Travel and tourism generated 10.4 percent of the world’s total economic activity in 2018. Currently, the industry stands decimated due to the pandemic. In my opinion, the business travel sector, in particular, will see the below trends in the next few years.
My guess is that occupancy levels will take a long time to bounce back to 2019 levels – maybe in the 3- to 5-year range. We can probably expect a minimum set of standards and guidelines to be enforced by airlines and hotels. However, an opportunity exists for suppliers who can innovate and introduce safety and hygiene features designed to put the traveler at ease.
Travel Management Companies
Travel management companies (TMCs) will see some significant consolidation in this space. TMCs and tech companies in this space have operated at negligible margins for years and cash flow has been a constant issue. This situation will exacerbate for the companies which are resource-heavy. Companies that invest in building tech and tweak their business models during this downtime are best positioned to come back riding the wave.
Enterprises will gradually get used to the new normal of conducting business with reduced travel. Non-essential travel may take years to bounce back. One positive outcome is that more stringent ROI assessment will be conducted by line managers before employee travel is approved. Procurement will negotiate based on value (safety/convenience/security) rather than price. Adoption of tech and online tools will spiral.
Travelers will be less inclined than before to get on the road. Traveling as a perk will go out of vogue for some time. The shift of power from the buyer to the traveler which has been happening already will accelerate.
In general, the Covid-19 crisis will lead to a rebirth for the industry; and one hopes that sustainability, safety and the environment will be the driving factors in the changes across all the stakeholders.
We will travel again – far and wide. Stay strong, stay safe.
Disclaimer: This article was originally written on 11 May 2020, expressing my views at the start of the pandemic.