Business travel is flatlining — and here’s why you should be worried

While the Doom and Gloom reports are never ending, let’s get back to reality. A few things are correct:

The U.S. is in a recession. We’ve been here before, and we’ll be here again. Once again, this isn’t the first time America has struggled and dealt with this issue.

Second, unemployment is very high, but there have been far worse periods. For once, the Great Depression saw 25 percent unemployment. Granted, there were FAR FEWER people back then, so reaching such a figure was easier. If you have 20 people and 5 are out of work, that’s 1/5th or 25 percent. When you are talking 100s of millions, getting to that number is far harder. While numerically, we have a lot unemployed, statistically we are only 3rd worst in history. This brings me to point two. The 1982-1983 recession saw Statistical unemployment at 11-12 percent nationally. Right now, we stand at 9.5. A pretty far off number from the Highs of back then. Certainly, there are many more global factors (trade, housing market, etc) at work now.

Long story short. The news can paint all the doom and gloom it wants. Times really do suck. Officially we’re 9.5 percent unemployment. Underemployed, those who had to take part time, and those that gave up is at 16.5… Big numbers but STILL not at the Great Depression Level or the 1982-1983 level. So what’s my point? Companies who have their ducks in a row survived then. Companies who are doing things right will survive now. Those that DO NOT make it are living the flawed business model of GM, Chrysler, and others. It’s their fault, and unless they adjust, then they will go the way of the wind.

For starters, (Hint), how about improving customer service, offering people an “experience”, and making people’s travel more enjoyable. I don’t know, but my guess here is the reason they are suffering is due to exactly the lack of attention to these issues.. But hey, what’d I know.

What most people – like the first commentor – doesn’t understand is the difference between business & leisure travel. In fact, the US has some of the most incredible and hospitable (over the top customer service) hotels in the world. If you can’t go to the St. Regis Monarch Beach and have an “experience” I don’t know if you’re capable. And yet that property was just turned over to the bank for foreclosure.

The problem is not the economic recession. You’re right, we’ll recover from that. The problem is the negative perception of holding meetings! Group businesses accounts for more than 70% of travel revenues and when group business (business travel) is down, as Chris mentions, we ALL pay the price.

What Chris didn’t mention is the trickle down affects to our state and city budgets. Since travel taxes are the largest revenue stream for many state and city budgets, those residents will also be paying higher taxes and will suffer larger budget deficits with more of their critical public programs cut.

So, does the media play a part in all this? YES! The “gotcha” mentality of hidden cameras capturing groups conducting meetings has got to stop. Responsible meetings are OK and are proven to increase company production, morale and employee retention. The public also needs to stop demonizing every company and organization that holds a meeting because those people are paying your taxes!

To be clear – it’s not that we don’t have amazing hotels and stellar customer service – it’s that the public is currently throwing the gavel at anyone seen doing something or going somewhere that they themselves are not able to do. Therefore, we all cancel meetings and travel and we sit at home, horde our money and watch the economy slump deeper and deeper until we can all lighten up.

As usual the truth is somewhere in between.

Good models, good service and a good foundation aren’t a guarantee of business success although it certainly does substantially increase the likelihood of success. Consider the number of industries which have disappeared simply because of technology, outsourcing, high domestic labor costs, unions, etc.

Its also not necessarily true that Joe Public is a core consumer. That really depends on the goods and services which are being sold. I’m not a core consumer for Boeing or Airbus for example and I assume that no one else on this blog is, although that’s sheer speculation on my part.

With regards to conducting meetings, business travel is a lot more than just conducting meetings. Using my own industry: Up until the last 10 years, attorneys made all of their court appearances in person. Now, it is perfectly acceptable to make a routine appearance via telephone, thus realizing a substantial travel saving wholly independent of the media,travel perceptions, etc. It’s a pure numbers game.

Carver,

I agree, solid companies don’t always make it. However, a company with a good model, foundation, and customer service is FAR more likely to do so than one of complete opposite standing. Once again, good companies do fall, but in far less proportions.

Now to cover your other points. I would disagree on your Boeing / Airbus model. Joe Public is their largest consumer, indirectly. Consider these points. First, airlines buy from these two companies. If people aren’t flying, airlines aren’t buying. Joe Public once again dictates whether said airline purchases new planes or continues to use existing stock. Similarly, the government is also a big spender for these two companies, as well as arms contracts. Once again, if the consumer is hurting, funds for such spending are usually cut back. Look at the F22. We have a few hundred of them and they haven’t EVER been used. Their are concerns about their safety in rain, and they are based on a 30 year old model. Do you think the public REALLY wants the government spending 200 million a plane on something that’s going to be warehoused? The same on goes for airbus and boeing. People aren’t going to stand for huge waste, when everyone else is struggling. So Joe Public indirectly is a costumer but DIRECTLY influences the purchases in both cases.

Now as for outsourcing and changing times. I am in full agreement, times change and technologies do, too. However, think for a moment on this topic. Lawyers do not have to travel and can teleconference their cases. So one company now has a new model and revenue, while another suffers. Isn’t that the whole definition of a “Free Market”. So said airlines and people affected then need to come up with reasons and incentives to bring back those who left. Sure, you will never recoup 100 percent of the lost revenue, but there are ways to show people why going in person is much better. Let’s be honest, nothing can truly replace face time in important matters. Telecomferencing is good in many instances. Yet, would you be wanting to argue a 10 million dollar contract over a video feed or be doing it in person? You have far less sway when your presence is not there. So basically, the airlines should be focusing on making it attractive for business people to travel and explaining why it’s still necessary. Unfortunately, the airlines are too busy cutting everything down to the core, along with the very thing that could save them. Customer Service and incentives!! Let’s face it, if you had the choice between an enjoyable and relaxing flight, meeting your client, and a nice vacation versus an “Informal Teleconference”, what would you choose?

