Forecasting the Next Stage of Business Travel Recovery

The question of if the travel industry will recover from the devastating effects of the COVID-19 pandemic has been well documented, endlessly discussed, and thoroughly debated. While this past year has seen significant growth in travelers returning to the road, the stops and starts of changing restrictions and the threat of emerging variants have left some businesses understandably frustrated.

However, as past worldwide events and crises have taught us, normal does not return overnight or look the same when it does return. The “unprecedented nature” of COVID-19 and the precipitous drop-off in travel that ensued have resulted in a permanently altered travel landscape, but in what ways? To answer that question and better understand how and what COVID-19 measures may continue in a post-pandemic future, we examined where travel is today and where it's heading next.

Travel is Returning in Stages

When the World Health Organization declared a global pandemic in March 2020, travel evaporated seemingly overnight as countries rushed to implement travel restrictions. Even after flights returned and lockdowns ended, travel demand remained depressed by waning consumer sentiment and fears regarding exposure to COVID-19. Those who did travel were also faced with navigating new travel norms that could at times be inconsistent and confusing.

Looking at how the drop and subsequent recovery compares to past crises, we can see similarities in the initial response, but divergence in the recovery curve. For instance, using data from the U.S. Bureau of Transportation Statistics to compare the drop in passenger volume to the post-9/11 period, we see a similarly steep decrease, but the drop plunges much further and takes longer to rebound. Unlike a single incident such, as a terror attack or a natural disaster, the recovery period for COVID-19 has been drawn outa repeated series of climbs, drops, and plateaus.

Rather than focusing on the sudden drops (or getting caught up celebrating unexpected climbs), businesses should maintain a big picture perspective and plan in the short term for reaching the next plateau. A recent survey from GBTA found that travel willingness has decreased to 69 percent, down from its high of 77 percent in July. Despite this softening, when we look at the overall curve of traveler sentiment, we see it's up more than 20 percent from earlier this spring and up even more dramatically from the lows of the previous year. Essentially, while travel is coming back, the pattern of return is unlike any past downturn or crisis.

Safety & Sanitation Will Still Matter

The initial panic and uncertainty surrounding the spread of COVID-19 led to a wide array of reactive measuresfrom scrubbing surfaces with bleach to disinfecting store bought items—and travel was no exception. Hotels, airlines, and rental car companies all implemented a variety of rigorous sanitation measures, which have since evolved as science and consumer confidence has evolved.

Going forward to the next stage of travel, the increased emphasis on traveler wellness and safety will still play a key role, but in a more measured, targeted approach. For example, most U.S. carriers started by blocking middle seats for social distancing purposes, but a year later, all major airlines have phased out this approach. Instead, airlines are experimenting with a wide range of changes that may not be readily apparent to most travelers, such as altering cabin arrangements, creating antimicrobial seat fabrics, and improving ventilation of planes to be healthier in response to COVID.

In addition to these changes, other aspects of pandemic era travel will likely evolve as businesses and travelers learn to not only accept, but even expect relatively new measures that are becoming increasingly commonplace. This may include new norms like reduced frequency of housekeeping, mandatory masks on public transportation, vaccine passports, and touchless payment and check-in options

Consolidation Continues

Prior to the pandemic, the travel industry was on a path towards consolidation for the past two decades. Due to recessions, globalization, and economic changes, some of the largest players in the industry had taken steps towards consolidating, including the bankruptcy of America West, and a succession of eventual mergers and acquisitions involving US Airways, American Airlines, Continental, and Northwest, among others. Although COVID-19 posed a huge roadblock to profitability for travel suppliers, the majority of airlines have avoided crisis-related closure or consolidation thanks to several relief packages from the federal government, even if some smaller carriers did not fare as well.

For those speculating what this might mean for other corporate travel suppliers, many hotels have actually taken the opposite approach, spinning off new lines of hotel chains and curating unique brands to add to their portfolio and attract a diverse range of travelers. On the travel management company (TMC) front, waves of consolidation and restructures are already happening in the TMC sphere.

Consolidation in itself is not inherently bad for travelers. In fact, it can open up a new stream of resources and more advanced tools for travel managers to deploy in their travel program. However, businesses need to watch for red flags during consolidation, such as deteriorating service quality, incompatible cultures, and shifting areas of focus. Similarly, when a TMC restructures or undergoes a change in leadership, customers need to feel supported and know that their business's priorities are still valued.

Up Next

The next stage in travel growth has already started, buoyed by new changes to travel restrictions, including the reopening of international travel to the United States in November. This may lead to a subsequent spike in travelers and subsequent leveling off after the holidays. It's also worth noting that while some business travelers never left, others may never returnat least not in the same capacity or frequency they once did. 

Is your travel program prepared for the next stage of growth and recovery? To stay up-to-date with the latest travel trends and in depth analysis as business travel rebounds, subscribe to our monthly newsletter for curated news and exclusive resources.