Australia

The Australian travel segment poised to soar past pre-pandemic levels

The Australian domestic business traveller is a godsend to local economies.

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

It’s much easier to make people 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 rather than the overpriced steak. The sacrifices you make for your company…

In post-lockdown Australia, domestic business travel recovered quickly, but why? In the era of working from home, in times of Zoom and Slack, wouldn’t we expect business travel to be a dying phenomenon? Aren’t video conferences much cheaper? Wouldn’t those oh so environmentally conscious Millennials simply boycott business travel?

The opposite will be the case. Business travel might well be the only segment of the travel market to grow beyond 2019 levels anytime soon.

The future of work dictates more business travel, regardless of the big and important counter-forces of videoconferencing, online collaboration tools and rising environmental awareness.

The nature of our Aussie job market changed in a way that simply requires more workers to travel more frequently. Our workforce keeps growing and the share of jobs dedicated to agriculture and manufacturing shrinks, while knowledge jobs make up an ever-greater share.

In all industries, top-level staff need to travel to arrange face-to-face meetings with clients and colleagues, but in the knowledge industries even lower-level workers travel frequently. They might not close million-dollar deals, but they visit team members and clients for sales pitches, workshops, conferences, trainings and meetings.

Modern businesses also work more collaboratively and engage more often with external staff that might reside in a different city.

Obviously a quick conference call is the cheapest and most common type of meeting. But the large increase in frequency of collaborative work means that overall, the need to travel to a different city is much higher.

The face-to-face advantage

Opportunities for a team to be in the same room were still relatively abundant in 2019. In the post-lockdown world of work, businesses must create events, like conferences and get-togethers, to get the whole team into the same room. This is not a luxury but an essential part of the future world of work.

The projects we work on these days include increasingly more complex tasks. Meetings to coordinate these projects are simply more effective when conducted face to face. This means flying workers from city A to city B becomes more rather than less important to guarantee optimal work outcomes.

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

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

Looking back to 2019, we are in awe of how our capital city airports and airlines ensured this seamless daily exchange of workers. The Australian Bureau of Statistics tells us that over 26,000 workers who reside in one of the Big Five cities spent the pre-pandemic 2016 census night (Tuesday 9 August 2016) in another Big Five city. This data doesn’t even consider the countless day trips between the cities.

Essential, unavoidable complexity

Since COVID, we gained a whole new level of appreciation for the complex systems that our society is built upon. We understand the complexity of global supply chains and realised that even a small delay in international shipping can disrupt a multitude of industries relying on just-in-time delivery of parts and inputs.

Similar things can be said for our appreciation of the national aviation network.

Airports and airlines don’t have enough workers to run their complex operations seamlessly – a big shout-out to the current workers who are fighting an uphill battle.

About six weeks ago, Sydney Airport alone recorded 1200 vacancies across security and ground-handlers, which are managed by external contractors.

On top of this the airport precinct had an additional 3800 vacancies in such areas as retail, administration and cleaning. The airport since ran a big job fair and improved the staffing levels. Along comes flu season knocking out about a quarter of the staff on any given day

Fly? Maybe driving is better

All this makes sure that travel isn’t as comfortable and predictable as it was three years ago. Prices went up sharply too. This is the perfect time to choose holidaying locations in driving distance to avoid airports.

Despite high fuel costs, the journeys are cheaper and more predictable than flying. Air travel can’t possibly operate without daily delays in the current environment.

Delays and high travel costs are much more stomach able when you travel on the company card. Somehow we don’t feel as entitled to everything working seamlessly when we spend the boss’s money.

At the moment a higher share than ever of all passengers should be business travellers – from professional service workers to fly-in-fly-out miners – people still need to travel for work.

The main beneficiaries of this daily worker exchange are located in the big cities.

Taxi and rideshare companies have plenty of customers to drive around, airports charge fees for each passenger and sell muffins and lounge access, airlines get their fares, cafes caffeinate the busy workers, restaurants sell to folks using the company credit card and not using the right-hand column to pick their meal, bars sell well-deserved nightcaps, conference centres cater to huge audiences every day and hotels have plenty of beds (and $29-burgers) to sell.

Naturally the businesses involved in building, maintaining and renovating the relevant infrastructure benefit too.

Different in the UK

The clustering of jobs and business travel in a few locations allows big players to dominate the business travel-related building market. In a more dispersed market like the UK, where only 30 per cent of the population live in the five biggest cities, small players have it easier to establish themselves in the market.

All in all, the business travel market is an excellent field to be involved in. It’s a market set to grow. Most business travellers aren’t spending their own money and easily be convinced to part from it.

That’s of course exactly what the airline and hotel loyalty points are all about. The individuals business traveller benefits (in form of points) from spending more money (not their own money, mind you) on flights and hotel services.



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