrs at home isn’t productive then he/she should be fired. It is just a control thing.
For my own personal business travels, I strongly disagree. I can not conduct my business by video conference calls. I need to come on site and conduct business in person. When its safe to do so, I will be traveling again
@Chopsticks +1.
“…and politicians, who are more important than we are.”
Don’t forget sports and entertainment celebrities. 😉
The business travelers, as a group in general, backed by deep-pocketed corporate travel expense accounts (not on their own dime) been mostly detractors and treated the rest of us (on our own dime) in this “hobby” of loyalty/mile/point hacking with disdain. So, if the above blog post is true, please accept my sympathies in this time of reckoning!
Stay safe!
@LAXJEFF
Are you a massage therapist?
Business travel will return. Not immediately, but it will return. I am to see a video conferencing system that works as well as a face-to-face meeting. And, of course, there is the data security aspect of sharing sensitive information over video conferencing. I negotiate contracts for military equipment with foreign governments. This cannot be done in any way but in person.
As for the cost of travel, depending on the industry, it is a very small piece of a company’s costs. My old company did $6B a year in annual revenue and spent $20M on travel in its heaviest travel year. That is less than 1% of revenue. Even if that were cut to $0 with no impact on revenue, it would have had no material affect.
I spent $150K on travel in my busiest year and closed $1.5B of new business in that time. What I spent wasn’t even a rounding error.
And for those of you who do not travel for business, but use your miles and points to purchase premium travel, do you really think there would be any premium cabins without business travel? You need premium cabin business travel to return.
@chopsticks, Here the abstract of a study (Projecting the transmission dynamics of SARS-CoV-2 through the postpandemic period) that came out yesterday from the Harvard School of Public Health, published in the magazine Science:
“It is urgent to understand the future of severe acute respiratory syndrome–coronavirus 2 (SARS-CoV-2) transmission….We projected that recurrent wintertime outbreaks of SARS-CoV-2 will probably occur after the initial, most severe pandemic wave. Absent other interventions, a key metric for the success of social distancing is whether critical care capacities are exceeded. To avoid this, prolonged or intermittent social distancing may be necessary into 2022. Additional interventions, including expanded critical care capacity and an effective therapeutic, would improve the success of intermittent distancing and hasten the acquisition of herd immunity. Longitudinal serological studies are urgently needed to determine the extent and duration of immunity to SARS-CoV-2. Even in the event of apparent elimination, SARS-CoV-2 surveillance should be maintained since a resurgence in contagion could be possible as late as 2024.”
Lot of misinformation out there regarding a potential vaccine for this virus. Just last night I saw an update on the virus that the NIH and Moderna are working on. Information here:
https://www.cnn.com/videos/health/2020/04/15/coronavirus-vaccine-timeline-acfc-vpx.cnn/video/playlists/coronavirus/
https://www.nbcnews.com/news/nbcblk/scientist-kizzmekia-corbett-leads-way-covid-19-vaccine-trials-dedication-n1181626
That group believes they can have high-risk health professionals vaccinated as soon as fall 2020. They also believe they can get the general population vaccinated spring 2021.
If it works like they hope, I don’t see why the world won’t return to pre-pandemic activity, within a matter of months. I agree with some of the points here about business travel and adoption of different things we learn during this pandemic, but otherwise I don’t know why people would be reluctant to travel if the virus is effectively erradicated.
Normally trust Bill Gates but this is the NIH I cited. And that’s Dr Fauci in the photo. If they say spring 2021 for the general population, I believe them.
And this is one of dozens of vaccines in development. With the stakes so high, the world will move mountains to get an effective vaccine to everyone far faster than ever. It’s pretty much the only thing that matters right now. I don’t think it’s responsible to say we’re in this physical distancing mode for years. We don’t know that.
@Henry LAX: That’s because Gary stole the points from other people at the think tank where he’s CFO. They’ve been doing a lot more “thinking” while watching Netflix and ordering from Amazon.
I’m also asking why we are down only 17% but a lot of the losses are going to be 100% losses in the private limited partnerships and family firms that own commercial real estate.’
You can see the losses in the large REIT’s but they are going to be able to borrow from the Fed for awhile, as long as they are BBB- or better, or were on March 22.
3 Questions:
1) I have $1 million (really) invested in private commercial real estate strip centers in the capital of the oil bust. Most of the tenants have their lives wrapped up in their small business. Anyone want to make an offer of more than $0?
2) I don’t need 6700 sq feet anymore for myself and the 10 cloned dogs (yes, really–Gary has pics). Anyone want to make an offer over $0?
