The corporate travel pool will be a lot smaller in the future, but businesses are resuming travel even if they are being undertaken under more stringent rules and will be reduced in number

There will be less and more controlled business travel for the foreseeable future, the findings of the ‘State of the Market’ surveys from global travel management company FCM Travel Solutions suggest, but encouragingly it appears that almost half businesses have now already begun, or are poised to travel again in the immediate future.

The study, based on insights over the past six months from nearly 2,500 business travel managers, bookers and travellers in EMEA, Asia, the Americas, Australia and New Zealand into prevailing sentiments on business travel conditions as countries continue to navigate their pathway through the Covid-19 crisis, indicated that just a quarter of businesses plan to return domestic travel to pre-Covid levels in 2021.

There is now clear evidence to show that the travel rebound will follow a path that is initially seeing uptake in local ground travel, followed by domestic air travel, then short-haul international and finally long-haul international. A number of actions need to be triggered as we pass each phase such as general safety, the opening of national borders, traveller sentiment and appropriate tracking and trace programmes.

Across the three ‘State of the Market’ surveys of FCM’s multi-national clients and Corporate Traveller and Flight Centre Business Travel’s SME customers, conducted by FCM’s consulting arm 4th Dimension, 26% of businesses said they are planning to return to pre-Covid-19 levels for domestic travel during 2021. The remaining 74% predict reduced domestic travel for the immediate year ahead.

When discussing the frequency of short and long haul international travel over a third showed real tentativity: 7% of respondents advised they are likely not to travel during 2021, and 30% were still unsure due to current government restrictions. National businesses in USA, Australia, China and New Zealand were identified as less likely to have long-haul international plans for 2021.

There is also an expectant marked reduction in the number of trips being taken according to the research with the global average number anticipated to reduce in 2021 and continue at lower levels through to 2023. “Pre-COVID the average number of business trips per traveller was 6-8 per year, and this is forecast to fall to 3-4 trips annum for the medium term,” according to the findings.

Encouragingly though, around half of the businesses surveyed are now travelling – some had not actually stopped, dominated by the mining; wholesale trade; health care and social assistance; electricity, gas, water and waste services; and construction sectors, where at least of 20% had retained some form of business travel through the pandemic.

When reviewing business travel programmes in Aug-2020, 50% of the surveyed businesses had employees travelling or booking to travel in the immediate future, but obviously the rate of resuming travel will be different for each sector.

The rate of resuming business travel will be different for each sector – the accommodation and food services sector appears to have seen the largest recovery, while administrative and support services has seen no movement (Source: FCM Travel Solutions – State of the Market: Business Travel Perspective)

FCM says that in the research conducted over the past months, over 90% of businesses plan to travel domestically and short-haul continental/international, within three months of borders opening. However, long-haul international travel is being reassessed, with no strong plans of when business will return.

In the accommodation sector the report acknowledges that whilst corporate hotel rate fluctuations are ongoing, understanding to what extent variations will occur is dependent on supply and demand per property and city. It suggests that we are “several months on from the trough of demand,” but whilst we see significant losses and increased operating costs that need to be recovered “the supply is outweighing the demand” and is a clear “buyer’s market”.

Looking toward 2021, the findings suggest we “should reflect on the 2017-2019 period by city” when forecasting rate levels and fluctuations to come as prolonged recovery in city locations especially “will pose more volatility in rates offered into and beyond 2021”.

The mining, construction, food, finance & insurance and wholesale industries that are most travelling today are “for the first time in some 10 years” benefiting from significant partnership leverage with hotels for the year ahead. Based on market research conducted by 4D, global hotel rates in key cities are set to reduce by an average of -4.5% in 2021. It notes that over 50% of hotels are offering a combination of fixed negotiated rates combined with a dynamic discount rate off Best Available Rate (BAR) enabling travellers to select the most favourable rate option.

Travel and Expense is viewed as the number one cost item that businesses can quickly dial back when the economic climate starts to soften (Source: FCM Travel Solutions – State of the Market: Business Travel Perspective)

It is no surprise to learn that Duty of Care, which includes risk management, traveller health and safety, and traveller tracking has emerged as the top priority in 2021 and well into the future. FCM anticipates the time and investment on duty of care will be significant across all aspects of the business travel framework including TMC, airlines, hotels, car hire and rail.

The research notes that policy changes addressing Covid-19 precautions, were seen by respondents as an important way to restore confidence in the overall workplace. While business travellers are recognised as the ones with greatest exposure, their return to the office post-travel similarly requires delicate management to protect non-travelling employees.

There is also a shift in terms of travel approval, a mechanism in place to ensure adequate budget is available, that travel is necessary for work and that the traveller has appropriately planned to be away from the office, but also that travel is in accordance with policy.

In the research, 80% of businesses were found to have an approval process in place, ranging from verbal, email or formal online tools or platforms. Of the 20% without travel approval processes, half subsequently introduced an approval stamp during the pandemic.

There is now an expectant tightening of the approval process with 37% of businesses surveyed increased travel approvals by at least one additional person – 6% have removed travel approval altogether signalling a total ban on travel indefinitely. This has seen the average number of approvals required for purchasing travel increase from 1.1 pre-Covid to 1.4 now.

“Never before have we seen such a wide reaching global impact on travel and business confidence – and one surrounded by a level of uncertainty that has created more questions, than answers,” says Chris Galanty, corporate CEO and Flight Centre Travel Group

Business travel is a critical component of success for many industry sectors, the road to its eventual return is set to be bumpy and unpredictable. These are unprecedented times and what happen pre- and post- the pandemic will be very different. The fact that 56% of corporations told FCM that will review their airline supply strategy as they move into 2021 highlights this perfectly. Airlines need to brace for impact.

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