Big changes will continue to hit business travel, a report from GlobalData suggests.
Over the past 18 months, international business travel plummeted 75 per cent, with domestic travel down 56 per cent. The lost billions in revenue, combined with changing attitudes on the necessity of business travel should drive a series of mergers and acquisitions as companies seek efficiencies and profitability.
“We may see some small and medium-size enterprises merge to give themselves more purchasing power in the industry,” GlobalData said in a statement. “Alternatively, some major players could start to merge to reduce overheads and increase sales and revenue.”
“Consolidation often occurs so a business can become a leader within an industry,” associate travel tourism analyst Craig Bradley added. “When a company purchases or merges with another company, it reduces the number of competitors and enlarges its client base. However, in the current climate, revenue, efficiency, and cost reduction are the key motivators for M&A. The increase in overall revenue will give merged business travel firms more influence in the industry, allowing them to control pricing, take on niche markets and generate more leverage with its suppliers.”
COVID-19 has forced companies to improve efficiency through innovative means, such as reducing travel costs through increased use of online conferencing technology. Some of those changes may become permanent, Bradley suspects.
“Communication technologies such as Zoom, Microsoft Teams, and Citrix have helped companies maintain employee engagement, collaboration, and partnerships throughout the pandemic, resulting in many companies questioning their corporate travel budgets. According to a recent GlobalData poll, 43 per cent of respondents said their company’s corporate travel budgets would ‘reduce significantly’ in the next 12 months, suggesting businesses will continue using communication technologies and carefully consider the necessity of using precious capital for flights and other travel expenses.”