This is why business travel will never be the same again – IWG boss

Current signs indicate business travel is unlikely recover to pre-pandemic levels, the boss of IWG, one of the world’s largest office providers, has said.

“Technology will never replace the value of in-person interactions where they are strategically important,” chief executive Mark Dixon told City AM.

However, he warned “all signs suggest it is unlikely to return to pre-pandemic levels,” following years of slower-than-expected recovery, stemming from Covid-era lockdowns.

It is widely accepted that executives are flying significantly less, with the shift towards hybrid-working and increasing use of tech platforms such as Zoom and Teams largely to blame.

Dixon added, citing IWG research, that half of employees would quit their job if asked to return to the daily commute, and only one in five would now be willing to commute for more than an hour a day.

“The small number of companies expecting their employees to commute to their central office five days a week risk missing out on the best talent,” he said.

Environmental concerns and challenging macro-economic and political conditions have also tightened businss group’s coffers, alongside specific industry trends.

Suzanne Neufang, head of the Global Business Travel Association (GBTA), said in August the industry had settled into a permanent “new normal,” with a significant decline in demand for one-day working trips the most notable change since the pandemic.

The GBTA has forecast spending on inflation-adjusted corporate travel, which includes flying, trains and other expenses, will not return to pre-Covid levels until 2027.

‘Business travel is not dying’, says IWG boss

“I don’t agree with those that believe business travel is dying,” Dixon said. However, he noted a myriad of global challenges facing the sector, including the rising cost of travel and geopolitical uncertainty.

“When borders slowly opened again… many CEOs realised that returning to the level of business travel pre-pandemic was no longer necessary or commercially sensible for purely functional meetings that can be held just as effectively online.”

The pandemic dramatically exacerbated the decline of corporate trips, but the general shift in behaviour began many years prior.

City Airport, the London hub known for its focus on business travel, has undergone a slow pivot toward the leisure market, growing its traffic from holidaymakers by around a third over the last decade.

That shift reached a pivotal moment this year when it was revealed the hub near Canary Wharf had served more than 50 per cent of its flights to leisure passengers.

Such a move is a major signal of the declining business travel market in the UK.

According to the New Economics Foundation, there has been no net increase in business travel in the UK’s aviation sector since 2005, suggesting the decline may be more deep-rooted than many in the industry claim.