How business travel may never be the same again

• Lufthansa sees increasing business demand in Europe
• U.S. spending at 65-80% pre-pandemic levels through fourth quarter 2022
• Companies take into account costs, the environment and employee welfare
• Customer conversations are seen as most important in person

BERLIN / MILAN, September 9 (Reuters) – Sylvia Burbery is delighted that she is no longer on the road for most of her life.

“I’m grateful that the pandemic has forced us to step back and review workflows that we took for granted,” said the emerging markets regional president of Mars pet care brand Royal Canin.

“I’m very happy that I won’t spend 80% of my time traveling again. I’m not even sure if it will be 50%,” said Burbery from her home office in Paris.

Burbery’s views are echoed by employees around the world who are tired of the stress of business travel. This is bad news for the airlines, hotels and conference centers that rely on this lucrative business.

Mars, the family-owned snack and pet food company, said cost, environmental and health considerations were behind its decision to limit travel to less than half the pre-pandemic levels, which means 145,000 fewer flights per year.

Nici Bush, Mars global vice president for Workplace Transformation, said less travel could also make senior jobs more attractive for people with families.

She said 700 employees could attend online strategy or sales events, compared to the 100 people who have previously met in person: “You can really be more surgical when you travel.”

Niklas Andreen, chief operating officer of global corporate travel management company CWT, knows the prospects for a quick return to pre-pandemic levels in the business travel sector are slim.

While 58% of those polled by CWT say they are interested in resuming cost-paid junkets, bookings are only gradually recovering, with 80% of domestic trips now compared to 67% before the 2019 pandemic.

“It will be several years before we get back,” said Andreen.

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The German airline Lufthansa (LHAG.DE) has recorded an increase in demand for its regional flights between Germany, Austria, Switzerland and Belgium by 15% and for flights within Germany by 30%, said CEO Carsten Spohr.

Lufthansa will be using more flights for business travelers in September, but is only expecting a return of 90% of the trips before the pandemic in the long term.

COUNT THE COSTS

Before the pandemic, airlines made the majority of their profits from business travel because companies tend to book on short notice and are willing to pay more for convenient times.

According to a Deloitte survey of 150 travel managers, U.S. spending on business travel is projected to reach just 25-35% of 2019 levels by the fourth quarter of 2021 and 65-80% a year later.

“Looking to the future, companies are thinking about how to retain some of the cost savings they have made,” said Anthony Jackson, director of Deloitte’s US aviation practice.

Patrizio Bertelli, CEO of Italian fashion company Prada (1913.HK), said he believed business travel was “kept to a minimum”.

“This is certainly a huge benefit for margins,” he said earlier this year.

GREEN TRAVEL

Companies are also looking for ways to reduce their carbon footprint: around half of those polled in the Deloitte survey said they plan to adjust their business travel policies to reduce their environmental footprint within the next year.

“I flew from Dallas to New York for the day to have an internal meeting with three or four people. I’m not looking back anytime soon,” said Jackson.

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The advisory arm of CWT helps companies develop travel policies that balance costs and environmental impact, for example by suggesting the cheapest direct flight instead of a cheaper indirect flight with higher carbon emissions.

CUSTOMER CARE

However, CWT’s Andreen said that bringing employees and customers back together is still important for some managers.

“It’s hard to make a deal without looking each other in the eye,” he said.

And Burbery said that some face-to-face meetings are better sticking around for brainstorming and relieving tension between staff: “When you’re virtual, you only see what people want to see.”

However, according to the Deloitte survey, conversations with customers are seen as the main reason for resuming travel, while internal meetings and training are more likely to stay online.

Filippo Baldazzi, CEO of the Serica 1870 silk manufacture, which works with Brunello Cucinelli, Kering and LVMH, sends fabric samples to customers he cannot visit in person.

“I hate video calls and customers like Vuitton and Gucci want to be pampered and expect white-gloved treatment,” he said.

Additional reporting by Ilona Wissenbach in Frankfurt, Michael Shields in Zurich, Claudia Cristoferi in Milan; Editing by Elaine Hardcastle

Our Standards: The Thomson Reuters Trust Principles.

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