Business travelers as we knew them may be done. Now what?

Speaker 1: When it comes to travel the most important travelers to any aspect of that business, our business travelers, they tend to travel a lot and they tend to travel with a pretty rich budget. The problem is that's the sector that says they may be able to dial back the most. Now what Scott, Horn's got some in sites for us. He's a partner at Oliver Wyman, a strategic advisory and management consulting firm. And they do something called the traveler sentiment survey at regular intervals throughout [00:00:30] the year. I believe it's 2,500 business travelers, at least in one of the most recent captures. And they've got some really good insights into what the business traveler will and won't do in the future, which everyone asking. And you hear a lot of conjecture, but I think we can really get some good answers here. So Scott, um, top line, give us some idea to what degree business travelers will be doing so less Speaker 2: Based on some of our survey results, something in the range of a 10 to 25% reduction [00:01:00] in business travel long term. Now, uh, that would've been much worse if you were to ask us about, uh, you know, just a little less than a year ago, we would've been, you know, prognosticating much more dire outcomes, but you know, we're seeing interestingly in our most recent, uh, survey, we just conducted in June, admittedly, that was for the Delta variant became quite such a big factor as it is now. But in June we were seeing nearly the same number of [00:01:30] business travelers actually saying they would travel more. As those saying, they would travel less than planned in terms of those saying they would travel more. There are some who complained that teleconferencing just isn't as effective. That was about 20% of those who said it would be traveling more 18% said it just wasn't even possible for them in their roles to, to do teleconferencing. Speaker 2: And then another 18% said in the meantime, you know, through the, the pandemic period [00:02:00] that their job had changed, their role in the come company had changed or they changed companies and that in their new role, their new job, what have you, there would need to be traveling more. On the other hand for those who said they would travel less, uh, 33% of them said that actually teleconferencing and remote work was very effective for them. So they said it wasn't a problem. Um, and that it was, it was, you know, more of efficient, obviously others cited ongoing health and safety considerations. Others mentioned that [00:02:30] their, their employers had reduced travel budgets Speaker 1: In one of the posts that you and your team wrote. You said a lot of the reduction planned reduction in business travel budgets, predates COVID by a bit, people Speaker 2: Were, you know, getting very comfortable more and more with zoom, uh, teams, you know, Skype and so on, even before the pandemic, but the pandemic sort of, uh, as you say, you know, kicked in the afterburners on that and accelerated it greatly fundamentally during the [00:03:00] pandemic, the road warriors really had to reinvent the entire Mo of their business lives, their work lives, uh, when it came to the pandemic and you know, oh, no longer would you see the investment banker, you know, flying across the Atlantic for a breakfast meeting at, at Heathrow and then busing back, right? Similarly folks in my profession, uh, fundamentally had to reinvent their way of working. We weren't, you know, flying in for the board meeting where we were presenting the outcome of some important study we've been doing, [00:03:30] but rather we were doing everything over zoom. And so were the board members for that matter, Speaker 1: That sounds like an awful lot of airlines status as being lost by people who the most, when Speaker 2: We asked elite members, what they saw about their expectation of being able to maintain their elite status, about 30% of the former elite elite members said, they thought they probably wouldn't even be elite members going forward. And another 30% of them said had, [00:04:00] they would probably still be elite members, but maybe not as high at, at, at the same status level, they once were, Speaker 1: That's moving a lot of senior managers back into coach. Speaker 2: Yeah, that that's right. In fact, we even asked, we even asked them, well, what would, you know, what would you be willing to do, um, you know, to, to, uh, to try to sustain your elite, uh, benefits. And some of them said that they would expect that they would try to earn their loyalty status through other types of things that would confer that [00:04:30] status on the NII, uh, loyalty, uh, cobranded card spending and things like Speaker 1: That. One of my biggest fears about going back to travel, you know, right after the safety, cuz we never really