Businesses are returning to the office, but around the world bosses are questioning if they need to return to the skies. Zoom meetings were an effective substitute while we were locked down, but many companies have adapted and now find them more efficient than the old-world, travel and meet in person alternative. Deloitte found that corporate travel budgets declined by 90% or more in 2020 (not surprising in a pandemic) but now many companies have announced they intend to keep it that way.
Further exacerbating the anti-travel push is climate concerns. Zurich Insurance Group, Bain & Company, and S&P Global are just a few of the companies that have announced plans to cut business travel emissions over the next few years. Zurich have announced a target of 70% reduction in travel emissions by next year.
The effect of this will go far beyond the Zoom share price. It will likely force changes in the business models of major airlines and hotel chains. In the US, business travellers make up just 12% of airline passengers but 75% of revenue on certain flights. Business travellers subsidise other travellers. So as they disappear, airlines and hotels are being forced to raise prices and cut costs, resulting in a worse experience for everyone else. Airlines are cutting routes, hotels are cutting staff and closing locations, and these businesses that relied on business travel are searching for a new normal.
This is an excerpt from our Thought Starters email. Once a week we send you 5 interesting articles that have caught our attention, to get you thinking. No spam, we guarantee.