When Will Business Travel Rebound?

by Robert McGarvey

Maybe the better question is, will business travel ever rebound?

I am on record as a skeptic about the rebounding of business travel but another day, another report or poll or prediction that the rebound is just around the bend and of course I read the stuff.

Case in point: the quarterly report from the European Travel Commission which is downright optimistic about the brisk rebound of business travel. Just what is the European Travel Commission? Here is the organization’s self description: “Established in 1948, the European Travel Commission is a unique association in the travel sector, representing the National Tourism Organisations of the countries of Europe. Its mission is to strengthen the sustainable development of Europe as a tourist destination.”

You might think that an organization of this kind is inherently biased, that is, its job is to encourage tourism and travel, not to deflate travel or even to objectively analyze the facts. However, the report was produced by Tourism Economics which is allied with Oxford Economics, an economics forecasting company with a glittering client roster.

Here are the two big bullet points made in the report:

*92% of business travellers expect their company to experience negative outcomes (e.g., reduced ability to generate new business opportunities) due to travel restrictions around Covid-19.
* Tourism Economics expect global international business spend to recover to pre-coronavirus levels by 2024, and domestic business travel by 2023.

Let’s start with the thesis that “travel restrictions” caused “negative outcomes” such as reduced new business. In logic there is a fallacy called post hoc ergo propter hoc which fits the claim that reduced business opportunity followed travel restrictions and, therefore, travel restrictions caused the reduced new business reduction.

Uh…I’d say that the uncertainties bred by the pandemic coupled with significant economic contraction in multiple sectors (travel, restaurants notably but also gyms, beauty parlors, spas and a long line of industries that are struggling to survive) have done more to directly reduce new business opportunities.

And I’d say coincidence is not causality.

Meantime, Tourism Economics even points to yet another reason why business travel will be years in rebounding and may never achieve the volume of 2019. The environment, i.e, Greta Thunberg. Wrote TE: “there is an increasing desire for businesses to be more conscious of their activity
within the context of environmental sustainability.”

Absolutely, Many, many companies will take hard looks at their carbon output and jet travel just is a big producer of carbon.

Add the two other factors that are leading many organizations to severely reduce business travel – cost savings and tech tools that eliminate the need to travel, i.e. Zoom, Microsoft Teams – and it’s a powerful trifecta that spells longterm struggles for the business travel sector.

TE believes otherwise. It says: “The importance of in-person meetings is supported by surveys of business travellers, such as in FCM Travel’s State of the Market report from mid-2020. The majority of respondents expected to see a phased resumption of business travel starting with domestic trips. Digital activities will not be a viable alternative to travel over time.”

The FCM data are a cornerstone of the TE argument.

That’s, shall we say, a bit of a problem.

The FCM numbers are especially Panglossian. 40% expect domestic business travel to recover in 1 to 3 months. 32% expect international travel to recover in 6 to 12 months.

Exactly who offered these forecasts? FCM tells us: “We asked our customers and clients from around the world to give us their perspective on when travel will return. Over 1600 individuals responded from multiple sectors.”

FCM is a global travel management company and therefore the people surveyed are people engaged in the business of travel. Are their forecasts analytical – or wishful thinking?

Sigh.

Imagine a beef wholesaler surveying its butcher customers on veganism: passing fad or here to stay? Would you expect accuracy from that survey?

Right now, it just is very difficult to envision a return to significant business travel this year. It is hard to see much internal business travel happening at all – that is inhouse meetings. It is hard to see longhaul travel returning this year, possibly at reduced levels in a year or three.

Will we be traveling at a 2019 pace by, say, 2024? Maybe. As TE predicts.

But if 2020 taught me anything it is that we have entered an era where we lack precedents and, absent precedents, it just is tricky to issue coherent forecasts about the future, particularly several years out.

Guesses, sure. But analytical and grounded forecasts – not so much.

TE’s guess is that business travel will be buoyant in 2024. Mine is that it won’t.

At least I know I am just guessing.

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