Australian travel segment poised to soar past pre-pandemic levels

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The Australian domestic business traveler is a godsend for the local economies.

While business travelers are short on time – they have business to do after all – they don’t spend their own money. Like teenagers equipped with their parents’ credit card, business travelers have the company card to wave around.

It’s much easier to get people to spend money when it’s not their own. At home, you’d scoff at paying $29 for a simple burger with fries. In a hotel room equipped with the company credit card, you feel like a saint for ordering the burger instead of the overpriced steak. The sacrifices you make for your business…

Domestic business travel recovered quickly in post-lockdown Australia, but why? In the age of working from home, in the age of Zoom and Slack, wouldn’t we expect business travel to be a dying phenomenon? Aren’t video conferencing much cheaper? Wouldn’t those oh-so-environmentally conscious millennials just boycott business travel?

The opposite will be the case. Business travel may be the only segment of the travel market that will soon grow beyond 2019 levels.

The future of work dictates more business travel, despite the large and important counter-forces of video conferencing, online collaboration tools and increasing environmental awareness.

The nature of our Australian job market has changed in such a way that more workers have to travel more frequently. Our workforce continues to grow and the share of agricultural and manufacturing jobs is shrinking, while knowledge jobs are an ever-increasing share.

In all industries, senior staff must travel to arrange face-to-face meetings with clients and colleagues, but in the knowledge industry, even lower-ranking staff often travel. They may not close multi-million dollar deals, but they visit team members and customers for sales pitches, workshops, conferences, training and meetings.

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Modern companies are also more collaborative and more likely to work with outside personnel who may live in another city.

Of course, a quick conference call is the cheapest and most common form of meeting. But the large increase in the frequency of collaboration means that in general the need to travel to another city is much greater.

The face-to-face advantage

The opportunities for a team to be in the same space were still relatively plentiful in 2019. In the post-lockdown world of work, companies need to create events, such as conferences and get-togethers, to get the whole team in the same space. This is not a luxury, but an essential part of the future world of work.

The projects we work on today involve increasingly complex tasks. Meetings to coordinate these projects are simply more effective when held face-to-face. This means that flying employees from city A to city B becomes more important than less important to ensure optimal work results.

In Australia, like our population, domestic business tourism is concentrated in just five cities.

Two-thirds of all jobs are in Sydney, Melbourne, Brisbane, Perth and Adelaide. As a result, these ‘Big Five’ exchange many workers every day.

Looking back at 2019, we are impressed with how our capital airports and airlines have ensured this seamless daily employee exchange. The Australian Bureau of Statistics tells us that more than 26,000 workers living in one of the Big Five cities spent the pre-pandemic census night of 2016 (Tuesday, August 9, 2016) in another Big Five city. This data does not even take into account the countless day trips between the cities.

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Essential, unavoidable complexity

Since COVID, we have gained a whole new level of appreciation for the complex systems on which our society is built. We understand the complexities of global supply chains and realized that even a small delay in international shipping can disrupt many industries that rely on just-in-time delivery of parts and inputs.

The same goes for our appreciation for the national aviation network.

Airports and airlines don’t have enough employees to run their complex operations seamlessly — kudos to today’s up-and-coming employees.

About six weeks ago, Sydney Airport alone registered 1,200 job openings with security and ground handlers, which are managed by outside contractors.

In addition, the airport district had an additional 3,800 job openings in areas such as retail, administration and cleaning. The airport has since held a major job fair and improved staffing levels. There is going to be a flu season that will leave about a quarter of the workforce on any given day

Fly? Maybe driving is better

All this means that travel is no longer as comfortable and predictable as it was three years ago. Prices also rose sharply. Now is the perfect time to choose vacation destinations within driving distance to avoid airports.

Despite the high fuel costs, travel is cheaper and more predictable than flying. Air travel cannot possibly work in today’s environment without daily delays.

Delays and high travel costs are much more noticeable when you travel with the company card. Somehow we don’t feel like everything works seamlessly when we spend the boss’s money.

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Right now, a greater proportion than ever of all passengers should be business travelers — from professional service providers to fly-in-fly-out miners — people still have to travel for work.

The main beneficiaries of this daily exchange of workers are in the major cities.

Taxi and rideshare companies have enough customers to drive around, airports charge for every passenger and sell muffins and lounge access, airlines get their fares, cafes caffeinate the busy employees, restaurants sell to people who have the credit card of the using company and not using the right one – hand column to choose their meal, bars sell well-deserved nightcaps, conference centers serve large crowds every day, and hotels have plenty of beds (and $29 burgers) to sell.

Naturally, the companies involved in building, maintaining and renovating the infrastructure in question also benefit.

Other in the UK

The clustering of jobs and business trips in a few locations allows major players to dominate the business travel-related construction market. In a more dispersed market like the UK, where only 30 percent of the population lives in the five largest cities, small players have an easier time establishing themselves in the market.

All in all, the business travel market is an excellent field to work in. It is a market that will grow. Most business travelers don’t spend their own money and are easily persuaded to part with it.

Of course, that’s exactly what airline and hotel loyalty points are all about. The individual business traveler benefits (in the form of points) by spending more money (not their own money, mind you) on flights and hotel services.

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