Perspective

COVID19: When Business Travel Goes Virtual

Business travel, the backbone of the travel and hospitality industry, has already dropped and is projected to sharply decline in the coming months due to COVID-19 fears. While the virus likely won’t cause a paradigm shift in business travel it’s forcing companies to take alternative measures such as virtual meetings and events. COVID-19 also is forcing businesses to look at subtle ways to change when and why they should travel.

“We could see situations unfold where business travel is restricted to relationship leads but people doing project work shift to more remote work,” said Dan Lubetsky, senior director, customer experience and innovation. “Being able to operate more efficiently is critical given many outlooks have been cut as a result of COVID-19.” 

The travel and hospitality industry has been drastically affected by COVID-19’s impact on the global economy and with the World Health Organization declaring the virus a pandemic, it’s unclear how long companies can expect the economic fallout to last.

The Global Business Travel Association, the trade group that represents more than 9,000 business travel professionals part of the $1.4 trillion business travel sector, expects business travel worldwide to take a $820 billion hit this year, with most of the losses coming from China and elsewhere in Asia. A recent poll from the organization found more than 41% of its member companies report their organization has canceled or suspended all international travel, regardless of region. Members also reported canceling an average 43% of business trips (all global regions) previously booked for March 2020 due to the COVID-19.

The United States also temporarily banned most travel from European countries except the UK, which is another major setback for business travel.

While many companies have turned to virtual meeting platforms like Zoom, Slack, and Skype to conduct business, the rise in use of these platforms as a substitute for travel is most likely a temporary blip. 

Conversations over whether technology advancements will lead to a decrease in business travel demand have continued for years, but demand has only grown. Global business travel spending has grown between three and five percent annually since 2012 and is projected to reach $1.7 trillion by 2022, according to the Global Business Travel Association. Virtual meetings can’t replace face-to-face meetings, and many cultural traditions favor the personal touch that face-to-face affords. 

This is a key reason why business travel will always remain viable for companies, said Khurram Farooqui, group vice president, Travel & Hospitality. “Virtual meeting solutions cannot fully replace the need for a face-to-face meeting, and the sudden increase in traffic, for example from schools that are moving their classes to online platforms, is straining the infrastructure,” he said. “The dilemma is, do companies invest in expanding this infrastructure when in a few months this additional demand may subside?”

Industry outlook

For the travel and hospitality industry overall, the coronovirus is similar to an economic downturn. The virus has weighed on China’s manufacturing sector and caused a ripple effect on the economies of the rest of the world. 

“A disruption in supply can cause demand to adjust, meaning that business patterns overall may change, such as companies choosing to ramp up manufacturing in the United States versus China,” said Farooqui. “This can impact business travel as executives who planned to travel to China may not need to do so because of a shift in manufacturing or if a company goes out of business. Travel and hospitality will likely feel the effects of the virus for much longer than the time it takes to get the pandemic under control, and that is tied to the impact on the global economy overall. But business travel will come back.”

There aren’t many silver linings to what the industry is currently experiencing. But if there if there is something the industry can learn from COVID-19, it’s that a slowdown in travel presents an opportunity to streamline operations and diversify your business, by re-evaluating customer service, demonstrating empathy and earning trust, and improving inventory and products for when demand does come back.

Streamline operations

Call centers typically don’t have dedicated staff for business travelers; they may have dedicated numbers for different loyalty tiers that include both business and leisure travelers, so everyone waits in the same line. But at times of stress, people just want to talk to a human. 

“If the website or another channel isn't crystal clear the tendency is for someone to pick up the phone and call,” said Farooqui. “This puts tremendous pressure on the call center. What are the changes a brand could make to its website or mobile app to make it super convenient for people to use? Even when they call while they're waiting, is there information you could give people that would make them get off the phone and go to the website or app?”

Demonstrate empathy

According to Farooqui, a little PR could allay the minds of travelers fearful of being in spaces like planes and hotel rooms that are typically perceived as germy. 

“Airlines use high-efficiency air filters on par with those used in hospitals, which means the air is cleaner than what you find in the typical home or workplace,” said Farooqui. “Let travelers know they can book their flight or room and if they change their mind, there’s no change fee.”

Brands could also offer promotions and sales to stimulate demand later this year. While people may not want to travel for the next few months, telling a family of four to spend $2,000 and fly anywhere in Europe this summer is an enticing bargain. 

“It’s all about, can you package up the same thing you sell right now in a different way and make it more attractive to someone?” said Farooqui.

Diversify your business

Many travel and hospitality brands have made investments to improve overall travel convenience but those efforts don’t help when the overall industry is down.

Airlines, for example, should be thinking about their cargo spaces and how they could expand that offering while commercial airline demand is down. In the U.S., airlines have rerouted some wide-body planes used for international routes and deployed them to longer domestic routes. Be more scientific about how you use the wealth of customer data you have about customer behavior to fine tune what you offer to them, and when. The more agile you are to shift your business to new revenue streams, the stronger you will emerge from a setback.

Qantas, for instance, partnered with most major Australian banks in 2014 to allow travelers with virtually any credit card from these banks to earn Qantas frequent flyer points through every day spending. 

“The Qantas loyalty program became more than points for a flight, expanding into a marketplace and go-to commerce channel,” said Lubetsky. “People are engaging with Qantas and not even flying. This is great for people who might not be traveling but want to stay connected to the brand. Especially if you’re someone who does travel a lot but right now you aren’t, you can still earn points. Those who help the customer now will be able to get back highly engaged customers when they do return.”

This is also a time for brands to test out new business models, such as subscriptions. Look for ways to connect with customers who are loyal to your brand but haven’t reached the highest tiers of loyalty.

“What if people who are in a lower loyalty tier but travel all the time opt into a subscription model that gives them new perks and earnings and helps them go up the loyalty chain?” said Lubetsky. “These are travelers who haven’t been getting the highest benefits from your program but why not give them more value, all wrapped up in predictive revenue? And those travelers now don’t see the competing airlines in the same way because you have a subscription, a commitment to a specific airline.”

Improve inventory and products

Brands also need to be sensitive to their staff’s needs during times of crisis, and while many will inevitably fall ill from COVID-19, this is also a time to present learning and growth opportunities to staff.

Singapore, a COVID-19 hotspot, created a Tourism Recovery Action Task Force to aid its tourism industry’s recovery. The task force is offering absentee payroll and course fee support for businesses affected to send their employees to various training opportunities. The goal is for tourism businesses to use this down time to train employees so that they’re better prepared for similar events in the future and ready to elevate the brand experience when demand picks back up. 

Many brands should also use this time to complete or move forward with renovations and improvements that will reimagine products that inspire travelers when they feel comfortable returning. 

The recovery

It’s human nature for people to want to venture beyond their homes and regions to explore new places. The travel and hospitality industry has weathered many catastrophic events in the past such as 9/11 and the Great Recession, and in every circumstance travel always climbed back and flourished. COVID-19 is unique in that there’s no clear end in sight or economic model to predict how long the virus will pose a risk. But the good news is that many travelers still have money to spend, it’s just fear that’s temporarily holding them back, and the same is true for many companies’ travel budgets.

“Those travel brands who have the resilience, demonstrate empathy with the traveler at the center, streamline operations and diversify revenue streams will rebound stronger with a loyal and trusting customer base,” said Lubetsky. “New offerings from ancillary revenue streams to integrate into the core offering and new operational efficiencies to scale will also help the bottom line.”

Dan Peltier contributed to this report