The Big Story brings together a select group of special reports to take a more in-depth look at trends in the corporate travel industry. In this issue, Business Travel Executive investigates the changes in the industry and their far-reaching impact on corporate travel programs and the business traveler.
As COVID-19 slowly releases its stranglehold on the world’s economy and on business travel, the realization has set in: We are all in this for the long haul.
From creating programs and policies that reflect a new reality to negotiating in a marketplace where no one is quite sure what’s coming next year – or next quarter, or even next week, travel post-COVID will be more complicated and more expensive, and it will be harder than ever to measure the real return on the travel investment. To be prepared, savvy travel executives are looking at the future from every possible angle.
What a year. Like nothing before, the coronavirus emergency has brought into question the value proposition around business travel. Even as recovery slowly dawns on the horizon, managing travel looks to be more complicated than ever. With both rising costs and potential reductions in travel budgets, assuring a solid return on the dollars invested in business travel is sure to bring new challenges.
Ilan Twig, co-founder and CTO of TripActions, says that despite the unique challenges of 2020, business travel can still be expected to bring a healthy return on investment. "There is no doubt that corporate travel will return as a critical driver of business growth, particularly on the path to economic recovery," he says. "Business travel empowers employees to build relationships, close deals and drive growth."
In a recent post-COVID survey sponsored by TripActions, 88 percent of travel leaders and business travelers agreed or strongly agreed that business travel is important for driving company growth. This reinforces the Oxford Economics study that showed that $1 invested in travel delivers a return of $12.50 in revenue for the business, Twig says. He reports that at TripActions, bookings have steadily increased since the Fourth of July holiday, indicating that more and more businesses and their travelers are ready to get back to travel.
With virtual technology on the rise and travel budgets on the decline, travel will be seeing a shift from general savings benchmarks to evaluating the total value of a trip from a cost and overall business-value perspective, says Mary Ellen Hess, EVP sales and marketing, North America for CTM. Instead of a day trip to New York City to see a customer, for example, that might mean more strategic multi-day trips to conduct several meetings. In the process, one benefit could be gaining more relationship value from each trip away from home.
Hess also anticipates a continued focus on the re-use of ticket assets and credits as a cost and savings driver. Also likely is a review of the value provided by rate assurance technology in response to changing supplier policies and volatile pricing markets.
Ultimately, any attempt to measure the real return on travel dollar investments brings questions related to the metrics of the business health overall, Twig says. Is the company driving growth in revenue and customers, and is it doing so while controlling costs and saving money? And how is the company progressing on the path to business and economic recovery?
It’s also important to take a close look at how agile the business is in responding to events such as natural disasters, political unrest and global health crises like the current coronavirus. A related consideration is the degree to which T&E partners are helping or hindering that agility.
"For travel leaders, this means delivering a robust global corporate travel program that ensures safety and compliance, drives traveler satisfaction and productivity, and maximizes the efficiency and cost-effectiveness of travel," Twig says. That in turn means having flexible and scalable tools for adapting to rapidly changing market conditions, and ensuring that T&E partners are proactively supporting them.
Analyses of traveler satisfaction and NPS (Net Promoter Score) of the travel program, adoption, cost savings, and factors such as the application of unused tickets and waivers within new bookings will help ensure travel budget dollars are not left on the table.
Hess notes that measuring the value of travel is never a cookie-cutter approach. Currently, everyone's operating in a time of pricing volatility where traditional benchmarking may no longer be reliable. For some, a priority is the challenge of defining and measuring traveler wellness and confidence as policies and processes are updated.
"Corporate travel buyers should be able to lean on their TMC and supplier partners to help them measure ROI in a way that’s meaningful to their business and supports their procurement model," she says. "We see this trend continuing."
That viewpoint is echoed by Lee Thomas, chief operating officer of ALTOUR. While he cites a broader success ratio for business travel (historically 5-12:1 ratio), he agrees that although COVID-19 has made business travel more complicated, the effort will still be worth the investment. "Everyone in the supply chain is investing heavily – including airlines, hoteliers, destinations and ground transportation companies – in the safety and well-being of travelers," he says.
Paul Tilstone, managing partner at the consulting firm Festive Road, notes that plenty of people outside the travel sector are overstating the impact of technology and other changes on business travel demand. But at the same time, too many within the sector are underestimating the impact that all sorts of components have had, and will continue to have, on business travel demand.
