Past crises demonstrate the great resilience of Business Travel

The business travel industry is resilient and always picks itself up after a fall. This has been proven in the aftermath of some past emergencies that have impacted the world. American Express Global Business Travel looks at how the industry fared after the last major global crises and the lessons that were brought to the table.

«This is a unique event for the industry. Never before has there been a massive impact of this nature —other than a war— that completely cripples the economy», said Richard Miller, former executive vice president of the World Travel and Tourism Council (WTTC), about the impact a global pandemic had on the travel industry.

This statement could perfectly well have been made in 2020. However, Miller made those statements in 2003, referring to severe acute respiratory syndrome, also known as SARS. The outbreak, which began in China, spread to more than two dozen countries before being contained and ended in 2004.

The SARS outbreak significantly impacted travel. Many organizations around the world curtailed business travel to protect their employees. Subsequent travel to the most affected destinations, such as China, Hong Kong, Singapore and Vietnam, had to be approved by senior management. Airports and hotels in Asia became ghost towns.

 

AGILITY AND FLEXIBILITY

One lesson travel managers learned from the SARS epidemic was the importance of having a lean and flexible travel program that can adapt easily when circumstances change rapidly.

They also realized the need to be aware of destination-specific health updates, so that companies can make quick and consistent decisions to protect their employees.

With SARS, we also realized that nothing is forever. It looked like travel to Asia might be interrupted indefinitely, but as this chart published by the International Air Transport Association shows, air travel recovered fairly quickly, and monthly international passenger traffic returned to pre-crisis levels within nine months.

Going forward a little more than 10 years, to 2015, we note that corporate travel in China was booming. According to the Global Business Travel Association, the country surpassed the U.S. as the world's largest business travel market, and in a 2015 report, Amadeus shows that corporate travel spending in Asia-Pacific "will increase to $900.billion by 2025".

 

CUTTING WITH OVER SPENDING

The biggest financial crisis since the Great Depression came between 2007 and 2009. It also had a major impact on business travel. With the collapse of Lehman Brothers and other banking heavyweights, the subprime mortgage crisis and a high unemployment rate, companies around the world slashed their travel budgets.

International travel became video conferencing. Employees who still traveled had to book economy seats and less expensive hotels. Travel managers began using data and reports to watch spending closely and educate travelers on how to make more efficient purchasing decisions, such as booking airline tickets in advance, taking cheaper flights with stopovers and booking with preferred suppliers to take advantage of negotiated fares. Some companies decided to consolidate suppliers, including merging all bookings under a single corporate travel agency (TMC), to achieve greater savings.

But if a company aims to grow, cutting back on business travel is only advisable on a limited and temporary basis. As research conducted by Oxford Economics and commissioned by the U.S. Travel Association showed in 2013, companies that spent the most on business travel during the recession in 2007-2009 had higher revenues and higher profits than companies that spent the most on business travel during the recession;The 2007-2009 recession had higher revenues and profits than those that cut back on business travel spending, while those that cut back were more likely to have a decline in profits in the following years. The study also shows that, for every day invested in business travel, companies earned a return of $9.50 in revenue and $2.90 in profit.

By 2011, business travel was on the rise again. According to the same report, U.S. companies spent $214 billion on domestic travel that year, surpassing a historic peak recorded in 2007. In 2019, this amount will increaseó to 334 billion, a signñal of a strong economyóa and competitive labor market.

As the Great Recession and the recent economic boom teaches, companies must strike a balance between maintaining employee travel satisfaction and keeping employees satisfied;

Companies must strike a balance between keeping traveling employees happy and being smart about travel spending so that when an unforeseen downturn occurs, they can not only weather the storm, but also maintain their travel programs and help revive the economy after it all blows over.

THE PRIORITY OF DUTY OF CARE

The September 11 terrorist attacks had a major impact on the world and on corporate travel. The industry experienced one of its biggest downturns. Increased security measures at airports became the new normal. Business travel and meetings were canceled. Companies reduced air travel to a minimum, and many people developed a fear of flying.

Companies that put business travel on hold devoted resources to strengthening crisis management teams and plans. Disaster plans were reviewed or developed by human resources teams, and travel managers were charged with establishing procedures to keep employees safe during travel.

The terrorist attacks highlighted the great need for companies to have a system in place to locate employees during an emergency. Travel managers began working with corporate travel agencies to implement technology solutions to locate travelers in real time, developed communications systems to quickly assist travelers during a crisis and promoted reservations within the policy to access and use all flight and hotel information during an emergency.

While 9/11 was a bad time for corporate travel, it also helped companies prepare for critical situations so that when crises occurred in the future, they would be able to act quickly and support their employees. All the time and money that companies invested in strengthening their duty-of-care programs since 9/11 was well worth it, as it enabled them to respond more effectively to the crisis we now face.

CONCLUSION

As with past crises, there will be lessons from this current situation that can help strengthen travel programs. The corporate travel industry is a cyclical industry. When it is on a downward trajectory, the future may seem uncertain, but as past events have let us know, it will eventually, inevitably, pick up again.