25 minute read
BACK TO BUSINESS?
WORDS GEMMA GREENWOOD
Corporate travel is on the rebound, but the road to recovery is long, reveals a new industry report
Anew report by the World Travel and Tourism Council (WTTC) forecasts that business travel spend will reach two thirds of preCOVID levels by 2022, with the Middle East and Asia Paci c regions set to lead the way. e report, entitled Adapting to Endemic Covid-19: e Outlook for Business Travel, and produced in collaboration with management consulting rm McKinsey & Company, suggests that a modest rise in business travel spend of 26 per cent during 2021 will be followed by a further rise of 34 per cent in 2022.
But the report also forecasts that the growth rate will vary across di erent areas of the world, with the Middle East leading the pack with a rise of 49 per cent in business travel spending this year, followed by a further 32 per cent next year.
Asia Paci c follows with rates of +32 per cent in 2021 and +41 per cent in 2022 – by contrast business travel spend is only forecast to rise by 14 per cent in the Americas this year, followed by a further 35 per cent next year.
In positive news for the business travel sector, the rise in business travel spend across the Middle East, Asia Paci c, European and African regions is set to outstrip the rise in leisure spend this year.
In Europe for instance, business travel spend is forecast to rise by 36 per cent in 2021, while leisure spend is only forecast to rise by 26 per cent.
But the WTTC notes that the above rises follow “a 61 per cent collapse in business travel spend in 2020, following the imposition of extensive travel restrictions”. e report adds that some business travel sectors have fared better than others, “with early rebounders including manufacturing, pharmaceuticals, and construction companies while service-orientated and knowledge industries including healthcare, education, and professional services are likely to experience longer-term disruption”.
It also highlights the importance of business travel for the travel and hospitality industry, noting that prior to the pandemic, business travel accounted for around 70 per cent of all global revenue for high-end hotel chains, while between 55 and 75 per cent of airline pro ts came from business travellers, who made up around 12 per cent of passengers.
LEFT: Business travel is bouncing back slowly BOTTOM: Business travel accounts for 70 per cent of global revenue for high-end hotel chains
DUBAI TOURISM
ABOVE: Hybrid meeting formats will continue BOTTOM: The events sector has a huge impact on the global economy DEMAND SHAPERS
While many business travellers are keen to get back out on the road for face-to-face meetings, corporate policies are proving the ultimate demand shapers. Corporates across all sectors play a large role in determining how business travel adapts to national health guidelines to form internal corporate travel policy, says the report.
As Zubin Karkaria, Chief Executive Officer (CEO) of VFS Global Group, explains: “One of the threats to business travel recovery is the health and safety risk perception of large corporations and their cost efficiency priority. Based on their experiences of the past couple of years, some corporations may have a view that they can temporarily reduce business travel without it having any adverse impact on business.”
Some business roles – such as certain manufacturing ones – require physical presence, making these flows more resilient, says WTTC.
Technology will no doubt change how some employees work, but business requirements for relationships and culturebuilding will shape decisions around virtual or hybrid work.
“There are things that cannot be done virtually, such as confidential meetings or where standards of hotels are checked, or repair services carried out. Also, sometimes people need to see each other face-to-face to bond emotionally,” says Vivian Zhou, Vice President at Jin Jiang International Group. Additionally, opportunity to travel will likely remain a key recruitment factor for many employers and potential employees.
It is also important to consider the overall risk appetite within a region. For example, Japanese travellers tend to be more risk adverse and thus will likely travel later than many.
“Senior executives are very careful about pandemics and Japanese companies are generally risk adverse under states of emergency. Even if younger generations are more risk tolerant, they will not be able to travel if company policies, as well as public opinion, take a more risk-sensitive approach to travel,” explains Makoto Yamaguchi, Head of Global Business at JTB CWT.
SUPPLY SHAPERS
The pandemic has hastened the move to digital. According to American Express Global Business Travel’s CEO Paul Abbott, “the pandemic made digital easier to launch”. While technology adoption was already increasing, prepandemic, the urgency to adapt to the crisis provided the travel and tourism sector with impetus and opportunities to accelerate digitisation. For instance, customerfacing functions expanded their technology for service operations, especially to address the increasing frequency and complexity of communications such as clarifications on health and safety protocols and refund policies.