I promise you’ll find a new room you didn’t know was there every week the first year.
3) Were you one of the people who confused ZM with ZOOM and cost yourself a bundle?
2109 traffic levels will probably be back in 5 years. One ain’t gonna happen, three could be a stretch; I’m giving it 5.
In terms of the effect on travel and other “large crowd” events, one would think that 9/11 is a good comparison. How much of this “travel will never be the same” has actually held true? Ok, I now need a boarding pass to get through security. We got the TSA instead of Wackenhut and Huntleigh. Cockpit doors are reinforced and hard to break into.
But has travel been “fundamentally altered”? Eh.
Likewise, we now have security getting in and out of sports stadiums. But we still go, knowing the risks.
I’m hoping that the actual “fundamentally altered” state of travel is the elimination of resort fees. Hotels are going to have some marketing problems when the resort fee is nearly as much as the base rate. Seeing your final price nearly double is really going to piss people off.
FF programs will get people back into seats. “Free travel anywhere in the world” still has a cache, and it’s going to take a lot to say no to that.
Gary’s blog is about 100x more intelligent than the $.02/word UA sub-contracts to HenryLAX to effusively praise them on every blog he shows up on
you know what they used to say about the part of the grand tour where you go and visit antiquities? It gets old.
The new grand tour will look a lot like the last one , moving from private reserve to private reserve. Tourism for the masses is largely passe; unless you are wanting to join in with a group of facemask wearing chinese tourists, they’ll still be there.
Of course you could always just go to the beach, or rather where the beaches used to be before sea level rise. Now sloshing around in the knee deep brackish water won’t hold quite the same appeal, so all those beach vacations (and ski vacations too) can be crossed right off the bucket lists. And of course cruising may stage a comeback too, just more of themed approach- the quarantine cruise, one to three weeks isolated on board depending on the specific blight to be borne out. Putting homeless people aboard cruise ships may turn out to be counter productive too, because the homeless are organically adepts at social distancing.
I’m in Sales, so I get the desire to get back in front of customers, but the thing folks are missing with this is they’re assuming the customers will actually want their Sales rep there in person. I know I sure as hell wouldn’t until there’s a vaccine in place. Just sayin…
@Justin says: “The thing I think will return is sales business travel , but not other types of business travel … If your competition does a face to face meeting and you don’t you lose.
I think sales travel will be the most impacted and I have some circumstantial evidence to support that. In the past few years, software sales meetings have been shifting to video-conference with screen sharing. Part of that is because the “product” is just as present virtually as if you’re there in the room. But I think the other part is that both vendors and customers in that field are both tech savvy and adept at using video conferencing.
After this experience everyone will be adept at videoconferencing, and I think sales of any product that isn’t a solid item will be just as likely to be done by videoconference as software sales were before this.
In person will always be better, but how much better? Three times better? But you can probably do 20 sales pitches by videoconference for every one that requires a flight.
Markets off by only 17%? My airline stock is down almost 70%, and there goes the list….
I pretty much agree. Even a decline of 20% will have a devastating impact on airlines and hotels…and particularly as most of the premium seats are paid for by businesses. The knock-on effect on pricing of economy could be substantial.
@ SalesBro, there will be fewer ppl in the meeting room and you won’t shake their hands. Some will ask you to wear a mask.
Businesses will still need Face-2-face interactions. People will travel solo instead of bringing their SME etc.
So @tommyleo is a supporter of the ‘herd immunity’ theory. I wonder how young he is? Boris Johnson, the British PM was a supporter of that crazy idea until he was himself struck down by Covid-19 and ended up in ICU on a ventilator for a week. Now, nutty Boris is no spring chicken, and I’m not sure how old he is in buffalo years, but I’m guessing he would be in the ascending 4th quartile. Not good odds for an aging member of the buffalo herd, eh? Not unsurprisingly Boris doesn’t mention his wacky theory any more.
Ethicists worldwide have rightly condemned this solution, with it’s neo-Nazi tinges, and it is hoped that the readership here will do so too.
Looks like you will need to wait a bit longer for the family inheritance, @tommyleo.
RE: Boris Johnson: According to the Sunday April 12, 2020 Guardian (Rowena Mason): ‘Boris Johnson has thanked the NHS for saving his life as he left hospital to recuperate at Chequers, after a week of treatment for Covid-19…..Johnson was taken into hospital last Sunday after his coronavirus symptoms, including a cough and a high temperature, persisted. He was moved into intensive care on Monday evening. The government said he was not put on a ventilator but had continued to receive “standard oxygen treatment” On Thursday, he was moved back to a hospital ward after three nights in intensive care.’