According to the German Travel Association (DRV), almost 200 million business trips were made in 2019 from Germany alone. The outbreak of the coronavirus pandemic brought an almost complete halt to these trips. As reported by IT service provider Coupa, global spending on business travel dropped by 97 per cent in the third quarter of 2020. And the number of plane journeys taken was at just one per cent of pre-crisis levels. As a result, the number of business trips fell even more steeply than those of holiday trips. In contrast to other industries that recovered economically following the first lockdown, the situation in the business travel market became even worse towards the end of 2020. And it is still difficult to evaluate what the consequences for the future of travel are.
Experts predict that business travel will increase again once the corona pandemic has passed, but over the long term, it will remain below the levels we saw before the crisis. Fraport AG, operator of Frankfurt am Main airport, Germany's largest, has seen a significant increase in business travellers for a number of weeks now, particularly those working for German SMEs, but those in charge estimate that over the long term there will be a decrease of between ten and fifteen per cent. The latest findings from the barometer survey undertaken by the German Business Travel Association (VDR) in July 2021 confirm this trend. Over 96 per cent of member companies believe that business travel will remain below pre-pandemic levels.
Video conferences are acceptable
So will business meetings mainly be shifted to the digital realm? The past few months have shown us that business relationships can in fact be maintained virtually – with significant benefits for the climate. According to a study commissioned by the climate-focused German Traffic Club (VCD) and carried out by the Borderstep Institute in February 2021, one third of business trips could be replaced by video conferences. ‘The pandemic and lockdown changed the norms. Suddenly, it was perfectly acceptable to meet digitally. And it has made a lot of things much simpler. As there are no travel costs involved, people and companies with a small travel budget can take part much more easily in international meetings and events’, says Prof. Nora Szech, Chair of Political Economy at the Karlsruhe Institute of Technology (KIT).
Over the past few months, Szech has carried out a number of studies across the world. The result is always the same: whether in China, South Africa or Germany – people expect there to be much less business travel in future than before the crisis. ‘Several of my colleagues love not being jetlagged so often anymore. The reduction in travel also makes it easier for people with a family to combine their private and professional lives’, says Szech.
The new longer-term way of travelling
Reiner Eichenberger, Professor of Theory of Finance and Economic Policy at the Swiss University of Fribourg and David Stadelmann, Professor of Economics at the University of Bayreuth, however, take the opposite view. They say that there will be a new trend for longer-term travel!
‘Many people believe that the virtualisation of our contact reduces the benefits of travel and we will therefore travel less in future. We think this conclusion is wrong. There are strong drivers behind travel, such as globalisation, the pressure of competition and decreasing travel costs’, emphasises Prof. Stadelmann. He says that it has become easier and cheaper to maintain contact with customers, partners and staff remotely, meaning that even smaller companies can position themselves more globally. But this contact has to be maintained in person occasionally, which leads to an increase in travel. He also states that many companies did not undertake business travel last year because competitors were also not doing so. However, he believes competition will quickly increase again following the lifting of most travel restrictions.
The decisive point here is lower travel costs, as Prof. Eichenberger emphasises: ‘The main costs involved in business travel weren’t really the flights, hotels and expenses, but the employee’s time. And this was something that was often poorly exploited previously when travelling. Managers did of course work on their laptops while on the road even before the pandemic. But the huge digital advances that we have made in the past few years and above all in recent months have enabled many more people to make more efficient use of the valuable resource that is time. Now, productivity while travelling is just as high as in the workplace or home office’.
More travel, more investment
‘This development towards longer-term travel not only applies to business travel but also private travel and migration. If travel time is no longer wasted time and the potential to keep in contact, whether with business partners or family, is much easier, people will travel more and more will be invested in e.g. better bandwidths on trains or good screens in hotel rooms to make longer-term travel even more attractive’, says Eichenberger. ‘We will also be able to avoid rush hour and traffic jams because traffic will be less concentrated around the weekend or holidays thanks to virtualisation of contact’, adds Stadelmann.
Big opportunity or big risk?
It sounds like a great opportunity for travel providers, but there is also the risk that people will continue to rush across the world and climate pollution will increase even more. ‘The problem is not longer-term travel in itself, but the negative external effects it causes, such environmental and noise pollution and congestion. These effects must come at a price to a certain extent, for example by taxing CO2 or having a form of tourist tax. However, we do not believe that travel should be suppressed as much as possible. Provided those travelling pay the costs associated with their travel, everything will be fine. A key point here is that we need technological progress so that sustainable travel can develop more quickly’, say Eichenberger and Stadelmann. There must be a greater focus on concepts that counter the negative external effects. However, it is important to both economists that such solutions develop in free markets and are not controlled by state regulation and subsidies. The state has only one task: to promote basic research.
Promising developments in terms of sustainable travel are of course green hydrogen as an emissions-free drive energy, which can also be used in air travel, as well as travel by hyperloop. And perhaps hybrid versions of meetings will become the norm, where some participants attend in person and some digitally. ‘Well designed hybrid events offer a great opportunity and should not be underestimated’, adds Nora Szech. During the pandemic, companies have learnt which business trips are necessary and how they can manage business relationships and events digitally and are well positioned to establish a new, individual mix of in-person and digital meetings in future.
‘We can see two opposing developments. On the one hand the reasons for travel have become redundant because video conferencing is now established and thus shorter, internal meetings will mainly continue to be carried out virtually. By contrast, the continued globalisation of value chains can already be observed in some industries. Whereas some companies operated production facilities in just one country before the pandemic, they are now operating in several countries to spread the risk. This results in an increased need for business travel. If we superimpose these two developments, we currently estimate a long-term decline of between ten and fifteen per cent in business travel compared to pre-crisis levels.’
‘Virtual contact does not in any way replace face-to-face contact. I think that business travel will increase again sharply following the pandemic as we have continued to expand our sales team in the meantime. For me personally, I expect to be on the road as much as I was before the outbreak of coronavirus.’
"Travel to professionally motivated events are the biggest drivers in the promotable business travel market. Business events drive innovation and change - their relevance will continue into the future. Accelerated by the Corona pandemic, however, the events ecosystem is currently changing both quantitatively and qualitatively. For example, respondents to the 2020/2021 Meeting & EventBarometer expect attendance to return to 74 percent of 2019 levels by 2022. Online participation will increase by 39 percent compared to 2019 - at the same time, the value of face-to-face encounters at authentic, real-life venues will take on greater importance. In this dual focus lies great potential for the future viability of Germany as a meeting and convention destination."
- Transport & Logistics