It has been 622 days since I last stepped foot into a physical conference back in March 2020, and, perhaps aptly, this week I spent time at the center of the business travel universe: the 2021 Global Business Travel Association (GBTA) conference in Orlando, Florida.
I visited GBTA for two reasons – first, because travel is a key category for procurement teams. I first managed it all the way back in 2004. My first act was to take travel management away from our former parent company in what turned out to be a political minefield! There are few, if any, categories where the stakeholders – your travelers – are so vested and opinionated. I have a number of war stories, but those are probably best kept for another day!
Secondly, I’m very interested to hear the ‘word on the street’ regarding the rebound of business travel on behalf of our brand partners, and, more specifically, meetings and events.
Here are the highlights:
Business travel spending is not expected to return to pre-pandemic levels until at least 2024. GBTA’s BTI Outlook report identified a number of threats to this forecast, including persistent COVID-related disruptions, rising inflation, labor shortages, broad adoption of remote working models, increased focus on sustainability practices, and long term cuts or elimination of business trips. In short, the threats to the recovery of business travel spend are likely to persist.
The cost of business travel is expected to significantly increase in 2022. Flight prices are expected to rise 3.3%, hotel rates 13%, and ground transportation 3.9%. Airline capacity is tight, and not expected to reflect pre-pandemic levels until 2023 or 2024.
Demand for meeting and event space is up 53% for 2022 vs. 2021, but that is almost entirely driven by small local and regional events that require little or no travel. The number of people that are anticipated to attend meetings and events has also halved.
There is significant pent up demand for travel, as can be evidenced by a strong rebound in leisure travel, but what is a personal decision for leisure travel is bound by corporate policies for business travel. Many businesses remain focused on their duty of care and responsibility alongside the ability to reduce travel budgets. What is the liability for a business that allows an employee to travel and they catch COVID? What disruption does that cause across their business?
The biggest conundrum is how a company can help ‘cavalier’ travelers become more risk averse? ‘Cavalier travelers’ – those who take few precautions when they travel – increase the risk profile of business travel significantly, leading to conservative policies that limit the ability of all travelers – whether they are reluctant, responsible, or cavalier.
Image: considerations for helping travelers travel with confidence. A particular area of focus for procurement is in the pre-trip approval process, applying both a criticality of travel assessment and a destination risk assessment to determine the inherent risk of a trip and mitigation measures before its approval.
Note: for more on the topic of Duty of Care, check out this podcast that I recorded with Caitlin Deegan of Egencia on traveler safety, as part of our pandemic pressures business travel series back in September 2021)
It isn’t all doom and gloom however. Business travel spend is expected to be at 75% of pre-pandemic levels in 2022. Necessary business travel is still being approved, with spend shifting from individual business trips to internal meetings and events that compensate for the shift to remote working. Discretionary travel looks likely to have a much slower return to pre-pandemic levels, and as other business models and technology emerge to replace the benefits of the non-essential travel of the past, the question will be, “What is the new normal?” Answer: TBD.
And what about meetings and events? The corridor conversations suggest that many businesses are still erring on the side of caution – external meetings and events are not considered business critical unless it is required as part of a job. This is evidenced by the fact that at many in-person events, the provider community is attending in greater numbers than practitioners. That being said, optimism was the name of the game at the conference, with a hope that wider-scale business travel will resume once companies pick up the pace of office reopenings following what is looking to be another COVID peak this coming winter.
As you might expect, digitization features prominently in conversations about the travel category. From enhancing the traveler experience to driving more effective hotel procurement, new technology is enabling companies to think differently about how they buy travel with a continued push towards self-service, underpinned by seamlessly integrated rules and governance. I was particularly interested in talking to a provider in the hotel booking space that is providing much-improved insights into the sustainability impact associated with booking individual properties. This is now playing into the total cost calculation of which hotel to book.
Finally, and most interesting to me, the pandemic has created an opportunity for many organizations to reimagine the art of the possible when it comes to architecting and delivering their travel programs. This encourages a hotbed of new innovations – whether that is process, program design, data management, traveler experience, or procurement innovation. It is an exciting time for those that embrace it!
Two final thoughts for procurement leaders based on my corridor conversations:
In many organizations, the role of ‘travel manager’ went away during the pandemic because there was no travel to manage. These travel managers moved to different roles, some of which are outside of the travel industry altogether. As travel rebounds, procurement may be called upon to fill the gap this has created. If your organization is not strategically managing the travel category today, you have an immediate opportunity to elevate your impact.
And finally, a bit of a red flag for some procurement leaders managing travel: listening in to a couple of sessions, there is an interest to reposition travel as part of “workforce mobility” rather than an “expense to be managed”. Savvy procurement professionals have long taken a much broader perspective on how to manage travel that goes way beyond cost. Those who haven’t may face internal pressure to hand over the reins to HR.
The bottom line: optimism abounds, but there are still a lot of unknowns. Anticipation for the return of travel will take a phased approach – sales meetings and business-critical first, internal meetings next, and finally bigger conferences and events.