4 Business Travel Industry Trends: How COVID-19 is Shaping the Future of Business Travel
As the COVID-19 pandemic and responses evolve, so do travel guidelines and restrictions. Even as vaccine rollouts accelerate, programs are progressing at vastly different paces in different regions. And, thanks to virus variants, new hotspots continue to emerge in the United States. Overseas travelers, too, continue to face uncertainties and interruptions.
Within the same week, federal regulations on international travelers arriving to the U.S. by air might expand, while individual states may add or subtract restricted locations to their lists, impacting hotel stays and car rentals. One frequent business traveler, Mary-Ellen Harper, put it simply: “Traveling for work keeps getting more complicated.”
Corporate travel agents and business travelers alike must keep up to date with ever-changing rules. While the rules of travel shift, so, too, do travel metrics that impact the industry.
The changes we see in booking trends, consumer behavior, and travel patterns provide valuable insight for frequent travelers and travel managers alike. What was once a fairly predictable landscape with flat historic trends is now an agile environment with new dips and peaks. This offers us a unique opportunity to learn, prepare, and adjust.
The World Health Organization (WHO) first issued a global health emergency on January 31, 2020, and global air travel restrictions began shortly thereafter. But it’s March 15 that marks the beginning of lockdowns in key states such as California, New York, and Illinois, and signifies a critical shift in travel booking patterns across most U.S. booking platforms.
But what can we tell from the data about 2021 and the future of business travel? What changes are here to stay? Following are four key trends we are following from that data, and what they mean for the business travel industry now and in the future.
4 Key business travel trends
The following trends reveal essential insight for industry professionals. Knowing which changes are likely to stay with us or which shifts are returning to pre-COVID practices will help businesses, travelers, and their agents best navigate the current landscape and prepare for what comes next.
Where it was
From 2015 to 2019, there was consistency around which platforms agents and travelers were using to book flights, hotels, and cars. Booking through native mobile apps reliably lagged behind booking from a desktop or entirely offline, through agent-assisted transactions. In 2019, for example, just 6% of Deem’s clients used mobile booking, compared to 75% who used desktop for transactions. Offline (agent-assisted) bookings accounted for 19% of bookings.
Our data show that the onset of the COVID-19 pandemic led to a surge in booking via mobile app, with the number more than tripling to 21% of transactions. Along with this came a sizable drop in offline transactions (down to 12%.) But desktop transactions also fell, by eight points, down to 67% of bookings.
After March 2020, we saw a distinct spike — one that continues — in the ratio of travelers self-booking, which aligns with the increase in app use seen in the statistics above. An interesting nuance in the data is that individuals booking via mobile app aren’t just the mobile-first demographics commonly expected, such as Millennials and Gen Z.
Pre-pandemic, users older than 70 years of age were roughly as likely to book via mobile app as Millennials were, while Gen X and Gen Z also shared comparable adoption rates to one another. In the pandemic environment, nearly every age demographic saw a shift towards greater mobile app usage. Millennials and Gen Z showed the largest relative increases, roughly doubling their mobile app transactions as compared to 2019.
The future of business travel
There has been a distinct shift in technology as businesses, agents, and travelers move to mobile booking. Across Deem clients, mobile booking has more than tripled. The Deem platform allows mobile-first demographics to use technology for business as they would other consumer aspects of their lives. But, as we saw above, numbers show the pandemic also strengthened adoption rates of older generations.
The shift to mobile booking seems likely to remain. Key to customer experience is how robust booking apps are, and whether they offer travel managers and travelers comprehensive booking options that go beyond routine flight or hotel itineraries. These full-service solutions can meet diverse user needs that continue to evolve along with the pandemic response and recovery.
A notable feature of booking apps that may have contributed to their increased use, at least initially, is that they allow for same-day transactions. This could have been useful as individuals navigated the uncertainty of traveling during the pandemic. In fact, 2019 showed a fairly consistent average of approximately 20 days advance booking for travel.
The onset of the pandemic, however, led to a quarter of hurried spikes and dips in advance booking trends, perhaps echoing the confusion of the public as it learned more about COVID-19’s impact on life and business. The latter half of 2020 settled into an average of about 10 days advance booking, half of what we saw at pre-pandemic levels.
That said, 2021 has shown strong indications that travelers are more confident in planning and booking their trips, with advance bookings showing a steady increase that has nearly returned to historic averages.
Hotel rooms and length of stay
Where it was
Advance hotel bookings are another key indicator of traveler behavior. Prior to the pandemic, users typically booked hotel stays an average of 15 days in advance. For those trips, the average stay was two nights in length.
As Deem’s data show, the average trip duration increased after March 2020 and the number of hotel nights per trip increased accordingly, averaging an extra night per stay.
This was particularly true in certain industries that saw even greater increases in trip duration. Healthcare corporations and traveling medical professionals, for example, traveled to areas most hard-hit by the pandemic. These travelers might have planned for extended stays of up to months at a time.
