Fifteen months ago, I wrote an article for Business Travel Executive in which I outlined the impact of COVID-19 on business travel and how the crisis created opportunities for travel managers. Let’s review where we are today and where we’re going.
Where We Are Today In April 2020, the Transportation Security Administration processed an all-time one-day low of 87,534 travelers through its airport checkpoints. Currently, it is not unusual for over 2,000,000 travelers to be processed in a day. While encouraging, this is still 20 to 25 percent fewer travelers than in 2019. International travel continues to be significantly reduced due to the various COVID protocols required by many countries.
Vaccination rates in the United States continue to lag behind many other developed countries. Currently, only 65 percent of Americans have received one dose of the COVID vaccine, and a slim majority, only 56 percent, of the population are considered “fully vaccinated.”
In contrast to the situation in mid-2020, most airline clubs have reopened, suspended routes have returned, and beverages and snacks are being served on airplanes once again. Many hotels have reopened, although some will never reopen. Occupancies have climbed back to normal levels in some – mostly leisure – markets. Rental car rates are up, Hertz has emerged from bankruptcy, and people are on the road again.
What have travel managers accomplished during this time? For one, there has been a lot of sourcing activity. There are many TMC bids outstanding. Hotel programs are being sourced for 2022, many for the first time in two years. There have been many travel policy reviews, traveler safety and security program reviews, and much focus on travel sustainability. There have been many methods of communication used to keep employees up to date on travel requirements – both internal and as dictated governments.
The return on investment of corporate travel is – as it was post-9/11 and during the 2008-09 Great Recession – under the microscope. This time, however, Zoom, Microsoft Teams, Google Meet, and other technologies have proved effective in conducting business. The right questions are being asked:
• When does a traveler need to travel and why? • What is going to be accomplished by a trip? • Can the trip objectives be accomplished with the use of technology? • What is the health risk to a traveler from using ground transportation, flying on a plane, sitting on a train, or staying in a hotel?
My previous article correctly predicted traveler safety and security as primary areas of focus for traveler managers in the months to come. The increased importance of communications was also covered in that article and certainly proved out given the many conflicting directives, almost daily changes to travel procedures, and varying guidance coming from regions, nations, states, provinces and localities. The increased focus on these areas certainly continues today, as it will for many more months ahead.
Where We’re Going As the earlier article suggested, airlines are smaller, there are fewer hotels, and rental car fleets are reduced in size. Therefore, as we come out of corporate bans on travel and government travel restrictions and traveler pandemic fears are mitigated, corporate sourcing activity will increase. Old agreements likely will not meet current travel needs. Re-examination of preferred supplier relationships will be required. Travel managers will need to be alert to situations that may have potential impact on their programs. These include:
Supplier activity resulting in a contraction or expansion of their delivery capabilities – The picture may involve mergers, acquisitions, partnerships, and bankruptcy reorganizations or dissolutions. As an example, the recent alliance between American Airlines and JetBlue Airways allows the two carriers to pool their gates and takeoff and landing slots, providing them with a far greater presence especially at Boston’s Logan Airport and Washington, DC’s Reagan National Airport. Further, the airlines can now codeshare on 175 routes. The codesharing arrangement allows one airline to market and sell another airline’s flight as its own. Additionally, the partnership has introduced 58 new routes. Although the agreement is currently being reviewed by the Justice Department and may ultimately be reduced in scope or undone altogether, whatever happens, travel managers will need to monitor this and other similar situations closely to determine the impact on their travel programs.
Hotel capacity and rate changes and the impact on hotel sourcing – No portion of the travel supplier system was more impacted by COVID than hotels. As a result, hotels continue to face the highest level of change. This includes when to open, what services to provide, and how to price. As noted earlier, many travel managers rolled over their 2020 hotel programs to 2021. For many this was acceptable since travel volume was very low and the impact of paying 2020 rates (even though higher than publicly available rates) was small. The same will not be true for 2022. Therefore, many hotel programs are being sourced this fall for the first time in two years. The uncertain hotel environment is a ‘poster child’ for the analysis and evaluation of the benefits of dynamic pricing. Rates are likely to continue to fluctuate wildly for several more months. COVID hot spots will reduce demand in some locations while others will be largely unaffected. The potential presence of new virus variants may cause additional market unrest and pricing changes. Therefore, for many travel managers, the best strategy is to negotiate dynamic rates with rate caps in high volume locations to avoid short-term demand spikes driving rates higher.
Continued scrutiny of meeting requirements and meeting fulfillment – Earlier we mentioned the success of technology as an alternative to certain in-person meetings. That said, as travel becomes post-pandemic, meeting volumes will increase. There isn’t now, and likely never will be, anything to replace face-to-face meetings. But for the travel and/or meeting manager there will be more focus on the meeting’s return on investment. There will be fewer meeting attendees with longer and more focused agendas held in lower to moderate cost locations. Social distancing requirements will place fewer attendees into larger rooms, at least in the short term. Food service will tend toward plated meals as opposed to self-serve buffet lines. Budgets will change and the managers will need to respond by being more creative and more assertive with suppliers.
Ground transportation – more changes ahead? – Rental car fleets are smaller, prices are up. Uber and Lyft are subject to more regulation, prices are up. Demand for public transportation is down, prices are up. What are travel managers to do to ensure access to ground transportation at reasonable cost? There are two primary actions travel managers should consider now.
1. If your rental car volume is increasing, and your current rental car agreements are expiring in the next year, consider sourcing for a new agreement now.
2. Evaluate your organization’s use of Uber, Lyft, traditional taxi, and black car services. Based on that evaluation, determine if policy changes are needed to shift business to one service or another.
With both actions above, be sure to explain the fluctuating market and how to secure the best service at the best price to your travelers.
As it was a year ago, there are more questions to come before the current pandemic situation is resolved. COVID-19 hasn’t been the first disruption to the corporate travel industry, however, and it certainly won’t be the last. Those future situations, like this one, will create more opportunities for travel managers to show their value. Now is the time for travel managers to seize the opportunity, own the spotlight that has been put on travel, and be a champion in their organization.
Mark Williams serves as the Managing Director, Americas for Nina & Pinta, joining the consultancy in April 2020 to help expand its global footprint and presence in the Americas. He previously served as a partner with GoldSpring Consulting and before that, was a Principal at Advito, the consulting division of BCD Travel. Before Advito, he held roles in the Business Transformation Outsourcing practice at IBM. Mark started in the travel industry in the late 1980s with WorldTravel Partners, followed by 10 years as the Director of Travel for Price Waterhouse and PricewaterhouseCoopers.