A recent McKinsey study predicts that firms have until 2023 before 80 percent of pre-pandemic corporate travel resumes. The question remains whether companies will use this precious time to pursue cost-saving solutions or will simply choose to “wait and see” while their competitors save on corporate airfare costs. Savvy companies will recognize the need to optimize and take this opportunity to do so.
McKinsey’s Insights Into Corporate Travel and the Pandemic
The McKinsey data reminds readers that in 2020, the total expenses for global business travel reduced by 52 percent and spending on managed corporate travel dropped by 71 percent. McKinsey has long predicted that it will take a long time to return to normal and now predicts that only by 2023 will 80 percent of corporate travel return.
Changes Due to Vaccinations
Based on current vaccination rates and expert insight, McKinsey predicts that parts of the United States and United Kingdom will reach herd immunity by Q3. The agency further predicts that by Q4, parts of the EU will reach herd immunity as well. When countries reach that herd immunity, corporate travel will increase, as businesses and their employees will feel safer.
Not All Companies Will Return to Corporate Travel
The study also pointed out key differences in the long-term changes to corporate travel within specific companies. Thirty percent of surveyed executives didn’t know anything about specific corporate travel plans following the pandemic. On top of that, 28 percent said their companies only have vague plans.
McKinsey divides companies that used corporate travel into four main categories:
- Companies that never stopped traveling (about 15 percent of corporate travel expenses during 2019)
- Companies that will never return to corporate travel (about 20 percent of corporate travel expenses during 2019)
- Companies with travel that will mostly be due to fear of missing out and competition (about 60 percent of corporate travel expenses in 2019)
- Companies who plan to wait and see (about 5 percent of corporate travel expenses in 2019)
To determine the categories, the analysts looked at the sector, whether trips are domestic or international, and the purpose of the travel. For instance, companies requiring in-person interactions had a stronger purpose of travel.
McKinsey’s Suggestions for Companies Who Use Corporate Travel
Based on its research, McKinsey offered advice for companies that plan on continuing or returning to corporate travel.
Utilize Real-Time Data
The first crucial factor mentioned is to make use of real-time data. Companies need access to real-time data to make informed decisions about ticket availability and costs. This is especially important due to the current volatility of flight schedules. Services like FairFly that aggregate data in real-time offer a solution for companies.
Make Planning Agile
McKinsey also suggests that travel managers create agile plans for corporate travel. This incorporates the previous point, as corporate travelers may need to change plans quickly based on the most recent data.
Prioritize Safety and Comfort
Corporate travels will be more aware of personal health, safety, and comfort during post-pandemic travel than they were before the pandemic. This requires companies to create policies and strategies that keep corporate travelers safe. To some extent, this will require companies to offer business travelers their choice of hotel or airline, with a focus on those that implement stronger safety measures or offer options to reduce contact.
Business travel will be back to normal before you know it – and now is the time to start optimizing your travel program using FairFly – Learn More Here.
How the Results Impact Corporate Travel Programs
When travel program managers look at the data from the study, they should see it as an opportunity. The lower levels of corporate travel are the perfect opportunity for travel managers to find cost-savings deals and strategies before they get back to business as usual. After all, these changes are significantly easier to implement at a smaller scale in the first instance. Additionally, travel managers are more likely to have the time to implement these changes now than when travel returns to normal.
More importantly, savvy companies have recognized this as an opportunity to get ahead and get a good deal. This means that companies that do not take advantage of the situation will reach 2023 and realize they have fallen behind their competitors instead of forging the path forward.