If you had been following the news, you would have noticed the growing number of local destinations that are relaxing the demands of travelers. With the Philippines being downgraded as “low risk” for Covid-19, local governments are adjusting protocols for visitors and opening their doors a little more, so to speak, in a bid to once again attract tourists and spending that ‘they bring.
As Filipinos slowly return to leisure travel, can business travel be far behind?
Just as international travel is expected to face a slower return to “normal” than domestic travel, so too is business travel. Even with easing restrictions, the conferences and trade shows that make up a significant portion of business travel remain mostly virtual. Organizers and organizers of MICE events (Meetings, Incentives, Conferences and Exhibitions) estimate local industry revenue losses to be at least 70% since 2019, which is why they are pushing for the reopening of the sector to attendees and fully immunized participants.
While vaccination is key to opening up travel, it’s not the only trigger companies look for when considering travel volumes for the coming year. Deloitte conducted a survey of travel managers and spoke to executives of companies whose airline expenses in 2019 averaged 6.2 million pesos. Asked about the changes that would trigger the return of business travel, they identified the following elements, ranked in order of importance:
1. Low and sustained infection rates
2. Percentage of vaccination of the general population
3. Reopening of customer offices
4. Relaxation of quarantine requirements
5. Reopening of its own offices
In addition to these triggers, most respondents said their companies are committed to reducing carbon emissions, with 58% saying restricting the frequency of business travel would be one of the sustainability measures. to adopt over the next 12 months. The challenges of the past 19 months have also made executives aware of travel costs and their impact on bottom lines. Two-thirds of respondents said that this renewed focus on costs would lead to limiting the frequency of trips.
In this environment, it looks like business travel and the ecosystem that heavily depends on it will continue to have a bumpy ride. To give travel providers a sense of where and how they can compete in this tough market, Deloitte developed the Why We Fly Matrix, which examines business travel use cases based on two factors: the relative importance of business success (y-axis) and the extent to which they depend on face-to-face interaction versus being able to replace them with technology (x-axis).
Business-critical travel use cases that rely on face-to-face interaction are expected to flourish. Business travel for client project work, sales or client acquisition, and client relationship building fall into this quadrant. These use cases will be some of the first to come back and will also have the need to travel the most in the long term. Businesses will likely use in-person visits to foster relationships and then move to virtual platforms to do more customer work. Interestingly, research from Deloitte showed that technology companies were more likely than others to invest in travel for client project work, while companies in the consumer sector were more likely to travel for visits and on-site follow-up.
Travel use cases that are crucial to success but more replaceable by technology, meanwhile, are likely to be a battleground. Leadership meetings and presentations and internal team meetings fall into this quadrant. These trips will see high demand initially as teams and boards look to break their cycle of virtual-only meetings for more than a year. But expect this to stabilize and decrease quickly as businesses settle into a new standard of less frequent internal meetings. Deloitte called this quadrant a “battleground” because this is also where technology providers are likely to focus their innovation efforts, adding to the pressure on travel providers to deliver the best deals and experience. end to end to encourage these small groups to book a trip.
Less commercial importance and high-tech replacement travel will be difficult. Use cases for travel in this quadrant – internal training, learning and development; industry conferences for content – stand to lose the most in travel spending. While some content still benefits greatly from an in-person format, existing virtual platforms have served companies well in maintaining the knowledge-sharing experience, even during the most difficult bottlenecks. One opportunity that travel providers might consider is reaching out to those who can combine travel use cases: companies, for example, can send people to in-person training events and in the same training program. travel, team building and collaborative exercises to maximize travel spending.
Face to face, but less crucial for business success stories, will finally find a niche. Exhibitions, trade shows, and on-site surveillance fall into this quadrant and are the most difficult travel use situations to replace with technology. The good news for travel providers is that companies see exhibitions and networking conferences as very important to business success. The bad news is that the content people consume at these events provides less business value and can be replaced by virtual delivery. This is probably where we’ll see hybrid formats, i.e., some attendees in a ballroom while others join remotely. Conference planners will need to get creative in facilitating a wider range of interactions and experiences to continue engaging these business travelers.
It may well be that the new reality for business travel is an overall decrease in travel, even beyond this pandemic. This is not a good prospect for travel suppliers, but there are opportunities nonetheless in this changing world. As in all other industries, success will depend on how they adjust and adapt to new ways that people choose to interact and connect with each other.
The author is a Tax and Business Services Partner and the Global Leader in Employer Services at Navarro Amper & Co., a member of the Deloitte Asia Pacific Network. For comments or questions, email [emailÂ protected] Deloitte Asia Pacific Ltd. is a company limited by guarantee and a member firm of Deloitte Touche Tohmatsu Ltd. Members of Deloitte Asia Pacific Ltd. and their related entities, each separate and independent legal entities, provide services in over 100 cities across the region including Auckland, Bangkok, Beijing, Hanoi, Ho Chi Minh City, Hong Kong, Jakarta, Kuala Lumpur, Manila, Melbourne, Osaka, Seoul, Shanghai, Singapore, Sydney, Taipei, Tokyo and Yangon.