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In our post-pandemic world, a thing or two have changed. COVID-19 has taught us that in many cases, working from home doesn't pose any mention-worthy limitations. And it comes with significant benefits. For example, people tend to be more productive in their home office. Plus, they get to spend more time with their families, which often results in a better work-life balance.
Consequently, remote working and video conferencing have become part of our daily working lives. Meanwhile, sustainability issues are increasingly important. The results: more online meetings. And if people really need to travel, they're inclined to jump on a train or combine visits to several customers into one trip. How does all this impact the world of business travel?
3 types of business travelers
First, let's have a closer look at some relevant aspects of (business) travel. I will mention some percentages that give an idea of the state of travel affairs. These are based on a range of studies as well as my own practical experience — in this case, there isn't a single truth.
Basically, there are three types of business travelers:
1. The avid traveler
Some people have never stopped traveling and likely never will. Even at the heat of the COVID-19 crisis, they considered travel to be essential. They'll rebound quickly and completely but could be open to combining trips. Avid travelers make up 10%-20% of corporate travel.
2. The reflective traveler
'What are the alternatives to business travel?' That's the main question on the reflective traveler's mind, who is currently in the process of re-evaluating travel. This group makes up 10%-30% of corporate travel.
3. The undecided traveler
Approximately 50%-80% of travelers are still in doubt as to what business travel should look like these days. So, the pace at which they'll return to business as usual may vary from one person to another. The undecided traveler will likely consider environmental aspects, too, which means they might combine trips.
The impact of changes in travel behavior
Corporate travelers tend to use flag and full-service carriers, so these airlines will be most affected. A mere 12% of their passengers travel for business purposes, but they bring in 75% of these airlines' profits as they usually book more expensive (flex, premium economy, or business class) tickets.
Low-cost carriers, on the other hand, will be impacted to a much lesser extent. They are less dependent on high-end corporate travelers and will benefit from a steep surge in leisure travel. In fact, corporate travel cost restrictions may even lead some business travelers to opt for low-cost carriers rather than their full-service counterparts.
Now, let's do the math. If 15% of business travel is lost due to the above-mentioned reasons, a typical airline company will lose 2% of its passengers but 11% of its profits. It will have to find a way to compensate for that loss.
What will (and won't) return
Business travel for the purpose of internal collaboration will lag behind. Organizations across the world have discovered that people can perfectly work together online. Therefore, only visits to customers or expert site visits will still be deemed necessary.
What will definitely return are visits to conferences and trade shows, as these are (at least to some extent) categorized as corporate leisure travel — many consider opportunities to attend such events as perks of the job.
Eventually, business travel will return to the 2019 level. But that will be due to market growth, and it will take quite some time. In 2023, business travel is still expected to be 15%-20% lower than in 2019 — assuming COVID-19 won't cause any new disruptions.
As restrictions are lifted, business and leisure travel will return to normal at the domestic (the U.S. and China) and regional (EU) levels first. Recovery will be slowest at the intercontinental level — each country has its own rules, and borders may close again if new COVID-19 variants are discovered.
As a result, competition will be most fierce when it comes to domestic and regional travel — all the more so because there aren't that many low-cost carriers offering intercontinental travel. That means full-service carriers will have to put their best foot forward to stay in the game.