Many businesses also scaled analytics applications to streamline internal operations.
Maria Anthonette Velasco-Allones, Chief Operating Officer, Tourism Promotions Board of the Philippines, says “the virus compelled everyone to adapt or perish. As a key strategy, we adopted smart tourism, which meant pivoting to the use of digital tech and digital marketing”. The crisis also led to more innovation as companies evolved their business models and developed new product offerings to quickly adapt to a sudden fall in demand.
Rajiv Rajian, Executive Vice President, Airlines and Travel Sellers, Americas at Amadeus IT Group, notes “the challenges and demands of the current environment have led to the acceleration of innovations that streamline and improve the traveller experience throughout the journey. Innovative trends we were seeing before the pandemic are now accelerating to become the new norm”.
These trends include an omnichannel approach, traveller demand for increased contact, and updated traveller engagement to suit new preferences – affecting both leisure and business travel. Sergio Purcell, Chairman, Cocha Travel, explains: “People want to be connected with you – from everywhere – in every single way they can. The omnichannel strategy is here, growing, and very important. Our number one concern through the pandemic is how to connect with our customers and how to be there for them in the way they want to be connected”.
Hybrid has become an interesting paradigm for corporate travel providers. When lockdowns were enforced around the world, hybrid events and hybrid work started emerging and technology-supported formats replaced in-person activities.
Initially this may have had a negative effect on business travel, but hybrid models may provide new opportunities in the future. Once business is able to return to a sense of normality, hybrid events could be used to great advantage to complement core business travel.
For instance, hybrid event models that do not reach full
capacity can allow for year-round or regional activation and subscription models. For B2B2C providers, hybrid service tools can also be used to create new revenue pools beyond transactions, for instance through additional personalised services.
Barbara Weizsäcker, Secretary General of the European Exhibition Industry Alliance (EEIA), highlights that although the exhibitions and tradeshow industry lost 70 per cent of revenue in 2020 compared to 2019, digital proved a meaningful tool for the sectorial communities to bridge the times without physical meetings. Hybrid events can provide new opportunities to revitalise the sector.
“In the mid-term, [the exhibition] businesses can grow in size by fully taking advantage of digital,” she says. “It has also helped widen our reach to additional and younger audiences.”
WHY REOPENING MATTERS
Although business travel represented 21.4 per cent of global travel in 2019, it is responsible for the highest spending in many destinations, making it essential for the recovery of the entire travel sector and for its many stakeholders.
Fred Dixon, President and CEO of NYC & Company says: “While 80 per cent of New York City’s travel spend is leisure, it is the business travel segment that drives the spending and the rates. They have a larger impact per person and it’s a critical sector for us. Leisure will lead the recovery, but we need to get business travel back for our economy to recover.”
Global Business Travel’s Abbott believes that business travel plays a more holistic role than just bringing business people together to complete a transaction in person.
“Many people take a transactional view of business travel – if it doesn’t result in a deal, it has no value. This is so simplistic,” he says. “A lot of business travel is about building relationships and building a culture. Creating an organisation that attracts, retains, and develops the best talent. Creating an organisation that’s tolerant and has an understanding of different cultures and can operate on a global stage. That learning comes from travelling.”
Business travel is essential to most sectors of the global economy. Most notably, the MICE industry has an impact on both the supply and demand aspects of business travel.
Indeed, this industry brings travellers to destinations, with a positive effect on all aspects of travel and tourism and shapes demand for business travel through its offerings.
Such events are key for business travel providers and for the destinations where they are held. Business travel also impacts migrant labourers, in sectors such as construction, manufacturing, shipping, consulting, and pharmaceuticals, who may work on projects away from their homes for months at a time. While the digital boom has effectively enabled office employees to work from anywhere in the world, it cannot replace all in-person work. Indeed, without travel – domestic, regional, and international – some workers would be unable to earn a living.
According to Chris Nassetta, President and CEO, Hilton, “at every step of the journey of innovation and technological advances, we end up with more demand for travel – not less.”
