Changing demographics and technology could disrupt business travel sector
Friday, January 25, 2013
Earlier this year, analysts at the Global Business Travel Association (GBTA) revised initial estimates for growth within the sector to reflect increasing confidence in the worldwide economic markets. Experts believe that the business travel sector could grow by as much as 4.6 percent by the end of the year, significantly more than earlier projections. However, according to data from Carlson Wagonlit Travel (CWT), heightened adoption of technology in the workplace and the changing demands of Millennial workers could potentially disrupt the global business travel market in coming years.
Signs of the times
Data from CWT suggests that workers belonging to "Generation Y" - individuals born between the mid-1980s and 1990s - represent approximately 27 percent of business travelers worldwide. In certain emerging markets such as India and Brazil, these percentages are even higher, with 58 and 45 percent of business travelers identified as Millennials, respectively. Based on current projections, workers from Generation Y could account for approximately 40 percent of the global workforce by 2020. While such a transition was inevitable as members of the baby boomer generation have begun to reach retirement age, the shift toward a younger workforce could signal a potential threat to the global business travel sector.
Service providers in the travel and hospitality sectors must adapt to changing priorities in the workplace, including the adoption of new technology. While some analysts believe the prevalence of video conferencing in the private sector could potentially harm business travel, others see the emergence of new technologies as a key driver of economic growth in the industry.
Key findings of the CWT report suggest that Millennials are more comfortable with long-haul business travel and are ready to embrace new ways of doing business. This includes a more personalized approach to business travel, the introduction of new software applications designed to facilitate a smoother travel experience, and flexible pricing secured through social sharing.
While organizations such as the GBTA believe the business travel sector will grow in 2013 despite changing attitudes toward technology, the need to control costs is crucial for many companies. The CWT report identified optimizing accommodation spending as a key objective for more than half of corporate travel managers. As such, alternatives to corporate suites at chain hotels could become more popular, including serviced apartments and corporate lodgings.
In addition, the growing Millennial demographic is more comfortable with flexible accommodation policies than their older counterparts. Just as workers belonging to Generation Y find long-haul business travel less stressful than their more experienced colleagues, they also feel less strongly about staying in different classes of accommodation. This could represent a significant growth opportunity for service providers in the hospitality industry seeking to diversify their property portfolios.
However, just because Millennials are more flexible than older workers, this does not mean their expectations are lower. In fact, the increasingly personalized experiences that many Generation Y workers have come to take for granted may make it more challenging for companies to offer the level of service Millennials expect at a competitive price. Millennials' brand loyalty is stronger than that of previous generations, providing service providers in the hospitality sector with a unique opportunity to develop strong connections with workers from Generation Y.
The global business travel industry is changing rapidly, and the expectations and work ethic exhibited by Millennials are likely to further shape the sector in coming years. Companies must adapt to the changing workforce if they wish to remain competitive, but for organizations that can manage this, the growth opportunities are significant. Long gone are the days when traditional corporate suites and rigid travel management policies were sufficient - if companies want to evolve with the times, change is inevitable.