McKinsey&Company
A better way to discount
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Welcome aboard. After two years of virtual meetings, business travel is on the rise again. Hotel executives note that more company meetings and conventions have taken place over the past few months, and major airlines in the US report rising demand for corporate travel even though they’ve raised fares to offset higher fuel costs. For now, most business travelers aren’t going very far. Domestic business travel is rebounding fastest, while in business traffic Asia is lagging behind Europe. [NYT] |
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Revenge tourism. In 2019, corporate clients reportedly spent more than $1 trillion on business trips. The recovery of this crucial segment has picked up in recent months. One business travel firm that works with S&P 500 companies says that bookings have increased from about 20% of prepandemic volumes at the start of 2022 to more than 50%. But many passengers are buying business class tickets for recreational travel, so a key question remains: How much of this boost to business travel is from “revenge tourism”? [Bloomberg] |
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The business of business travel. Compared with leisure travel, corporate travel is expected to take longer to rebound. Naturally, airlines are eager to accelerate this recovery. However, many carriers make the mistake of overrelying on discounts, which can cut into profits. Worse, if an airline decides to cut corners elsewhere to make up the difference, it may hurt its reputation and lose passengers. In an age where online reviews are just a click away, repairing this damage may be difficult. |
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Ask the right questions. Asking five questions can help airline leaders steer clear of common pitfalls as they try to bring back business travelers. If the answer to one or more of these questions is “yes” or “I don’t know,” airline executives might want to reconsider their corporate sales strategy. Read on for better ways to compete in corporate travel, from using data to confirm that corporate travel deals actually generate value to breaking down departmental silos that can undermine sales efforts.
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| — Edited by Jason Li |
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