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Issue # 2 (580 Words/3 minutes)
Has the tourism industry been asking the right question about business travel recovery?
Business travel is a critical segment to many tourism destinations and for a lot of good reasons. Many destinations have millions invested in infrastructure to support this segment; business travelers visit mid-week, and lots of businesses, including hotels, restaurants, and attractions are highly dependent on business travel Since Covid 19 took hold, tourism in many destinations, especially city and gateway destinations that depend on international and business travel, have experienced significant adverse impacts. In contrast, outdoor destinations have held their own and in many places, have seen visitation levels exceed pre COVID levels. One of the big questions has been when will business travel return to pre-pandemic levels? When will those meetings and group functions be booked? Forecasts have been all over the place anywhere from the end of 2021 to 2025. It remains a big question. ​ But is it the right question? Maybe the question is not when will business travel return, but a more important question might be how it will return? Covid has changed many things in the industry. Why wouldn't it impact how business travel returns. ​ A recent Inc Magazine article, "Delta Air Lines Just Shared a Surprising New Insight. Passengers Are Already Making Big Changes," suggests two important insights.
1. Yes, business travel is down and will probably stay down for a while.
2. There's also a rise in a new kind of customer: an individual consumer who is now willing to
pay for premium service, even though they don't have a corporate employer footing the bill.
​An interview with Delta CEO Ed Bastian in the same article sheds some fascinating insight. According to Delta, their first-class cabin space primarily sold to corporate businesses is now being replaced with individual "high-end consumers," they are driving demand for premium products like business-class travel. ​ What's fueling this change, and how does it impact your destination's business travel strategy? The article states that we have experienced millions of Americans walking away from traditional jobs (Not all of them low pay hospitality jobs). Still, many of them did not look for other jobs. ​ "Instead, millions of these people left to launch their businesses, or else to try to turn side hustles into full-time, profit-producing efforts." As a result, many are traveling for business and have become used to first-class travel. If you are a destination built on traditional business travel, it remains to be seen if this segment will return in numbers that were seen pre-pandemic in either the short or medium term. It also raises the possibility that this new class of travelers may replace the traditional segment but to what degree? ​ What will the demand level be if you are a destination with significant built infrastructure for business and meeting travel? It is important to note that companies saved billions of dollars in travel expenses during the pandemic, and online technology replaced many face-to-face meetings. It is unclear to what degree those same companies will want to absorb those travel expenses again. ​ If this scenario plays out in any way, it raises the question of what happens to infrastructure built for classic business and meeting travel? For insight, watch the airlines as they have the biggest interest in business travel, and they will not hesitate to change their business model if they need to. ​Something to think about, and you are developing your 2022 and beyond strategy. For more information contact Carl Ribaudo; carl@smgonline.net
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