WORKING ON A COMEBACK

When the Covid-19 virus shut down travel four months ago, AmaWaterways president Rudi Schreiner said, his employees — like much of the travel industry — began spending most of their days on video calls, webinars and other virtual events that keep them face to face with travel advisors.

“Our sales and marketing teams are extremely busy,” he said, noting that his wife and company co-founder, Kristin Karst, “is constantly on some kind of video conversation,” a trend that he thinks will alter the role of sales calls in the future.

“The [business development managers] used to fly all the time, visiting agencies and so on,” he continued. “Today they can do 10 times as much — 100 times as much! — online.”

River cruising might be a leisure product, but filling the ships had involved a lot of business travel for sales forces. Predictions that videoconferencing could reduce business travel expenses were common in past crises, like 9/11 and the 2008 recession, but those predictions turned out to be overly optimistic. 

However, Chris Davidson, executive vice president of insights and strategy at MMGY Global and head of its MMGY Travel Intelligence division, said the widespread adoption of easier-to-use video chat platforms during the pandemic are “going to have a more dramatic impact on business travel going forward.”

The degree to which videoconferencing will replace business travel is just one aspect of the uncertainty facing travel management companies (TMCs). There’s also the constantly changing rules on quarantines and self-isolation, the ebb and flow of infection rates, ever-evolving border policies, pandemic-related liability questions, nonstop budget reforecasting, airline instability and hotel closings. The outlook for business travel’s recovery grows only murkier over time.

If the path forward is unclear, looking backward provides little comfort: Business travel rebounds typically lag behind the return of leisure travel.

But with a crisis comes change. And TMCs said they are using the pause to solidify relationships and to develop new products and services that underscore their value. Everything is under review, from fee structures to supplier relationships.

‘I think there is an opportunity to [rework] the whole environment, the whole TMC landscape,” said Jennifer Wilson-Buttigieg, co-president and co-owner of Valerie Wilson Travel. 

Will business travel return?

With the mid-March global shutdown, business travel came to a crashing halt. 

The latest forecasts from Lodging Economics, commissioned by the U.S. Travel Association, estimate that business travel will be down 35% this year compared with last, while leisure is anticipated to drop 28%.

But it also predicts business will regain some of those losses in 2021, with 29% growth compared with 26.5% growth for leisure next year. 

“The assumption is that business travel will recover more slowly than leisure, due in part to risk aversion,” said Aran Ryan, director of lodging analytics for Tourism Economics. 

Ryan said that in addition to worries about the virus inhibiting travel, cutting travel budgets is viewed as an easy way to contain costs, though it’s often done without carefully assessing the implications of those cuts.

A global survey of 1,600 business travel managers, bookers and travelers conducted in May by FCM Travel Solutions and its sister company, Corporate Traveller, showed that only half of respondents believe their business travel volumes will eventually reach pre-Covid-19 levels.

“The business travel landscape and the needs of our customers have changed beyond all recognition over the last few months, and business travel conditions will continue to evolve and shift as everyone comes out the other side of the global pandemic,” said Charlene Leiss, president, Americas, for Flight Centre Travel Group, FCM’s parent company.

But forecasts tend to change, sometimes dramatically.

Davidson, for instance, said his firm has been regularly gauging traveler sentiment but has stopped short of trying to make any projections about the pandemic’s economic impacts.

“I think back to when we were about a month into Covid-19 and look at the projections being released now. They are astonishingly different. We could put out predictions, but the reality is, we don’t know.”

He said that how much time elapses before the development of vaccines and reliable treatments will greatly impact how and when companies return to travel.

“No doubt, I do think business travel is going to take years to recover,” he said. “I think it will be a steady return over time. But I think that there’s no doubt it will be different by sector. There are certain industries where face-to-face business sales are critical.”

And while many companies may continue to substitute video for in-person travel for both safety and budgetary reasons, Davidson said those who return to the road first will have a “significant competitive advantage.”

Increased reliance on TMCs

Helping companies get employees back on the road could also give travel advisors and TMCs an edge as businesses concerned about traveler safety and liability tighten their policies to ensure workers are booking through an agency or TMC rather than on their own.

