The Small and Medium Sized Enterprises (SME) segment of business travel is a bright-spot in the industry as it recovers more rapidly than the large corporate segment. As a result, the SME has become a top priority for many airlines, hotels, TMCs and other suppliers.
Qantas Group CEO, Alan Joyce, told CAPA Live in Apr-2021 that a ‘battle royale’ is occurring for the SME market between Jetstar, Virgin and Rex – and one that he sees continuing throughout the recovery phase. “Small businesses need to travel and need to make the contact, so it’s less subject to being disrupted by video conferencing”, Mr Joyce said during that edition of the monthly virtual conference.
The latest edition in Jun-2021 had a focus on business travel and understanding and tapping into its recovery. In 2021 at least, there’ll be very limited business travel and its loss will undermine the full service airline business model and limit what has traditionally been an important and profitable market segment. But, while the corporate recovery may be on a slow path the SMEs are leading the way for now.
BCD Travel senior director, research and corporate innovation Miriam Moscovici acknowledged the important current role of SMEs. “We’ve done some research recently – it’s obvious the mid market SME business is coming back a lot faster than the larger enterprise business travel”. Ms Moscovici added: “The middle market will have fewer restrictions and executive leadership managing these different aspects of the business”.
Alongside Ms Moscovici on the panel session Arthur D Little senior advisor Patrick Diemer noted that large corporations have more concise management of business travel. “The notion of duty of care is much stronger the larger the corporation is”, he said, adding: “They are under much more scrutiny to take care of travellers and employees”. Mr Diemer said larger corporations also have “much more concise management of their business travel, while in the mid market there’s much more decision making at lower levels”. He added: “The large corporations came to appreciate that they are saving millions of dollars in travel”.
The Company Dime journalist Jay Campbell stated that a recovery of business travel to 2019 levels should be a “point of reference, not a goal”, adding: “Predictions don’t matter that much. We’re much more concerned with how and why business travel comes back rather than when and how much”. Mr Campbell said project related essential travel “didn’t go away but was cut back” and will expand sooner than other types of travel.
You can view the full discussions from the panel session below.
In a separate panel during the Jun-2021 CAPA Live edition Belgium Association of Travel Management president Pascal Struyve also commented on the SMEs lead in the recovery. “The SME market will be the first ones travelling again, as soon as it becomes possible in an efficient way,” he said and large corporations “will be a little bit later”.
His European perspective on the recovery of travel is positive. “I’m very optimistic… here in Europe you see that there is an enormous eagerness by travellers to travel again”. However, Mr Struyve said more measures are needed on COVID-19 vaccination, quarantine processes and testing, which is “a pretty slow process”.
Kam Pin Industrial (Hong Kong) MD and Hong Kong Small and Medium Enterprises Association honorary chairman Danny Lau also agreed SMEs “will start to travel before the large corporates”. Mr Lau said larger companies will require more approvals for employee travel and will “prefer to wait until the epidemic situation is over” before allowing staff to travel. He said SMEs are able to adopt “a more flexible arrangement” than larger companies and are “ahead of the curve” in resuming visits to overseas clients in destinations without travel restrictions.
While there are signs of recovery further afield in the Pacific, Small Enterprise Association of Australia and New Zealand (SEAANZ) chair Tui McKeown noted “travel is incredibly restricted” in Australia and lockdowns introduced by Australian state governments are “making travel incredibly difficult”. Dr McKeown said “we do not have an uptick in travel” in Australia.
She believes Qantas may be ‘changing its business model’ to support the current environment provide ‘a whole suite of offerings’. Commenting on the Australian flag carrier’s approach to small and medium enterprises (SME), Dr McKeown said: “I suspect what we’re looking at is an airline changing its business model”.
“It’s not just about flying planes through the air and carrying passengers, it’s what are the add ons to those passengers”, such as loyalty programmes and insurance, she said and Qantas may aim to provide “a whole suite of offerings”, which she described as “a very, very clever idea, particularly for small businesses”.
You can view the full session below.