In a world of endemic COVID-19, driving the recovery of the travel and tourism sector will take “foresight and imagination”, concludes the WTTC.
“Recovery may vary largely by segment and country, but the key trends observed indicate that business travel will likely continue to be slower to resume than other segments,” says the council. “In the medium term, travel and tourism stakeholders can take advantage of growth in domestic and industry-specific segments to aid recovery. Yet, border restrictions and healthcare regulations will likely continue, at different times for different countries, and travel stakeholders should work together to expand markets of origin in line with these changes.
“In this new context, public-private cooperation, dialogue, and continued policy engagement will be an essential part of the sector successfully navigating the ebbs and flows of endemic COVID-19 to restore international mobility and rebuild traveller confidence.”
ABOVE: It’s business travel that drives tourism spend in New York LEFT: Business travellers contribute between 55 and 75 per cent of airline profits
TREND WATCH
CONRAD TOKYO
A glance at what to expect in 2022
1Testing and restrictions Two years into the pandemic, international travel with restrictions will be maintained by both destinations and airlines in order to o er 100 per cent security to the consumer. COVID-19 testing will still be in place as a preventive measure.
2Conscious travel Travel to more distant destinations, but with prolonged durations of stay, as consumers look to enjoy as much of each place they visit as possible. American Express’ Global Travel Trends Report reveals 72 per cent of respondents are passionate about travelling to destinations to help boost tourism revenue and the local economy.
3Ed-ventures Combining education and holidays for the youngest members of the family. While adults may need to telework or attend meetings, their children can be doing workshops and learning in a playful way. 4 Pet travel A rise in pet ownership during the pandemic is leading to increased interest in pet travel and the development of hotel dog parks, pup perks and more. Recent 2021 Hilton.com booking data reveals ‘pet-friendly’ is the third most-used booking search lter.
5Comfortable travel Consumers want more comfortable and approachable travel and dining experiences. And while many are happy to retire their yoga pants for designer jeans and blazers, tuxedos and gowns are no longer the norm. People want to have a high-level dining experience, but also to be casual. Travellers will still expect meticulous service, but they won’t want to be in a sti environment. Personalisation will outperform pretention.
ABOVE: Pet-friendly travel is becoming popular BELOW: Conscious travel is on the rise
HILTON SEYCHELLES NORTHOLME
Sources: UNWTO, Hilton’s The 2022 Traveller: Emerging Trends and the Redefined Traveller report
TRANSPORT OF THE FUTURE
The UAE is a trailblazer of smart transport, with a wide range of solutions, from autonomous vehicles to high-speed hyperloops, in development. In 2025, Sharjah will launch the uSky elevated string rail transport system for cargo and passengers, with a testing facility already operational in the emirate. Developed by Unitsky String Technologies Inc. (UST), a Belarusian-based eco-friendly, safe and comfortable transport solutions specialist, uSky travels at speeds of up to 150 km/h, with a capacity for 50,000 passengers per hour. The Sharjah rail development is just the start, with UST planning to grow its portfolio to 10 projects by the end of 2022.
MADRID IS LIFE
The Spanish capital is promoting its slow travel offering, inviting visitors to enjoy authentic moments, from gastronomy and shopping to culture and nature
If life were a city, it’d be Madrid – that’s the message fronting Turismo Madrid’s new promotional campaign, which invites visitors from all over the world to enjoy premium experiences and a convivial atmosphere in the vibrant Spanish capital. Tapping into consumer demand for authenticity and slow travel, Madrid is throwing the spotlight on its diverse destination offering, encouraging travellers to savour every moment in the city. Here, Business Traveller rounds up some of Madrid’s most enriching experiences.
Luxury hotels
Madrid is home to some of the world’s most luxurious hotels, including the Four Seasons, which opened its doors in 2020 and the Mandarin Oriental Ritz, which has reopened after its iconic Belle-Époque building underwent restoration work. They join an extensive list of premium properties, including the historic Westin Palace, the Santo Mauro Autograph Collection, and the recently reopened Rosewood Villa Magna Hotel. Other new additions include the Hardrock Hotel Madrid, which opened in June.