know when it's safe until it's well, in hindsight is, uh, doing so with a lack of how any travel status it's, uh, you get used to it back in the day when we all would, like you say, jump on a plane for a 12 hour round trip for a 60 minute meeting. You know, that was, that was, there's nothing uncommon about that in the American business landscape. [00:05:00] And yet now it started to look a little bit odd. We've had time to get away from it. We've had financial pressures that suggest we get away from it. And we've had technology carrots as opposed to financial sticks telling us we can get away from it. When you do these surveys, it rolls all these pressures together. You're doing these to inform the travel industry, is that right? Speaker 2: We definitely to inform our clients and you know, the airline industry, the hotel industry, rental cars, cruise lines and, and, and rail, uh, [00:05:30] rail carriers, certainly. And then also those who serve those industries, the, the distribution companies like Gama and sabers of the world, the, the OTAs and so on. So it's, it's broadly informative and we look not just at the business side, but also at the leisure side to make sure that we're, you know, getting a complete view of this, but certainly the business traveler side is, is, is being impacted. Speaker 1: A lot of people will say, okay, this is business travel. Maybe I don't travel for business, and this is a story for someone else, but this is all part of one [00:06:00] ecosystem as goes the business traveler. So goes a lot of other aspects of travel. Right? Speaker 2: Yeah. And I think that we're gonna see, uh, you know, travel companies look to take those higher end products that they have and, you know, capture more leisure customers with those, right? So if you're an airline and you have, you know, 30 plus, uh, seats, trans Atlantic that are for business class passengers, well, you may not have the same number of, uh, [00:06:30] you may not have the same number of, of business class passengers as before. So how can you induce leisure passenger to buy up to that product? For instance, as a consideration, tell us as frankly, Speaker 1: As you can, who's in the most trouble out there and who's gonna weather this better. You know, Speaker 2: I think, um, I think that the folks, uh, that are doing the best right now, let me put it that way. Are those who are serving largely domestic or short haul international travelers? Uh, [00:07:00] certainly in the us where the, uh, the leisure recovery has been quite strong. In fact, it's even above 2019 levels in many cases to leisure markets. Um, and so people who are serving those markets well are, are doing well. And, and the short haul by shore hall international and mean things like to the Caribbean, to, to Mexico and things like that, where, uh, the travels from, uh, from the us market to those destinations have, have been very, very strong in their recovery. [00:07:30] I think those who, uh, will struggle the most are those who serve primarily long haul business, travel, more markets where the recovery will certainly take longer. And as mentioned earlier, may never fully reach the prior levels because of this, uh, you know, systematic reliance, uh, greater reliance, I should say, on, on teleconferencing or video conferencing technologies. Uh, one of the things Speaker 1: You call out in, uh, in some of the, the, the, the writings you've put out [00:08:00] about your survey are that, you know, business travel is not monolithic. They're all kinds of people who travel for work. Some of them are sea level. Some of them are technicians who literally board with their tools. Speaker 2: You know, earlier I mentioned about the, the occasional business traveler and that we think will make a fairly robust recovery. As I mentioned, a lot out of our respond and say, Hey, we'd actually think we'll travel more than we used to, but that's for the people who are traveling, you know, maybe three, four times [00:08:30] a year. And, and they're saying, Hey, that's, you know, that's good because I was traveling to, you know, a trade conference or something like that, where there's a bit of a, you know, a, so social dimension, there's an educational dimension. That's hard to replicate in a, in a traditional video conferencing setting. And then there will be those who were, you know, the road wires who we said will probably travel less, but then there's the another passive business traveler, which I would call kind of the essential worker business traveler or, [00:09:00] or, uh, some folks prosaically like to call them the muddy boots, uh, business traveler, the guys who are out there, you know, doing an H V a C installation on a factory, or, you know, calibrating the, the new, uh, printing and press, and some, you know, in some printing operation or installing, you know, the aseptic