Justin

Justin
that you may, sir! Amen. What we have done is sell our manufacturing souls to off-shore mfgrs. (e.g., China, India, et al.). Pure and simple greed for the almighty Dollar. That is not a crime, however; the shifting of our technology, ingenuity, spirit (I could go on), that have dealt us an almost economic death blow is the crime. In our area, we have seen plant after plant after plant closed with the manufacturing moved “off-shore” (cute little euphemism for China – or India). Meanwhile families have been disrupted, financial strains appear, marriages crumble and, again, I could go on.

I’m sure you will agree that you would spend a few bucks more for a nice shirt made from textile mills in the US over those made in Hong Kong, Taiwan or other cheap labor areas. Is it not enough to make money without trying to stuff as much as possible into our coffers?

Now, we’re (still) borrowing money from China to finance our misdeeds and help us get back on track (whatever that might end up being). We borrow money we don’t have from the Chinese tom keep making goods that we once made here, and end up buying Chinese goods – and still have to repay the Chinese back for the debts! Is this a great country or what?

As for the generational gap, let me close by not admitting to any age, BUT, I will say that the next time I see 70 will be on a speedometer…

JPC
PS: It’s the young people like you and others on this blog that make me have hope for the future. jcb

Carver,

Well airlines may or may not be able to influence attorneys on a large scale but consider this example. Say you need to be in Chicago and you lie in Memphis. That’s a good 9 hour drive. I’ve done far worse drives before. 2.5 times that. Yet, here lies the conundrum. Do you drive or fly? You said above you from from SFO to LAX. San Francisco to Los Angeles. I did a yahoo map. That’s a RELATIVELY short puddle jump. 385 miles or around a 6 hour drive. Obviously, you felt flying made a better use of your time than 6 hours each way, right? What’s my point. Airlines need to take this into consideration when marketing. People like you are who drive the industry. The traveler who is willing to spend money flying short distances for business matters. Granted, this may not be the norm, but EVERY dollar helps. Airlines need to look at people like you who have a choice:

A) Do I worry about the headache of flying (Check In, Stress, Security, and the people at the desk) or

B) Do I just load up my car at my own schedule and go. Sure you are at traffic’s mercy, but you are on your own pace for the most part.

Options more or less. Airlines need to realize that even though you may not fly ALL the time, that making it worth your while is STILL in their interest. I am a FIRM believer that if airlines would stick to Customer Service, Smart Marketing, and loyalty programs, things would work out. Unfortunately, they are busy getting rid of all of these things, which only alienates MORE PEOPLE.

May I say, look at Southwest airlines for how things should be done? Sure, it has to buy out 1400 people as times are tough. However, it has never officially had a layoff in it’s time of operation. One could consider this it’s first or scaling back a bit. No one says things like that don’t happen. As in good times, companies expand and in bad times, things contract. Still, Southwest is a very sound airline model that has done everything to plan right.

My 2 cents here.

Justin

Carver,

Well that is true on the point of whether an appearance is mandatory or not. The airline has no control over whether or not you must be at a desired location. Still, when your presence is required, you have a choice. Your choice may not be influenced by the semantics of customer service, but instead convenience. It is much quicker to fly those 400 or so miles than to drive. You sit back, relax, and arrive (Most times).

However, let’s assume that the last 3/5 times you’ve flown, there were 2 hour travel delays. You sat on the tarmac an hour waiting to taxing to be taxied in. You called the airline to complain, as you missed some important meetings you needed to be at. Certainly, you thought your 3 or 4 hour window of comfort was more than plenty. Yet, now here you sit getting your bags, and just making it out the door. To make it worse, you call the airline to say what’s the deal? You have had this problem several times over and you would like something for your headache. Only to be met with an apathetic, it was “Weather Related” excuse. Which essentially, is the blanket cover for don’t expect us to care.

Would you now reconsider flying and start driving? This is my point in a nutshell. Even if Customer Service isn’t your number one priority. The experience and convenience is for most. If flying takes just as long as driving, what’s the benefit? I have been on several flights from hell. Suffice to say, I hate Airtran. They stranded me in Atlanta for a good 5 hours because our flight left a few minutes late, they sold off the seats on our connecting flight, and it departed 15 minutes early. That was the second but ABSOLUTE last time I will use them.

So i guess long story short, when one has a choice to drive or fly, something obviously motivates you to choose one or the other. So loyalty programs, a basic level of service, and smooth sailing are simple expectations that most have. Yet, these hardly exist anymore.

See what I mean by this point, too?

Carver,

That is true. As Elliott pointed out in another blog, newspapers are suffering the same fate. 100s of daily print ones have gone out of business since 1990. Even the best of models do fail. However, when times are tough, one needs to get tougher. That means making sure you have a solid model and better your chances.

At the end of the day, sometimes you become outmoded. Will newspapers ever vanish for good? I doubt it. Will there be far fewer? Most likely. Many people turn to online news versus print these days. Yet, there will always the occasions one wants a USA Today or a New York Times. Will some others vanish. Of Course. Even if they have the best model around. Yet, those that do will stick it out longer, and possibly diversify, than those that do not. Long story short, when the when the going gets tough, you can either carve a new path or accept defeat.

I think the airlines are at this crossroads now. Unfortunately, they are choosing the wrong way to go about things if you ask me. (Getting rid of customer service, loyalty programs, and the basics).

Justin