Outstanding shopping
Discover Galería Canalejas, a new home for exclusive fashion brands, a food hall offering unique culinary experiences, and 14 restaurants serving global flavours, located in the Barrio de las Letras (Literary Quarter). Other premium-sector favourites include Calle Serrano and Calle Ortega y Gasset in the wellknown Salamanca District. Beyond designer shopping choose from bohemian, alternative and vintage fashion, handmade clothing, artisanal souvenirs, outdoor markets, and more (www. esmadrid.com/en/shopping-madrid). Madrid is synonymous with quality, design, detail, and passion, evident in the plethora of boutiques and studios showcasing home-grown products. Look out for Salesas, Lavapiés, the Barrio de las Letras and Chueca, Malasaña, Conde Duque, La Latina, and Madrid de los Austrias – establishments selling everything from hand-crafted capes, gloves, hats, meninas dolls and fans, to Manila shawls, jewellery, handbags, tapestries, violetflavoured sweets, furniture and guitars.
Culture and art
Private tours of Madrid’s most famed galleries and landmarks are now possible, with the city's well-known Golden Triangle of Art – the Thyssen-Bornemisza, El Prado and Reina Sofía Museums – all offering this service. So too is Liria Palace, the official residence of the house of Alba in Madrid and the main location of its art collection and historical archive, as well as the Royal Tapestry Factory. Often-overlooked cultural attractions worth a visit include the Decorative Arts Museum, the Royal Observatory and the Royal Botanical Gardens.
FROM LEFT: A boutique in the Salamanca District; Gran Via, Madrid
Gastronomy
According to the Guinness Book of World Records, Madrid is home to the oldest restaurant in the world. Founded in 1725, Botín promises authentic traditional cuisine. If you wish to delve further into the Spanish capital’s culinary history, the Illustrated Map of Century-old Restaurants and Tabernas has a foodie route for you (www.esmadrid.com/en/centuries-old-restaurantsmadrid). For a Michelin-star experience, treat yourself to a meal at Saddle. With chef Adolfo Santos at its helm, it’s the latest addition to the city’s haute-cuisine scene. It collected its first Michelin star in December 2020 and, more recently, two Repsol Suns — a distinction recognising culinary experience and contribution. There are 20 restaurants listed in the Michelin Guide 2021 (www.esmadrid.com/en/michelin-starred-restaurants) ranging from DiverXo, headed by Dabiz Muñoz with three Michelin stars, to Coque by Mario Sandoval with two and El Invernadero by Rodrigo de la Calle, also awarded a Green Star, a new accolade in the guide, acknowledging restaurants at the forefront of sustainable gastronomy. Halal food is also easy to find in Madrid (www.esmadrid.com/en/halal-travel-madrid#).
As business travel gradually returns, there is a recognition within the industry that sustainability – and particularly a focus on the environment – will be crucial in coming years.
During interviews conducted at Berlin’s International Hotel Investment Conference (IHIC) and London’s Business Travel Show in September, participants from ground transport to travel management companies and airlines to hotels spoke of sustainability.
Cynics will say we have been here before. Similar noises have been made in the past, and what followed the statements of intent was price cutting, expansion and growth. Will this time be di erent? Perhaps it will, because the world has changed.
Interviewees all mentioned the pandemic, which has not only forced a re-think of the way companies and individuals organise their business travel and thrown up questions about whether all trips are necessary, but also the intention of many governments – and perhaps societies – to ‘build back better’. ere is also the renewed focus on the environment, not just because of the recent COP26, but because the scienti c evidence for climate change, con rmed amongst the majority of scientists for decades is now increasingly showing itself in natural disasters. Estimates for the contribution transport makes to carbon and other missions varies, but as other industries and market sectors reduce emissions, those of transport – and particularly aviation – come into focus.
Add to this the focus on ESG investments (Environmental, Social and Governance) by the nancial community – airlines, hotels and transport companies rely on nance just like other sectors, and so will rely on ESG ratings to continue to attract money – and the millions of employees working in the industry who expect companies to ‘do the right thing’, and it could be that this time is di erent. Here’s what we learned speaking to the industry in recent weeks.