packaging system or something like that, those folks are gonna, you know, need to travel just as much, and frankly never stop traveling. Speaker 1: So that may sound to me like a lot of business, uh, [00:09:30] travel support companies, hotels, and restaurants, and, and transport, and all that may need to pivot to who their ideal or most likely customer is in the future. Speaker 2: Yeah. I think that there's definitely an opportunity to, you know, to focus on those, those essential worker type business travelers as, as being a highly attractive segment. And then also, uh, you know, for those who are traveling and, and, and you eventually resume traveling to [00:10:00] things like, you know, sales conventions and conferences and, and trade shows and things like that, you know, to really make sure that, that you're taking good care of them, so that they're biasing towards your brands and your properties or your airline, uh, when they're traveling. Cause they, they will remain important and will probably make a, a very robust recovery. Speaker 1: We spoke recently to, um, Bob pretech, who's the CEO of Freeman, which is the largest conference and trade show company. And, uh, they, they [00:10:30] see kind of a, kind of a forking in the business. I think it is where the online conference remains robust long term for a sector of conference attendees. I, if I recall correctly, perhaps the majority of attendees who can get the education and the benefits that they're looking for online, and those who want to network or meet people and start relationships, they're the ones who continue to go to conferences and such in person. No, Speaker 2: I think that that's right. And I think a lot of the, you [00:11:00] know, the relationship maintenance and, and training delivery, you know, that that's where we're finding, you know, zoom and so forth being pretty effective it's as you say, it's, it's, you know, cultivating something new, uh, it's it's, uh, networking and things like, like that, that are gonna be, you know, more challenging. And then there's literally the, the kind of business travel where your hands have to be on, you know, on a physical device or things like that in order to, to be [00:11:30] effective. You can't, you know, uh, so far they haven't, you know, engineered the DaVinci surgery of, of tuning a HBA C system and where you're doing it, you know, with remote control. Speaker 1: I haven't been on a plane for business since, uh, it would've been boy, uh, late February or early March of last year. How about you? Are you traveling at all? Speaker 2: Yeah, I have traveled a, a, a little bit. Um, I, I would say it's probably been, uh, five or six trips since may, but it's been [00:12:00] limited, you know, and I could easily take five or six trips in, in two weeks before. Right. So, Speaker 1: And I think like a lot of us, there was a real, there was a real, nothing window there through most of 20, 20 looks like 21 has bringing us, uh, you know, back to a, a point where we can start to forecast. Speaker 2: Yeah. And I think that, you know, at least for me personally, and I think for many other business travelers, you know, being able to be vaccinated and, and know that, you know, we're, uh, maybe not a hundred percent protected [00:12:30] against, you know, a breakthrough infection or what ever, but we're pretty protected and very unlikely to get severely ill, you know, has given us the comfort to make the decision when it was important to go and, and meet with people in person. And, you know, in some cases, you know, conduct a workshop where we needed to, you know, broker, uh, a lot of different opinions Speaker 1: And business travel and business meeting is get, they get pretty Auste under those conditions. Speaker 2: It's definitely diminished. And, you know, it's something that even [00:13:00] within our own practice, Oliver, Wyoming, we we've, you know, we've, we've tried to create, uh, opportunities for our, our, our partner teams to meet with our more junior consultants and, and, and create a little bit of that, obviously, you know, uh, under circumstances where everyone's vaccinated and, and, and so on, but, uh, you know, getting together, uh, for, you know, colocation just to have some of that informal discussion, even in cases where [00:13:30] we're working on projects, where the client's not expecting us to be in person, we just know that there's an awful lot of camaraderie. And, uh, and also training where, you know, people are learning from each other, working in a project team room, uh, that, that doesn't happen as well, Speaker 1: Remotely. All right. We've been talking to Scott Hornick, he's a partner at Oliver Wyman, uh, management advisory and strategic consulting firm talking about their traveler sentiment, sir. I, what it tells us about where business travel's gonna normalize one of these days.