What is the connection between business and leisure travel, and how can a slower growth of business travel impact leisure travel in the long run...
When it comes to the return of travel, there are many differing opinions on whether it will be business or leisure that return first. While both forms of travel have been steadily increasing, it seems that leisure travel has been growing faster than business, with travelers eager after rolling lockdowns to get away to any destination that doesn’t require a quarantine on arrival/return. What most people don’t consider, though, is the connection between both forms of travel, and how a slower growth of business travel can impact leisure travel in the long run.
In 2016, Expedia conducted a survey and found that 43% of business travelers turned their business trips into vacations, or “bleisure” trips. By 2019, that number raised to 90% amongst millennial business travelers. This fact is an important figure because bleisure travel shapes different aspects of a person’s vacation, and therefore of travel in general. For instance, someone flying from New York to Hong Kong for work might add an extra week and vacation in the country, but if that same traveler wasn’t traveling for business the odds that they would fly to Hong Kong would be significantly lower. In fact, 49% of bleisure travelers claim that they combine the two in order to save money.
With airlines having to rethink travel routes according to the demand, a reduced traveling business-force could impact where people vacation, and we might see a reduction in the frequency of longer haul flights due to a smaller demand.
While most travelers aren’t aware of this, in many cases, business travelers are actually subsidising the flight for leisure travelers. That’s because airlines allow themselves to charge business travelers more than they would leisure travelers, who are usually much more sensitive to prices. Therefore, each flight theoretically consists of a mix of lower-paying leisure travelers and higher-paying business travelers (not necessarily business-class passengers) which, together, make the flight worth dispatching for the airline. The mix of passengers is important because most flights wouldn’t be able to reach sufficient occupancy rates with only business travelers.
In the short term, airlines have adjusted their ticket pricing in order to catch anyone willing to travel, which at the moment tends to be mostly vacationers visiting friends and family. In the longer term, though, if business travel is slower in picking up than leisure travel, airlines might need to either raise the standard airfare across the board for leisure travelers or reduce flight frequency to certain destinations.
While leisure travel is growing faster than it’s business counterpart, many companies and governments understand the importance of business travel and are developing new initiatives to give companies the sense of security they need in order to send their employees abroad. As we have seen, business travel and leisure travel are inexplicably linked due to how airlines are used to managing their route schedules and prices. Therefore, travel trends over the next year will play a major role in determining whether airlines adapt their corporate strategy regarding these factors, or whether travelers will have to bear the brunt until the industry levels out.