LEFT: The pandemic has accelerated demand for sustainable travel
Radisson Hotel Group
Federico J. Gonzalez
CEO, Radisson Hotel Group
“ e hospitality industry needs to move on this, and I think it will. We are part of the Sustainable Hotel Alliance and also a member of the World Travel & Tourism Council (WTTC), which has its own initiatives on climate and environment action, single-use plastic reduction, biodiversity and inclusion and diversity.
“Remember that governments have not regulated us on how to clean the hotels. When COVID hit, every company was doing their own protocols and so many of the hotel companies helped to come up with the WTTC Safe Travels so that any country in the world could apply. at means the regulators didn’t need to regulate, but if we had not done this, then they would have done.
“ e same can be true of sustainability. We have been talking with many other hotel companies to push beyond the situation where every brand has its own programme, which is confusing, and instead come up with global hotel hospitality standards, and that would be 10 or 15 things so that any hotel in the world should be able to do them. We as an industry want to be net zero, but is it realistic for an independent hotel in the middle of nowhere? ey would say “How do I start? I don’t even know how to measure it.” And so, we have the protocols, which start with not using plastic, looking at waste, recycling and so on. We need to create those standards and I am convinced we will do it.
“If any consumer wants to come to Radisson because we are sustainable, then that’s great, but if we market it as a point of di erence with other brands then we end up in a game of claims, which is irrelevant to a lot of customers. I don’t see this as a competitive advantage. It’s more about how we can drive the industry to do this.”
radissonhotels.com
HOTEL SUSTAINABILITY DEFINED
In November, Radisson Hotels Group was one of several major hospitality entities to launch an initiative designed to set a common definition of hotel sustainability, working in partnership with the World Travel & Tourism Council (WTTC) and the Sustainable Hospitality Alliance
The Basic Sustainability framework, set for launch in March 2022, will provide a common starting point for hotel sustainability, accessible to all properties worldwide, whether they are part of a large international group or independent. In the coming months, all entities will work together to set out essential sustainability actions, collaborating to share best practices and ensure all hotels start working towards the targets of the COP 21 Paris Accord.
The WTTC has also set out a Net Zero roadmap for travel and tourism, with 2050 targets. wttc.org
Wyndham Hotels and Resorts
Dimitris Manikis
President for EMEA at Wyndham Hotels and Resorts, encompassing brands including Wyndham, Ramada, Days Inn and Registry Collection
“We are a franchise model, so we don’t manage hotels, but sustainability is a target in terms of operations with the Wyndham Green certi cation programme. However, ESG is more than just making sustainability training mandatory. We have also made human tra cking training mandatory and we now have engagement tools to ensure hotels are keeping engaged with the sta . Hospitality needs to be interesting again. It needs to be something the young see as a career path.
“Part of that comes from having a social purpose. In India, franchisees told me they were proud hotels gave food to the local community. We opened up rooms for them to stay in when they didn’t have hospital beds, so that sense of purpose is important and we shouldn’t let go of it.
“Whether it’s food waste or the environment, these are meaningful actions that all of us in hospitality need to take care of. We need to remind ourselves of this every time we do a deal for a new hotel or bring new partners in. Hospitality is about the passion people have and that’s been shown in how hotels responded during the pandemic. e repurposing of jobs will be a big thing in our industry, and this feeds in to the ‘Social’ part of ESG. Repurposing will improve some of those jobs, for instance, the front o ce person who becomes a relationship manager. Keeping people motivated is important, giving them good jobs which they enjoy and want to stay in.” wyndhamhotels.com with partners such as BP to install the infrastructure with fast charging.
“In the UK we have 70,000 drivers on the platform and in London 50 per cent of Uber cars are hybrid, which is the rst answer. But to get to 2025, that will be full electric. No hybrids is what we are aiming for.
“So that is a big push coming from consumers, but it has also materialised in the Request For Proposals (RFPs) we are answering from the procurement people at large corporates. It’s a prominent expectation. If you have nothing to answer you are not part of the equation.”
uber.com
Uber for Business
Christophe Peymirat
Head of Uber for Business, EMEA
“When we speak to our corporate customers in Europe they are asking for three things. ey ask about the safety, both in terms of cars and also during the pandemic with masks and hygiene. ey also ask about cost e ciency, and then nally it is around sustainability. All the big corporates whether nancial services, consulting, media and pharmaceutical companies want to know the carbon emissions we are generating with their travel. rough their Travel Management Companies (TMCs) they get this sort of CO2 reporting on their ights, and they want it from us on ground transportation. And that’s where we have a number of initiatives, mostly around Uber Green.
