The long & winding road to corporate travel recovery
As the pandemic continues and travel-industry players look ahead for a rebound, McKinsey research shows that the post-crisis return will take years and that business travel will return at a slower pace than leisure travel. Business travel will eventually return—but in phases. Examining the purpose for travel, travel for sales and client-related meetings is most likely to be among the first to return as domestic travel resumes and more travel is permitted, according to those interviewed.
Sales-focused organizations expressed an urgency to return to face-to-face meetings, with the understanding that doing so will require both parties to be comfortable with the travel required. Whether client offices will reopen to workers and allow guests will be a major indicator of the likelihood of that type of travel returning. Other interviewees expressed a need to keep up with their competitors: once peers begin traveling for sales meetings or pitches, companies will face increased pressure to return to travel to win business among key customers.
The timeline for travel for internal in-person meetings to resume is longer, with higher levels of scrutiny on what is considered business critical and can’t be accommodated with technology. Travel to interact with physical assets—data centers and IT infrastructure—will take priority. But economic constraints across industries, especially those hit hardest by the pandemic’s economic disruption, will decimate internal travel as budgets get disproportionately cut. Travel for internal MICE and other off-site gatherings may not return until well into 2021 or later. And some travel for internal purposes will be permanently replaced by virtual meetings and collaboration.
Business travel for major industry events will most likely be the last to return, as it requires a higher degree of confidence in public safety.
Business-travel players must evaluate the economics and pivot where needed. Airlines, for example, may choose to shift their business-class pricing and marketing to appeal to high-end leisure customers. Hotel operators may choose not to operate all their facilities or amenities or perhaps keep entire properties closed until demand returns. Trade associations and event planners, too, must pivot, bracing for a slow return to travel for in-person events or investing in technology to create high-quality virtual experiences to generate revenue. Alternatively, players may realize that they need to seek new revenue streams to survive. For instance, hospitality companies may choose to re-purpose event and meeting spaces as shared-workspace options for companies that have reduced capacity at their own office sites.
MICE sales cycles, in particular, are long—from six to 18 months or longer. Hotel chains and event spaces will need to maintain frontline sellers to stimulate long-term demand but may need to centralize or share resources across properties and adjust incentives and targets. Click here to read the full report.