Business travel stopped more or less overnight when governments in many countries closed borders and implemented travel restrictions to limit the spread of COVID-19. As of April 2, 2020, nearly every country in the world has some form of entry restriction. According to Pew Research, 93% of the world’s population lives in countries or territories that are the subject of travel restrictions. The travel restrictions have killed hotels. All reasons for travel are more or less banned and people are advised or forced to stay home. There is no demand for accommodation.
Before the COVID-19 outbreak, it was business as usual. World travel has steadily increased year over year and the major challenge for the hotel industry was to increase capacity at the same pace. Before the crises, the hotel construction pipeline peaked at some 14 000 new hotels worldwide. The hotel industry was operating at full speed and no one had the time or wanted to change what they thought was a winning concept.
In April 2020 there is more or less no demand for accommodation. Hotels layoff most of its employees and management. Some hotels stay open while others close and some will file for bankruptcy. Every industry expert has an opinion about when everything is back to normal or what a different future will look like.
Let's analyze the most important reasons for business travel by looking at trends already affecting business travel. Next, we combine those trends with the forced change in working- and meeting behavior during the lock-down. This might help us understand if business travel will look the same or not after the crises is over.
Business travel was already changing
The past ten years with a growing world economy, business travel has been growing as well but not at the same pace. New technology, such as video conferencing, has been replacing business travel and saved on travel-related costs. It is difficult to change human behavior, so especially the older generation has had some problems adapting to the digital way of working. Not only from a technology point of view but more so from a management point of view when human interaction takes another form. Today the whole world works from home. Technology is in place and it seems to work without any major problems. Over the next couple of months, management will learn to manage a team that is not in the same office. The management in companies will develop their skills to lead teams that are not fully visible.
In the next two months, people will develop their skills to lead and participate in digital meetings. They will discover that digital meetings work much better than anticipated. A little bit of training was all it took to push the whole world into becoming more digital.
There are five major reasons with an endless number of subcategories for business travel. Before the outbreak, there were strong trends of change within each of these major travel reasons. The outbreak of COVID-19 has accelerated these trends. Business travel is up for a major and rapid change.
Corporate business travel
Corporate business travel and physical business meetings have been taken for granted as a necessity to operate a company. Everyone needs to meet in person to make plans, follow up and manage projects. From now on and in the future, meetings will be fewer and most work will be done from the home office using new tools. Microsoft Teams, Google Meet, Slack, Asana and Trello are some examples. These and other tools will evolve over time with more functionality and higher quality in connectivity, picture, sound, and security. Employees can do their work, participate and meet the other team members instantly from wherever they are. It is tempting to skip that business trip and instead collaborate digitally.
Many new tools focus on replacing physical business meetings to help companies save on business travel. When the COVID-19 crises is over, people will again start to worry about climate change. Consumers will put pressure on companies to travel responsibly to minimize the effects of the climate. This will continue to drive people into the digital way of life.
Will digital meetings will replace all corporate business trips? It all depends on if the trip is domestic or international and it depends on different business cultures between countries. Hotels will notice the impact of all these factors and will see a decline in corporate business travel over the next couple of years.
Buying and selling
The next category of business travel is taking a trip for meeting customers and suppliers. To understand how this category will change over time, we have to think about how sales processes have started to change. For many years the salesperson had an information advantage over the customer. Today the customers are better informed than the salesperson. The sales cycle has changed over time. Cold calling is over and lead generation is the new way of finding av potential customers. The salesperson will be involved later in the sales cycle and maybe the first contact takes place as a video call instead of meeting in person. This means less business travel for salespeople.
Learning and developing
All companies need to develop their employees. The need for education and training is essential in the future to win in a competitive marketplace. The old classroom teaching is still around, but e-learning is the first option. Every company is now hosting a webinar instead of having face-to-face meetings. Most likely e-learning will see a rapid development to be able to meet new requirements from both companies, employees, and participants.
For the same amount spent on classroom training, the company would be able to train and educate more employees by moving to e-learning.
During the COVID-19 crises, many employees will have had the first try of e-learning. They will discover that it worked better than they had expected.
Networking and collaboration
Maybe people will feel lonely in the digital world, so people still want to meet. When they meet, they would like to maximize the benefits and meet as many people as possible at the same time. This category includes conventions, congresses, corporate meetings and other gatherings for exchanging knowledge and collaborate.
Many of these gatherings have been postponed due to COVID-19, but they will eventually take place later this year or next year. Technology will develop over time to make it possible to participate remotely in these types of gatherings. A digital presence is not the same since the major reason for networking and collaboration is the face-to-face meeting.
Reward and motivate
The last travel reason for business is to reward and motivate your employees or customers. For now, this is very difficult to do remotely and in a digital way. People need to be present to experience the true ambiance to get the right feeling during these types of events. These events will be postponed until the world opens up again. Many companies will skip these meetings all together this year.
Business travel will never be the same again
Business travel will never be the same as before the virus outbreak. People have involuntarily been trained in how to work from home, use technology for meetings, how to manage a remote workforce among other things. This has changed their perception of business travel from absolutely necessary to optional. Why would anyone want to sit in an airplane for several hours and stay in a standardized hotel room? Skip this hassle and have a digital meeting from home.
The final conclusion is that many hotels will experience a decline in business travel compared to before COVID-19.