“We have our Clean Air Plan, which is a commitment to be fully electric in London by 2025, and the same for Amsterdam, and 50 per cent fully electric in seven other major European cities, and by 2030 fully electric in most European markets. So, we are supporting and incentivising drivers to buy the cars and encouraging the manufacturers to provide the cars. We need to create a second-hand market. It’s di cult, but we have no doubt it’s the right thing to do. We are also working
Conscious Certified Hotels (CCH)
Raoul Thomas
CEO and founder of Miami-based CGI Merchant Group, which has a partnership with Hilton to open three new brands of ‘conscious’ hotel
“Consumers are focused on seeing meaningful change, so our decision was to have a unique operating model attached to brands and values, and for us, that was brands centered around an ESG strategy. We think the standards for the E and G (In ESG) are there for us – we have green buildings, we will be energy e cient and we will be mindful of recycling, but we want to focus on the Social part.”
“What we are saying is that we will give one per cent of topline revenues to the communities around our properties, and over time that will be millions of dollars over the year. We believe communities around us have to thrive for our investment to have value over time. It doesn’t make sense to have a beautiful high-rise building in an urban core where everything around it is impoverished. e more we can impact and drive development and make progress in those human needs around us, the more the value of our asset goes up.”
“We would want to encourage guests to experience investments outside the hotel. So, for example, if we make micro loans to a nearby restaurant, we would encourage them, through the concierge, to experience the farmers market and dine in the neighbourhood at that restaurant. Our studies tell us they want that sort of experience and we think that outreach and engagement will bring a lot of brand loyalty.”
“On the business side, our studies have found that people will pay a ve per cent premium to Average Daily Rate (ADR) and will also stay longer. We think also that as you go through cycles in the hospitality market, customer loyalty will be stronger where they see strong brand values. So, we are saying this is accretive over time, but to be clear, this one per cent of top line is coming out of our share, not the consumers. It’s not a levy on the hotel room. We want to make sure we measure the good that has been done, so we have contracted a third-party group to so that.
“So far we have two hotels in Miami: one of which will be the Gabriel Miami Downtown (thegabrielmiami.com) and we have just acquired another hotel on Ocean Drive, which will become the Gabriel South Beach. In total we have three brands: Celino, which will be under the Hilton LXR brand; the Gabriel, under the Curio brand; and the Kelsey, which will be under Tapestry by Hilton.
LEFT: Gabriel South Beach BELOW: Egencia o ers rail options as an alternative to flying
“We have also signed for another hotel in Atlanta, which will open in 2023 as a Kelsey. It is next to Atlanta Morris Brown College, a Historically Black College and University (HBCU) built in 1881, with a campus which is a stone’s throw from the Mercedes Benz Stadium, home of the Atlanta Falcons NFL. e university is launching a hospitality programme, so we were able to get Hilton to help to develop the curriculum, extend its personnel as visiting professors of the programme, and we can also recruit the talent from that programme for our hotels. You can do good while making money.”
consciouscerti edhotels.com
Egencia
Manuel Brachet
Vice President of Commercial and Customer Success
“COVID accelerated the sustainability agenda, because companies reset their travel programmes and, because of that reset, they have embedded sustainability as part of those programmes. As a TMC, we provide choice to our customers. Our online tool o ers air/rail dual display, so if you take a ight from London to Manchester, it o ers the train as an alternative.
“We partner with UK’s Department of the Environment, Food and Rural A airs (DEFRA) for the carbon o setting of hotels, but nd our corporate clients prefer to de ne what is a sustainable hotel, based on their particular criteria. at said, we have a supply team out signing up new hotels and acquiring Egencia preferred rates from hotels that our travellers can book, and while doing so are providing input to the hotels about sustainability criteria valued by clients.”
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