As Business Travelers Long for Recovery, Large Companies Are Resistant to Returning their Employees to the Skies
It’s been more than two years since business travel was halted due to the COVID-19 pandemic and, even as some road warriors have resumed their old itineraries, the path to a full recovery of the business travel economy is still dotted with challenges.
From rising fuel costs to the widely expanded use of virtual meetings as a replacement for face-to-face connections to restrictive corporate policies put in place during the pandemic, businesses are still facing significant headwinds when it comes to corporate travel.
According to our forward-looking Business Travel Index, developed in collaboration with the U.S. Travel Association and Tourism Economics (an Oxford Economics company), business travel activity is expected to increase over the next quarter. Moreover, according to our accompanying Business Travel Survey for Q2 2022, business travelers expect to resume traveling at a frequency only slightly reduced from pre-pandemic levels, averaging about 2.1 trips per month over the next 6 months. While that seems to be trending in a promising direction, business travelers—particularly those at large companies—remain skeptical that their travel will increase dramatically in the near term.
Corporate Policies Restricting Business Travel
More than two-thirds (68%) of corporate executives expect the company they work for will spend less on business travel during the next six months compared with the same period in 2019. While there are many factors keeping business travel in check, chief among them are corporate policies. Half of executives say their firms still have policies in place restricting business travel due to the pandemic. The most frequently mentioned policy restrictions include fewer business trips overall (71%) and fewer employees sent per business trip (58%).
Base=Corporate executives with company or organization policies in place restricting business travel specifically due to the Covid-19 pandemic
In fact, one-in-five (20%) employee business travelers say they are unsure they will make a trip for purposes such as a customer meeting during the next six months. The most frequently cited reasons for this uncertainty are video conference substitutes for business travel, company cost constraints and companies restricting employee business travel.
Larger Companies = More Restrictive Travel Policies
A greater proportion of larger companies (45%) continue to have restrictive policies governing business travel in place vs. smaller companies (24%). That’s despite the fact that 80% of executives at large companies consider business travel essential (vs. 73% of all executives). More than one-fourth (28%) of business travelers at larger companies have budget constraints to attend conferences, conventions or trade shows.
The Ripple Effects
How do these restrictions affect business growth? Both business travelers and executives alike cite negative effects related to a reduction in business travel. Executives appear particularly focused on the expectation that reduced business travel may represent short-term savings but bring long-term reductions in sales (51%), while half of business travelers (49%) perceive reduced business travel will have a negative impact on company financial performance.
Base= 195, Corporate Executives Q2’22Business Travel Survey;
Base= 2031, Business Travelers Q2’22 Business Travel Survey
The Road Ahead
While the pandemic was certainly the catalyst for the current slowdown in business travel, businesses now must grapple with this pressing question: What part of the “new normal” is the bigger concern, living with the threat of COVID-19 or missing out on valuable face time with clients and customers in a volatile economic environment?
The barriers to adoption that once prevented online meeting platforms from acting as suitable substitutes for meetings and conferences have undoubtedly been eroded. But do these solutions truly replicate a pre-2020 existence? And if not, where is the tipping point that will finally swing the pendulum back toward busting terminals and packed convention centers? From the prevailing attitudes of travelers and executives alike, we may have already arrived.
Find out More
Data provided is based on the Quarterly Business Travel Tracker, launched in April in a collaboration between U.S. Travel Association, J.D. Power and Tourism Economics (an Oxford Economics company). The Q2 2022 results are based on responses from 2,545 business travelers and responses from 195 corporate executives across multiple industries gathered May 20-26 2022. Please contact us at the numbers below to connect with the J.D. Power Travel & Hospitality Intelligence team or to learn more about the underlying research.
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, J.D. Power; West Coast; 714-621-6224; [email protected]