In recession battered 2009, corporate travel dropped an average of 20 percent nationwide. The question corporate travel managers and travel agents are asking now is: How much of that business will return and how much is gone forever?
One Utah travel agent who spends a lot of time in corporate conference rooms selling travel services has noticed a change in those conference rooms. Television monitors are mounted on walls, speakers are arranged around tables and small video cameras stare out from the corners. Video conferencing is becoming mainstream, eliminating the need for yesterday’s routine business trips.
From setups as simple as Webinars on gotomeeting.com and Skype, to elaborate video productions with in-house producers and directors, digital connections are making actual human connections less frequent.
At General Electric (GE), one of the nation’s largest business travel spender, travel dropped by $30 million last year according to the authoritative industry journal Business Travel News. It reports that GE is focused on eliminating internal travel by using telepresence equipment in place of visits. At Verizon, which knows a thing or two about digital communication, expanded videoconferencing is reducing corporate travel, saving both time and money, as well as reducing its carbon footprint.
“The impact has been coming for 10 years at least,” says Alan Hess, owner of Utah-based Hess Corporate Travel. “Video conferencing is easier now.” Hess estimates his clients have cut their business travel by 30 percent since mid-2008. The question now is: How much business travel will return as companies incorporate more cost effective ways to communicate with customers and colleagues? “It makes good sense for them to examine what they’re spending and ask ‘can we do this with one less trip?’” Hess says.
“People are investing, evaluating and making aggressive plans for meetings,” says Kathleen Roberts, development manager at Christopherson Business Travel, about client initiatives toward video conferencing. Christopherson’s corporate bookings are down about 20 percent since the recession began, but Roberts says it’s not possible to say how much, if any, of the decline could be attributed to video conferencing. And for some companies, travel spending has actually increased during the recession.
Out of Touch
Connecting people remotely can save money without losing interpersonal impact in some circumstances, but those personal, face-to-face conversations still need to take place.
“We use video when the meeting is not critical—when it’s a conference type of thing,” says David Allred, C.R. England’s director of management services. The refrigerated truck line operates nationwide and has routine needs to communicate widely, such as in the training of drivers and other personnel with similar jobs.
“Our business is so customer focused that we want to be in front of our customers,” Allred says. “It’s not a good business practice to talk too much to clients over the phone or video conference. We need to maintain relationships.”
When a long established customer wants to re-bid a transportation contract with England, Allred says, “A phone call is not as effective; we want the account executive to sit down across from their desk. We want them to look us in the eye as they make this decision.”
With that, Allred is looking at ways to upgrade the existing teleconferencing equipment at England, but also points out that video conferencing only works when there is video capability on the other side of the meeting. “The other end needs to have it to make the handshake happen,” he says.
“Our customers tell us there are still situations that require face-to-face meetings,” adds Roberts. “Much can be done over the phone, but companies are still willing to meet face to face.” Roberts notices companies are giving more care to how corporate travel dollars are spent. “Companies used to send five people to a meeting or conference. Now they’re reevaluating how many need to go and today they’ll only send two.”
And while cost containment is high on every company’s to-do list when times are lean, Alan Hess points out that most sales work requires that personal contact. “Anything to do with sales—you can’t do the same thing with video conferences. Sooner or later, you have to show up in person.”
There are other functions that demand personal visits, such as announcing and implementing broad new corporate initiatives. And site inspections in new markets obviously require shoes on the ground. And then there’s hiring and firing.
The hit movie “Up in the Air” chronicles an HR administrator who logs 300 days of travel in a year firing people, moving on and firing more, while in the personal pursuit of racking up a million frequent-flier miles.
In real life, functions like key personnel moves, sales calls, site inspections and trips to put out corporate fires will always require personal travel. But Hess notices companies will spread out these types of trips. “They’ll make three trips where they used to make four, spreading the interval out a little,” he says.
The recession has forced most companies to re-evaluate the cost-benefit ratio of personal travel versus virtual travel. Video systems are becoming more ubiquitous, less expensive, and easier to use. In 2008, Business Travel News reported GE had 12 locations equipped with enhanced video conferencing technology. By 2009, the number of equipped GE sites nearly tripled.
And Verizon’s internal travel booking computer program now has a pop-up window that appears when employees log on to the intranet travel page, reminding them to use Verizon’s conferencing and collaboration services.
As companies tighten travel budgets and use video, those who make a living booking corporate travel are working to acquire competitors to grow business. Both Christopherson and Hess Travel have expanded their business travel customer base through acquisitions of competitors. “Some will not survive,” predicts Alan Hess, who in recent years has purchased Crossroads Travel and more recently, Morris Murdock’s business travel division.
A phone call or connection with a client or employee by video can take care of routine business, but there’s nothing like that handshake and a conversation over dinner to seal the deal and build a relationship.