“There have always been multiple types of travel policies,” said Jay Ellenby, president of Safe Harbors Business Travel in Bel Air, Md. “Some say, go out and find the best deal; that’s about the worst possible policy. Or, they will say use the designated travel company, but if you find something better, go for it. Or, it’s mandated that you use the travel provider they’ve contracted with.

“Today, we are seeing that there is a move back to a more consolidated and managed travel program.”

Wilson-Buttigieg agreed, saying the need for companies to keep track of the physical location of their employees is critical.

“A lot of companies used to say to use one provider but then have a few exceptions. Not anymore,” she said. “Companies [need] to know where their employees are and that they’re OK and how they can get them home or wherever they need to be. It’s of paramount importance.”

She predicted there will be changes in many aspects of corporate travel management, including how TMCs are compensated and how they work with suppliers.

“I think there’s an opportunity to look at rebooking fees,” she said. “Everything was a commodity and a transaction. We’ve had months and months of refunds and cancellations and rebookings — all that work, and there was no compensation for it.

“I think the financial model will become far more transparent. We’re not going to go back and charge people retroactively, but I think we’ll be setting new parameters moving forward. There’s a wariness to say, ‘Sure, I’ll rebook your bookings using credits, and then if a second wave comes, I’ll refund them all a second time.’ I think there are expectations in place for rebooking fees, cancellation fees.”

With all the layoffs in the hotel sector, she also sees a huge opportunity for companies to recognize that travel advisors are actually their sales force — and compensate them as they did their in-house salespeople.

“Most [hotel] salespeople were compensated whether guests traveled or not,” she said. “Why is the paradigm different for a TMC? I think we have to use this crisis as an opportunity to relook at all of these components. That’s when I start to think big picture.”

Providing guidance, education

For now, the most important service travel advisors say they can provide is information.

“The biggest hurdles really are the unknown,” Ellenby said. “People just want to know what the experience is going to be.

“After 9/11, we were able to tell them, ‘Listen, give yourself some extra time, because there are going to be some unusual things going on, and TSA’s new, and they’re going to be working through this process.’ They got used to it; TSA refined the process, introduced TSA Precheck, introduced Clear and so on.

“But now it’s the absolute Wild West when it comes to each supplier, to each state.”

To help educate clients, Ellenby said he has been posting video interviews with hoteliers, car rental companies and airlines about how they’re responding to the pandemic.

Stephen Thomas-Schulere, senior vice president of strategic solutions for Balboa Travel in San Diego, said, “One of the most important roles we’re playing now is just giving guidance to travelers and to travel managers on the information that is coming out.”

For instance, he said, for each booking Balboa sends detailed information about the destination, the airlines they’re flying “information about their trip to help them know the circumstances under which that trip is going to take place.”

“That’s something we feel is important, because unless you’re an avid traveler, you don’t know what the policy is on American or United or Delta or any other carriers for that matter. We’re sending that information out after they book so they have that information that’s attached to that trip at their fingertips.”

Valerie Wilson Travel has taken its information campaign a step further, partnering with GeoSure to give clients access, via app, to a platform that uses artificial intelligence to analyze hyperlocal health, crime and other data and provides real-time travel risk assessments for more than 65,000 cities and neighborhoods around the globe.

TMCs are also busy trying to assess how big an impact video technologies will have on business travel in both the short and long term.

“I do think that there will be some impact,” said Thomas-Schulere. “Because platforms like Zoom are taking root, I believe companies will continue to include them as an option to conduct business moving forward. 

“The more sophisticated and secure [the platforms] become, the more they will be considered, and the return on investment between an in-person meeting as opposed to video can be a huge factor, depending on the type of business being transacted.”

Wilson-Buttigieg said videoconferencing will not replace business travel in the long run.

“While tools like Zoom are a great way to both continue to collaborate with suppliers and keep clients inspired, business travel in the long term will return,” she said. “There is nothing better than face-to-face interactions to do business and cultivate relationships.”