“Ensuring that companies understand and facilitate purposeful business travel is going to be absolutely key,” he says. “Taking the time to understand what types of travel occur and how they are likely to be impacted is what the travel buyers should be beginning to think about now.” Such knowledge arms not only travel managers but also TMCs and other providers to re-think where value is added. Success in these roles isn’t about a never-ending drive for compliance against all the odds, Tilstone says. It’s about recognising what the company and travelers need and how that can be provided.
Old Challenges, New Calculus
Implications for budget planning vary from the concerning to the not-so-bad. Based on communications with global procurement teams, finance contacts and others, CTM does not expect travel budgets returning to pre-COVID levels for the foreseeable future. "With airfares highly volatile, the reuse of unused ticket assets will be critical," Hess says. Similarly, the adoption or refinement of re-shopping tools can combat the volatility of hotel dynamic pricing.
Thomas expects to see companies evaluating how they do business and embracing a hybrid approach of virtual and face-to-face meetings. In the process, that will lead to reduced travel budgets. But he notes that the outlook isn't overly gloomy. "The good news for budgets, I believe, is that pricing will be low as suppliers fight for market share and product differentiation."
To some degree, savings from reductions in travel may offset budget cuts. Many organizations have assets they’re sitting on, says Will Tate, a partner in Goldspring Consulting, with funds not spent in a recent budget period available for future use. Too, unused tickets assets will be an even great plus with the waiver of change fees. “We can expect a burst of travel activity when people feel safe,” Tate says. “This should include a lot of prepaid travel that won’t affect budgets.”
Budgetary decisions will also see new types of complications. "Safety is going to enter into travel policy like never before," Thomas says. He expects to see a cost-benefit analysis for choices such as a more expensive hotel in walking distance of the office, as opposed to the cheaper hotel that would require the traveler to take public transportation. “The dollar is not the only way of measuring ROI, and we’ll start to see that more and more.”
Of course, some value can never really be measured, even if most would acknowledge it. "Although virtual meetings are here to stay, at our core, humans are social beings and prefer doing business with those they like," Thomas notes. "And getting to that point in a relationship requires face-to-face time."
He points out that an actual meeting is only part of the picture. Conversations at the coffee station pre-meeting or the post meeting walk to the lobby are where business professionals gain the greatest insight into one another’s expectations and needs. "Businesses who embrace corporate travel will have a distinct advantage over those that do not," Thomas adds. "In the end, all businesses are human-powered, and corporate travel is an important fuel."
It’s also important for travelers to be informed about what suppliers are doing, Tate says. Issues such as consistent use of masks and proper cleaning practices should be communicated. Not only will travelers expect such assurances, but managers will want to know that travel expenditures are supporting safe practices.
He recalls a recent lapse when a traveler expected a flight to include plenty of social distancing. Instead the plane was completely full, with people coughing and speaking loudly. Hotels also run the gamut from well-planned spacing to a somewhat oblivious approach to the pandemic. In such situations, the investment in travel dollars fails to bring full value in terms of employee confidence, if not other considerations.
Pre-trip approvals are also seeing a new level of scrutiny. “Most travel managers are putting in some kind of acknowledgement about high risk areas, “Tate says. That might range from disapproval to providing information on potential threats. “You certainly don’t want to have a traveler be surprised when they land and have to go into quarantine for fourteen days.”
Tate notes that the need for creative collaboration will still require substantial in-person interaction. “It’s hard to do that on a screen,” he says. “Companies will continue to invest travel dollars in high value, high return on investment.
Tilstone says aligning travel spend to organizational objectives is essential. For a commercial company, travel might be the best way to generate revenues. But for an NGO the focus may be on putting people on the ground to feel and see the landscape before delivering services. Taking the time to understand where face-to-face really brings value is the first step, according to Tilstone. Then everything beneath that, where face-to face brings incremental value, is of second priority subject to other determining factors such as a focus on sustainability or cost.
“I think we could get too wrapped up in trying to find some dollar ratio for a return on travel,” he says. “Investigation, listening and common sense should suffice for companies to really think hard about the ROI of travel and what their program might look like in the future.”