In other instances, health considerations impacted — and continue to impact — travelers’ hotel behavior. Professionals who are traveling to work at client sites face in-person limits. Fewer service professionals or technicians onsite for an implementation, for example, can mean longer project times on the ground, increasing the durations of hotel stays.
The future of business travel
Because the factors above are responses to pandemic-specific engagements and safety measures, it is likely that many business trips will return to 2019 patterns of advance booking timeframes and shorter lengths of stays. In fact, the data trend heavily in that direction, with traveler confidence boosting these data points to near pre-pandemic levels. If certain industries have realized significant operational savings by flying fewer employees to client sites for longer stays, businesses may recalculate their travel norms to retain these cost savings going forward.
Interestingly, while the number of nights per stay increased, the average hotel rate dropped nearly $90 per night. With travel down, hotels opened up rooms at much lower rates. This is a trend that will likely return to historical ratios, as hotels begin to recover and enjoy restored capacity.
One way vs. roundtrip
Where it was
Prior to the spring of 2020, there was a very consistent set of behaviors, with one of the most unwavering being that 75% of travelers booked roundtrip. This should be familiar to all of us; regardless of our destination and trip purpose, we expected to return at a set time and booking the package all at once was efficient.
Starting in March 2020, regular flight cancellations created a shift in how travelers and agents book their business trips. This shift was reflected in our data as a spike in ticket cancellation transactions. Pre-pandemic, it was typical for about 10% of bookings to result in cancellations; in March 2020, that skyrocketed to 75%. At the same time, we noticed a significant, corresponding drop in new bookings.
Meanwhile, of the remaining trips still being booked, there was a significant dip in roundtrip bookings that was complemented by an equal rise in one-way tickets.
The future of business travel
As with advance bookings and trip durations previously discussed, trip types are also trending back towards historic averages, albeit a little more gradually. Still, roundtrip bookings are once again king, with one-way tickets dropping off at a corresponding rate. This is yet again a good indication of traveler confidence as pandemic-related restrictions ease both domestically and abroad.
Average Ticket Price
Where it was
Conventional wisdom dictates that the further out one books airfare, the less expensive a ticket will be. In actuality, however, a strong correlation doesn’t exist between advance purchase and ticket price. Airline ticket prices are heavily influenced by a number of factors, including seasonality, destination, and, of course, consumer demand.
Consumer demand for air travel plummeted with the onset of COVID-19, as shown by the previously mentioned spike in trip cancellations and drop in new bookings. Of course, this was in large part due to the many travel restrictions put into place both domestically and internationally.
This historic drop in demand naturally led to a drop in ticket prices. Deem’s data show a historic average of about $500 per flight booking; in March 2020, the average price dropped to a low of just $250.These reduced numbers can be attributed not only to lower consumer demand, but also to the increase in one-way bookings as well as the reduction of bookings for higher-cost, international tickets.
The future of business travel
Ticket prices have rebounded quickly as traveler confidence returns and restrictions ease. We’re once again seeing averages reach the $500 mark. This upward trend is certainly influenced by travelers returning to roundtrip bookings over one-way trips, as well as a wider availability of destinations.
It may be that prices not only return to pre-pandemic averages but begin to exceed those numbers, at least initially. During the pandemic, eliminated routes, empty middle seats, and reduced prices severely impacted airline revenue. Airlines also temporarily relaxed cancellation and exchange fees, which further impacted their bottom line.
If ticket prices don’t rise to amounts equal to or higher than pre-pandemic prices, travelers may expect to see special fees increased for premium seating, baggage, and other items as airlines work to make up their pandemic losses and capitalize on travelers eager to return to the skies.
Travel managers are already thinking about how their programs will be impacted. “I think that corporate travel policy [will] focus on flexibility for quite a long time,” said Makiko Barrett, director of global travel and procurement at Automation Anywhere, Inc. “...I think we’re going to focus on that to make sure that if something happens, maybe not a refund, but you can change for a future date. That’s going to be very important.”
Business travel in the years ahead
Travel is an essential component of business operations across a wide range of industries. Certainly, some sectors saw their travel activity plummet in 2020. While the business travel industry will no doubt rebound in the post-COVID context, it, like other sectors, will see lasting changes.
“For some time, the justification for your trip will be very important,” added Barrett. “There will be more emphasis on why we need to make that trip, and [asking] how it leads to future sales or some other advantages that you need to make the trip.”
Given the information above, business travel is likely to trend toward a lasting shift to mobile booking platforms with robust features and functionalities. These apps have the agility to quickly adapt to user needs as circumstances change. In another nod toward flexibility, single tickets made in separate transactions may continue to appeal to some travelers.
“We are moving toward travel recovery, but travel looks different from before the pandemic,” said David Grace, president at Deem. “Technology can provide the data and insights that travel managers need to stay ahead of the changes and keep their businesses moving forward.”
Many areas will likely return to pre-pandemic patterns, particularly a return to normal airfare and hotel capacities and rates. The data indicate this has already begun, with traveler confidence and consumer behavior leading to current averages nearly in line with historic norms — and just in time for summer.
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