Are business trips slated to become a thing of the past?

The coronavirus pandemic forced many companies to halt business travel almost overnight. The economic consequences for airlines and hotels have been dramatic, leaving many wondering if corporate travel can bounce back. In 2019, scores of domestic and foreign guests traveled to Berlin to attend conferences and conventions, like the annual international tourism trade fair, ITB. Their visits translated into considerable revenue for the transportation and hospitality sector. Estimates by Germany’s business travel association (VDR) show that in 2019, German companies spent a record $61 bn on business trips, sending 13 million employees on work-related trips.

The following year, business travel all but ceased. In a bid to contain the coronavirus, countries around the globe shut their borders. Countless conferences and trade fairs were canceled or replaced by virtual events. According to VDR estimates, in 2020, German companies reduced business trips by a staggering 80% compared to 2019. Prior to the pandemic, Lufthansa, Germany’s biggest carrier, earned half all revenue from business trips. Selling business class tickets has been highly lucrative for carriers, says professor Yvonne Ziegler, an aviation expert at Frankfurt’s University of Applied Sciences. So lucrative, in fact, that some airlines, including Lufthansa, have relied heavily on corporate travelers and afforded less attention to holidaymakers.

Now, major airlines like American, Delta, Emirates and Finnair have reacted to the sudden drop in work-related travel by removing business class berths from aircrafts and replacing them with premium economy class seats. “Very few conventions and conferences are being held at the moment, so few business travelers are flying, which means reserving excess space aboard aircraft makes no sense,” explains Ziegler. ACCOR, a major hospitality chain operating some 350 hotels in Germany, has had a tough time these past two years, confirms Ben Brahim, who runs its German operations. One strategy to cope with the shortfall in corporate clients has been to target local companies and office workers by renting out hotel rooms as temporary workspaces.

Inge Pirner, VP, VDR, is confident work-related travel won’t disappear in the long-term. She says interpersonal meetings are crucial for firms eager to win over customers and build mutual trust.

Back in 2020, Microsoft founder and philanthropist Bill Gates predicted corporate travel would not return to pre-pandemic levels. He projected that 50% of business trips would disappear long-term as enterprises now have a “very high threshold “ for sending staff packing.

This view is echoed by the VDR, which expects the overall volume of business trips to significantly decline in Germany. A reduction in work-related travel, after all, saves money, time and helps reduce a company’s carbon footprint.

That said, corporate travel won’t be phased out entirely, as it remains key to building trust, fostering relationships, and promoting products. Moreover, new hybrid formats combining business and pleasure — so-called “bleasure” travel — are expected to grow in popularity. Similarly, there will likely be more people choosing work remotely and become so-called digital nomads.

This article was provided by Deutsche Welle