From ash clouds to terrorism, wildfires and pandemics, the 21st century has dealt some massive blows to the global travel industry. But travel industry players have always fought back with unwavering resilience.
How business travel will help kickstart economic recovery
The role of business travel on the road to recovery
By Oz Desai, General Manager Corporate Traveller
Business travel will have an important role to play as the global economy recovers from the massive knock-on effect of COVID-19.
The US and the Eurozone experienced record-breaking declines of 32.9% and 40% in GDP, respectively, in the second quarter. And, although the extent of South Africa’s economic downturn has yet to be established with the official GDP figures only being released in a few weeks, we know the impact in our country has been severe.
Business for SA (B4SA) recently published an assessment of the local economy that predicted it would take a minimum of two years for the economy to recover to pre-COVID-19 levels. South African economic contraction is predicted to be between 8% and 10%.
Already to date, approximately three million people have lost their jobs over the lockdown period in South Africa, according to a team of South African researchers who published the National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM).
Although far-reaching structural reforms will be needed to reverse the economic damage created by the lockdown, business travel is one essential element in the road to recovery.
Contribution to GDP
Globally, travel and tourism is one of the most significant industrial sectors. It drives economic growth, creates jobs, improves social development and promotes peace.
In its annual analysis quantifying the global economic and employment impact of travel and tourism, World Travel & Tourism Council’s (WTTC) research revealed that the travel and tourism sector experienced 3.5% growth in 2019, outpacing the global economic growth of 2.5%. What’s more, this sector accounted for one in four new jobs across the world. In South Africa, travel and tourism contributed a massive 8.6% to GDP in 2018 with business travel accounting for approximately 36% of total travel spend.
The movement of know-how
Besides the contribution to GDP, new research from Harvard’s Growth Lab also found a direct link between a country’s incoming business travel and the growth of new and existing industries. The findings, published in the journal Nature Human Behaviour, support a Growth Lab hypothesis claiming that moving know-how, is critical to economic growth.
As opposed to information and knowledge that exists in books, computer files, graphs and algorithms, know-how only exists in brains and moves very slowly from brain to brain through years of experience. So, moving expertise involves moving brains.
The researchers explain that the importance of know-how might explain why firms rely so heavily on business travel. After all, why go to the expense of travelling – not only the direct cost of airline tickets and hotels, but the opportunity cost of time spent just moving people at sub-sonic speeds – if e-mail, Skype, FaceTime, and now Zoom can move terabytes of information at close to the speed of light?
The researchers analysed the effects of the withdrawal of business travellers from specific countries. For example, if German businesspeople stopped travelling, the research estimates that Austria, South Africa, Switzerland, Nigeria, Czechia, and Turkey would be most affected, and global GDP would decrease by 4.8%.
“According to our study, the world is benefiting enormously by mobilising the know-how in brains through business travel. Permanent shutdown of this channel would probably imply a double-digit loss in global GDP,” one of the researchers said.
The unseen benefits of business travel
As companies are contemplating what their new business travel programmes will look like and are considering the ever-evolving health and safety implications of sending their employees out into the world, it is essential to take note of the ‘unseen’ benefits of business travel.
While virtual meetings are time- and cost-effective, the pure exchange of information has never been the only reason for business travel. According to communication specialists, our words only carry 7% of what we communicate. Tone conveys 38% of the message and gestures up to 55%. The human connection, combined with the element of networking is what makes business travel valuable.
The pandemic has placed our country in a challenging economic predicament. The decisions businesses make in the near term will drive how companies sustain themselves in the long run. Leaders must take decisive action and work together to unlock South Africa’s productivity potential for improved competitiveness and sustainable economic growth. Now more than ever, our economies need stimulation and connectivity, but without business travel, this will not be possible.
