As the world shuts down to stop the spread of a deadly pandemic, expect to see a significant coronavirus effect on global business travel.
In late January, Tourism Economics projected the United States would lose 1.6 million visitors from mainland China due to the spread of COVID-19, also known as “coronavirus.” Months later, coronavirus has spread around the world, locking down countries and grinding the worldwide economy to a halt — suggesting there could be a significant and long-lasting coronavirus effect on global business travel.
Given the scale of this virus’ spread, it’s difficult to make confident predictions on what the coming months and years hold in store for business travel and other industries. But here are 3 likely outcomes that companies and business travelers can expect to experience in 2020 and beyond.
1. The Limitations of Virtual Meetings
As many professionals are working from home, companies are embracing tools like Zoom, WebEx and Skype for virtual meetings. Guest rooms and kitchen tables have turned into home offices, and people are trying to keep a business-as-usual mindset.
But virtual meetings offer severe limitations. For as ubiquitous and preferred as Zoom has become in recent years, it’s still challenging. Not all meeting attendees fully understand how to use the platform, which can lead to tech-related delays. Home Wi-Fi networks don’t always support both audio and video on Zoom calls. And some meetings still demand face-to-face interaction.
In the immediate short-term, businesses are naturally leaning heavily on these virtual meeting tools. This reliance comes out of necessity, as the U.S. State Department has issued its highest-level travel alert for all international travel. But many are likely to leave this period of time frustrated by Zoom and similar products.
Americans will spend the next weeks or even months becoming intimately familiar with the limitations of virtual meetings. As COVID-19 and the travel alerts subside, Americans will be ready to embrace travel for client visits, closing deals, bringing together remote team members, etc.
2. Lower Travel Costs in Late 2020
Once countries start eradicating coronavirus, they will start reopening for business. But it’s likely that everyday consumers will remain reluctant to travel for pleasure. Demand for flights, hotels and car rentals will remain low in the aftermath of the epidemic, which should mean lower business travel costs.
Companies won’t have the luxury of slowly re-engaging with business travel. Once the virus-related quarantines and shelter-in-place orders have ended, business travelers are likely to vastly outnumber those traveling for pleasure. While no individual or corporate entity would wish an economy-rattling pandemic on the world, everyone will be searching for silver linings as life gets back to normal. For corporations, a part of that silver lining will be the low cost of business travel in the second half of 2020.
3. Long-Term Travel Budget Impacts
Yes, it’s likely the cost of travel will be low in late 2020. But what about corporate travel budgets? Many industries are taking a big revenue hit as consumers are asked to stay at home for weeks at a time. Will this revenue hit reduce travel budgets through 2020 and into 2021?
The answer: it depends on the industry.
Some industries will thrive during this period. For example, grocery companies and others that provide consumer goods, e-commerce businesses, healthcare and pharmaceutical companies, plus others should see little to no impact on earnings. If your business operates in one of these industries, travel will likely continue unabated with few budget restrictions.
In other industries, even if revenue takes a hit, travel will remain essential to day-to-day operations. For example, sales teams will still have to travel to meet with existing and prospective customers. While budgets in general may be tight, it’s impossible to limit business travel when it’s essential to generating revenue.
Lastly, there will be industries that do take a revenue hit and that are not as reliant on business travel for regular operations. These industries are where travel budgets are likely to shrink — at least in the short-term. Businesses in these industries are likely to lean more heavily on virtual meetings, despite their shortcomings.
How Should Your Company Handle the Coronavirus Effect on Global Business Travel?
The coronavirus effect on global business travel will be felt differently by different businesses. How will your company be affected? No matter the answer to that question, JTB Business Travel can help you navigate the challenges and opportunities of traveling in a post-coronavirus world. Contact us today to learn more about how we can support your business.