December 6, 2022

Springswines

The Tour And Travel Enthusiasts

As biz travel slowly returns, some companies expect workers to pay their own way

6 min read
As biz travel slowly returns, some companies expect workers to pay their own way

Corporate travel managers have backed off their expectations for a recovery this year, with fewer than one in five confident travel will return to pre-pandemic levels in 2022, according to a new report by consultancy Deloitte LLP.

As companies are rethinking when and why employees should travel, Deloitte examined what to expect for the future of domestic and international business trips — including how workplace flexibility will affect required journies to office headquarters.

Only 17% of travel managers expect a full recovery by the end of the year; more than half of respondents thought business travel would bounce back this year, according to a 2021 survey by Deloitte.

This spring and summer, many large companies will be rollingout the return-to-office plans they delayed last fall because of the ongoing COVID-19 pandemic. An uptick in travel will likely accompany the shift to more office-based work, Deloitte said. 

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Business travel is still two years away from reaching pre-pandemic levels, according to Deloitte. Travel spending is expected to reach 36% of 2019 levels by mid-year, increasing to 55% by year’s end, and 68% by late 2023.

In Deloitte’s most recent February survey, a quarter of companies indicated that more work from home will mean more trips to headquarters — thought it also means less travel overall. Companies that will be office-dominant by Q2 2022 are twice as likely to expect travel spend to reach 2019 levels by the end of 2023 as companies centered on work from home.

Remote workers expected to travel to offices

For those expected to resume travell, Deloitte warned they may need to factor in added costs. For employees who relocated during the pandemic, two-thirds of companies will reimburse for trips to headquarters. However, nearly one-third (29%) of companies leave employees to shoulder the cost themselves, the Deloitte survey showed.

Historically, corporate travel has been divided into internal versus external trips. External travel involves attending third-party events, networking, creating and sustaining customer and vendor relationships, and completing a business transaction. Internal travel, or travel to corporate offices and events such as corporate offsites, is more about project development, collaboration, and team building.

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Jack Gold, principal analyst at J. Gold Associates, said some companies had a policy that went along with employee moves during the pandemic, and if they had specific language in place about travel, workers can’t complain when asked to pay their own way. 

“If the company specified that any moves would not affect the requirement to come into the office once the pandemic was over, and if the employee moved anyway, then the employee is on the hook for travel,” Gold said. “If that means an employee has to drive an hour or two to go to the office once in a while, then that probably isn’t really that much of a burden and the employees probably thought about that before the move (or should have).”

If an employee moved further away, that’s a more difficult challenge. But workers can’t complain if they were warned, Gold said. “Even if there was no explicit policy, the company is right to have an expectation that the pandemic would eventually end and employees would return to the office,” Gold said.

Deloitte’s report involved a survey of 150 travel managers, along with executives with various titles and travel budget oversight. The survey took place from Feb. 10-18.

David Lewis, the CEO of OperationsInc, an HR consulting firm in Connecticut, said organizations that want to connect employees who work out of the area with one another and with their headquarters-based team need to pay for their travel.

“If you want to re-convene, create connections, set the foundation for the future post-COVID workplace, and move closer towards what the new normal looks like, you need to pay for your employees to travel and to stay,” Lewis said via email. “That removes many of the barriers.”

Lewis cautioned companies to move slowly in pressing employees to get back in the air to attend a conference or other event. While pandemic concerns have eased, Lewis said organizations should remain patient.

“Employers looking to get their teams back on the road need to allow for things to settle in far more before pushing anyone to get on a plane, attend a conference, etc.,” Lewis said.

In fact, employers that adapt to the new norms and cover the costs of regular headquarters visits will see a return on their investment. “Those who make the employees out of area pay to come are going to further a stigma that out-of-market employees are second class,” Lewis said.

Evan Konwiser, executive vice president of product and strategy at American Express Global Business Travel (Amex GBT), said internal corporate travel was once seen as more discretionary. But with a more distributed workforce, it is a key way to fill the void in corporate culture building.

Amex GBT and CULTIQUE, a business strategy firm, released their own recent survey of 700 travel managers around the world. All respondents expected corporate travel guidelines or policies to change over the next 12 months.

Organizations that have been saving money because few people were going anywhere are likely to place an emphasis on travel “sustainability” — where employees are encouraged to bundle visits to multiple clients or events into a single trip, according to the Amex GBT report.

As travel comes back from pandemic lows, executives will likely begin to push companies’ sustainability priorities and cost imperatives. “Leaders will look to lock in gains in these areas as much as possible, even as they loosen the reins in the name of growth and innovation,” Deloitte said. “Rising travel prices is one of the few travel-deterring factors that saw an increase in significance from 2021 to 2022. To keep costs under control, nearly three in four companies say they will limit the number of trips taken.”

Along with travel “sustainability” to mitigate costs, companies are looking to reduce their environmental impact. Nearly one in three surveyed by Deloitte said they’re looking for guidance from travel management companies on how to reduce their carbon footprint. And a quarter plan to prioritize travel suppliers that invest in sustainability.

“These environmental priorities are poised to place a ceiling on corporate travel’s comeback. Most respondents expect sustainability to reduce 2025 spend by 10% or less, but nearly three in 10 expect a reduction of 11%–25%,” the report said.

International travel faces stiffer headwinds, Deloitte said. The potential for future COVID-19 outbreaks, and stringent or unpredictable entry/exit regulations, “have made travel to most regions impractical for the past two years,” according to the report. (Deloitte’s results were compiled before Russia’s invasion of Ukraine; that war is also likely to negatively impact travel.

On average, survey respondents said they expect international trips to represent about a fifth of overall business travel spend this year. But in light of geopolitical developments, that figure could fall short of expectations.

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The top driver for a return to international travel aligns with the biggest driver of domestic trips: 43% names sales visits among their top two reasons for sending travelers overseas; leadership meetings (32%) and client project work (31%) were next in importance.

Conferences should see a resurgence domestically in 2022, but face another tough year attracting international delegates. Only 15% ranked industry events in their top two reasons for international travel, according to Deloitte.

While the move to virtual events is permanent, not all events will be virtual, or at least not exclusively virtual; there’s no doubt in-person events will be making a comeback, Gold said.

“There is still no replacement for one-on-one, face-to-face meetings for certain types of business discussions, and especially if there are negotiations of some sort involved,” Gold said. “It’s much harder to establish a personal rapport with someone over Zoom than sitting with them in a meeting room or over a meal of coffee. So even though in-person events are more expensive, they still have a place and advantages over virtual only events.”

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