Companies are spending more on sending their staff out to win deals
FOR well over a century, people have predicted that technology will make business travel obsolete. In 1889 Jules Verne imagined that the “phonotelephote”, or “the transmission of images by means of sensitive mirrors connected by wires,” would replace overseas meetings. In the 21st century far-flung communication is no longer science fiction. Yet far from stowing their suitcases, putting away their passports and signing in to Skype, the corporate world’s “road warriors” are clocking up more miles than ever.
According to a report by the Global Business Travel Association (GBTA), firms around the world will spend a record $1.25 trillion this year on sending employees on work trips. This largely reflects growing business confidence. In the downturn following the global financial crisis, suspending foreign jaunts was a quick way to cut costs. Now, firms are looking to grow, by sending staff out to hunt for deals.
A recent survey by Morgan Stanley, a bank, found that 63% of American firms increased their travel budgets for 2015. A similar proportion said that they would increase spending again next year. Another survey, by BusinessTravelNews,suggests that management consultants and makers of expensive hardware remain the biggest spenders on travel among American companies. And businesses and other organisations in China will, collectively, soon be spending more than their American counterparts, the GBTA reckons (see chart).
Organisations still place great store by face-to-face meetings. Kathryn Bell of the Boston Consulting Group says that although clients do not always demand personal contact with its consultants, when they are working on operational improvements to a customer’s plant, for example, there is no alternative to being on the ground. Isabelle Bajeux-Besnainou, the dean of Desautels, a Canadian business school, says a big part of her job is scouring the world for potential benefactors. “When you are asking someone for money it is better to do it in person,” she observes. Some firms also use foreign jaunts as a reward for high-performing staff.
There might be less demand for expensive jet-setting if promises of seamless teleconferencing had not proved so hollow. Anyone who has endured a jerky, muffled video-call might wonder if, like Verne’s phonotelephote, it was being transmitted through distant mirrors. Sony is a leader in virtual-presence technology, says Chris Bowen, a former executive at that company (now at Carlson Wagonlit, a travel-management firm), yet, if its potential customers and competitors were gathering at a conference on the other side of the world, it would not send a hologram to attend.
Even as they increase their budgets, corporate-travel managers continue to seek ways to pinch pennies on each individual trip. A survey by the Association of Corporate Travel Executives (ACTE) found that over the past two years firms have become stingier about letting staff upgrade their flights or hotel rooms, and stricter about demanding that all trips go through their centralised booking systems.
Yet one obvious way of cutting costs is going largely unexplored: making use of the “sharing economy”. According to the ACTE, over half of firms have ruled out alternative suppliers of accommodation such as Airbnb, mainly citing their “duty of care” to employees. Carol Neil, a travel manager at Nomura, says the bank vets all the suppliers of travel services before letting staff use them, and so far it has not approved any sharing-economy firms, because of doubts about safety. Indeed, hotel rooms are built to a standard design, with safety in mind, whereas Airbnb hosts’ homes may contain unexpected hazards.
What of the road warriors themselves? As their employers expect them to do more schlepping around the world with fewer perks, life on the road has become tougher. Stricter airport security—business travellers’ biggest gripe—eats up time and patience; and as more airlines offer in-flight Wi-Fi, the chance of enjoying a few hours of downtime is evaporating.
Yet despite this, most executives say they enjoy life on the road. According to the GBTA around half are happy with the amount of travelling they do, while over a third say they would like to do more. This may be because the daily grind back at base has got a lot tougher too. An executive from a big professional-services firm, who flies around 20 times a year, says that modern office life has got so unpleasant—“trying to run a business from an open-plan desk, higher levels of expectation and having to inspire the hell out of people merely to stop them from being tempted away”—that he looks forward to foreign trips simply to take a break from it all.