Business travel will never be the same.

After a year of Zooming instead of traveling, building relationships virtually instead of face-to-face, and testing the business impact of not going to events like CES, will business travel rebound as we emerge from COVID? Probably not, argues Center director Jeffrey Cole.

By Jeffrey Cole

It’s almost the end of the first quarter of 2021. In any other year, I would be taking a short rest after speaking at a number of media or technology conferences. The new year usually began with CES (Consumer Electronics Show) in Las Vegas, followed by NATPE (National Association of Television Program Executives) in Miami, and then the IAB (Interactive Advertising Bureau’s) ALM (Annual Leadership Meeting) in either Palm Desert or outside Phoenix.

About now, I would be planning another five or six events over the second quarter, including the Cannes Lions Festival in June. No complaining about jet lag or being away; it was a good life.

Over the last 13 months, of course, none of those events took place anywhere except on the Internet. A lot of money was saved on airfare, hotels and Uber (and earned no frequent flyer or hotel points).

What was not so good for the economy was very good for my mental and physical well-being by not disappearing for a week or two at a time from family, friends and work colleagues.

Because of video conferencing, I was able to do more with no toll on anything except my rear end—which I’d never used in any of my past speaking! One day last week I was able to speak live in Australia, London, New York, and Indonesia. All with no jet lag or unfamiliar hotel rooms.

The world has changed, and things will never go back to the way they used to be.

The economic impacts of conference centers never booked, billions of miles and millions of rooms never reserved, and restaurants never visited are incalculable.

Business leaders will scrutinize and re-scrutinize everything about business travel.

Fastest to return will be the things that cannot be satisfactorily digitalized: eating in local restaurants, riding roller coasters, and playing basketball or baseball with friends in local parks. Next come the things that might be just as fulfilling digitally, and we’ll have to make critical decisions about whether we are content to continue doing those things online rather than face-to-face. These things include learning in school, going to movies, theater, concerts, and sports events, as well as traveling to meetings and conferences.

On one side of the continuum of whether to return to pre-COVID days is classroom learning. Although many enjoyed the lack of commute and the more flexible schedules at home, almost all felt virtual learning was inferior to being next to classmates and in front of a teacher.

Our works shows that most learning, particularly for the youngest students through high school, will return to what it was before March 2020 as soon as possible (if it hasn’t already). Higher education is facing a longer disruption that began before COVID, was accelerated by the pandemic, and will take a few more years to come into focus.

The story remains to be written about whether movie theaters and live sports and concerts will return as vibrantly as before or instead in some diminished form. Each of us will balance whether watching sports, movies, and concerts on television and streaming fulfills our needs and provides an adequate or better experience. Tens of billions of dollars—and the danger of millions of square feet of vacant real estate—depend on how we balance this equation.

Fastest to return will be the things that cannot be satisfactorily digitalized: eating in local restaurants, riding roller coasters, and playing basketball or baseball with friends in local parks. Next come the things that might be just as fulfilling digitally, and we’ll have to make critical decisions about whether we are content to continue doing those things online rather than face-to-face. These things include learning in school, going to movies, theater, concerts, and sports events, as well as traveling to meetings and conferences.

In this re-consideration, we believe that while travel for learning or pleasure will (perhaps slowly) come back to pre-pandemic levels, a third of business travel is gone forever.

Looking at the events of 2020-21 that moved from exciting cities or tropical locales to a screen in my home office, I missed the welcome parties, food and drinks with friends, running into old colleagues, and great entertainment. However, the business of the conferences was accomplished well and even with some benefits. The quality of speakers and participants was higher than it had ever been because everyone was available to speak on Zoom.

Every business travel supervisor will begin to apply the “sure it’s fun to go there, but do you really need to be there” rule to future travel. The difference between a yes or no can easily be thousands of dollars for just one employee.

The burden of proof for business travel will be heavy.

Events survive because of fear

For some companies, the difference between being at one event and being digital can be tens of millions of dollars. CES is an international conference that in 2019 attracted 175,212 leaders of the electronics, entertainment, advertising, and technology industries.

The biggest exhibitors at CES, companies such as Samsung and Sony, rent floor space at costs of millions of dollars. Then they spend just as much trucking in massive amounts of equipment and building their spaces as well as bringing hundreds of employees (hotels, food) to make it all work.

Many of the big exhibitors spend these enormous amounts year after year because they are afraid not to. Their businesses work and to stop attending one of the big events might disrupt everything. No one wants to be the one to pull the plug on a major industry convention and then see their business take a significant drop.

The greatest fear of the event organizers is that something will disrupt their meeting (pandemics, earthquakes, politics) and that afterward the big customers will see little or no negative impact to their bottom lines. It makes no sense to spend millions on one event if it does not give sales a bump.

Pre-COVID, event organizers were terrified such a disruption would let companies see that impact of not being there was negligible, and the companies were equally terrified of what would happen if they were not there.

In an unplanned natural experiment, COVID provided a rich source of data on business impact to evaluate the usefulness of these big events.

Participants have learned which events are a good use of time and resources and which can be accomplished just as well via Zoom. This was a test that no event planner ever wanted administered.

The conferences that will return to looking similar to what they used to be will be those ones that rely heavily on socializing (schmoozing) and building relationships. Introduction of products and learning from speakers can be done about as well virtually.

The smaller events are likely to suffer the least. The bigger ones of over 100,000 people will probably also return, but without looky-loos or attendees for whom it is more a boondoggle (or vacation) than serious business.

The businesspeople who attended these events in the past are the most profitable customers for airlines and hotels. They pay full fare or buy business class and stay in hotels at convention rates. Hotels and airlines will have to make up for these losses through higher prices. If a third of business travel disappears forever, loyalty programs will never return to what they were.

In a domino effect, since many businesspeople will not resume travel as they did, they will not qualify for the highest tiers of loyalty. Instead, they will seek out the best deals for each trip rather than sticking with a preferred airline or hotel.

Looking at the events I spoke at online rather than in person over the last year, for me the one third figure holds true. I will probably return to two of them.

The impact of changes in business travel on airlines, hotels, rental cars, restaurants and bars, as well as on sleep, health, and family relationships will be above seven if it could be measured on the Richter scale. Business travel is just one example of the fundamental parts of life that we will need to re-consider as we emerge from COVID.

We are experiencing the greatest disruption of our lifetime.
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Jeffrey Cole is the founder and director of The Center for the Digital Future at USC Annenberg.

 

 

See all columns from the center.

March 24, 2021