Has videoconferencing killed business travel? No, but there will be substitution and we could lose between a fifth and a quarter of trips in the future

An increasing number of businesses have adapted favourably to the new working from home environment and many now plan to employ it, or a more blended working option between home and office, as a permanent feature moving forward. But, just because corporations see the value and perhaps financial benefits of reducing their office footprint, it doesn’t mean a similar course of action will follow for travel.

The videoconferencing industry has been helping to power business during the pandemic, but we appear to becoming a little tired of using the platforms and perhaps a little in the monotony of constant home working and online meeting after online meeting, occasionally interrupted by webinar after webinar.

Whether via Zoom, Skype, Google Meet, Microsoft Teams or Slack, video conferencing has acted like a first responder during the health crisis and permitting business to keep in touch with staff and customers and maintain some form of ongoing relationship.

Professor Keith Mason, professor of air transport management at Cranfield University, has taken into account the changing marketplace dynamics and built them into IATA’s own air transport forecast to project the return of business travel across the next 20 years. What it suggests is that the industry will recover, but that perhaps a fifth to a quarter of demand could be lost annually. You can see his insights in this video.

Technology certainly has a role to play in the future. Video calls work well when relationships are established and when communication styles are known. They can even help to grow and deepen relationships. It will certainly help influence how meetings take place in the future and will be a substitute to some degree, but will not be a full replacement for business travel.

It is accepted though that videoconferencing will have a permanent impact on corporate travel levels. CTC – Corporate Travel Community reported recently on the comments of BCD Group founder John Fentener van Vlissingen to Dutch business and financial matters newspaper Financieele Dagblad. He concurs it will replace a significant amount of physical travel for companies. “More people will work from home, there will be more video conferencing,” he confirmed in the interview. However, positively he does still see a demand for regular business travel, albeit he acknowledged “the market for business travel will return but it will be different”.

Previous research from Harvard University in the US helps to explain a little more about the important role that business travel plays in the global economy and what would happen if business travel stopped. The recently published work pre-dates COVID-19, but the pandemics almost shutdown of air travel and continued pressure on business travel provides some additional context for the research, titled: Knowledge diffusion in the network of international business travel.

Harvard’s Growth Lab works to understand the dynamics of growth and to translate those insights into more effective policymaking in developing countries. It puts a special emphasis on the importance of knowhow. As opposed to information and codified knowledge that exists in books, computer files, graphs and algorithms, knowhow only exists in brains and moves very slowly from brain to brain through years of experience. “So, moving knowhow quickly involves moving brains,” it explains.

The Growth Lab explored this question by looking at labour and entrepreneurial mobility between firms, regions, and countries. But it occurred to them that the importance of knowhow might explain why firms rely so heavily on business travel.

After all, it explains, “why go to the expense of traveling – not just the direct cost of airline tickets and hotels – but the opportunity cost of time spent just moving people at sub-sonic speeds, if e-mail, Skype, FaceTime, and now Zoom can move terabytes of information at close to the speed of light?”

The research found some clear correlations between countries and delivered finding that showed how the suspension of business travel in once country would have a domino effect across many more. For example, if Japanese businesses stopped traveling, it projects South Korea, China, Vietnam, Thailand and the Philippines would be most affected, but the impact would be felt significantly in countries as diverse as India, Germany, the US and Saudi Arabia.

Interestingly, previous work by the same authors had indicated that trade between two countries is not actually a very good predictor of the amount of business travel they will exhibit. Instead, owning subsidiaries or being owned by a parent company from another country is a much stronger predictor, suggesting that business travel is strongly related to the management of multinational organisations. “These entities have become ubiquitous in the global economy, because they can easily deploy anywhere the knowhow that exists somewhere in their network, provided they can travel,” according to the paper.

Adequate technology has been around for some time with little impact on business travel. Admittedly, it has got better and the current crisis has forced us into using it, but as the Harvard research shows “moving brains had become so endemic” even with the presence of major improvements in telecommunication technology, but it acknowledges “it is not clear why.”

One way to think about the distinction between moving bytes and moving brains, it says, is “to consider bytes as data and brains as CPUs that are able to form parallel computing machines when working in groups”. Why physical proximity “facilitates parallel computing” and how much new technologies can substitute for it remains an open question, but this research at least brings a little science into understanding why we can confidently say that business travel will recover.

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