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A Gloomy Corporate Travel Prediction for Hedge Funds and Tech Firms

Skift Take

AMcKinsey partner has warned “digital adopters” may never see the point in returning to business travel as we used to know it.

Not only are consultancy firms, with their avid flyers, curbing travel, one of them now predicts hedge funds and technology firms could “never return” to taking business trips.

The likes of Capgemini and Cognizant plan to drastically reduce the number of business trips in 2022, while Bain wants to reduce the emissions caused by its own travel by about a third over the next five years.

Now, a partner at global consultancy McKinsey believes hedge funds and technology firms will call an end to business trips altogether.

“We think there are some themes on the different types of customers that will come back,” said Vik Krishnan during a webinar this week. “There’s the ‘never returning’ segment. These are digital adopters and cost-focused firms who are able to maintain high levels of effectiveness while working remotely. These are technology firms and hedge funds, for example.”

San Francisco Bay Area-based Krishnan, who advises companies in the aviation, travel and aerospace sectors on operational-performance improvement and digital transformation, also outlined another group: the “wait and see customers.” They won’t be in a competitive industry, where travel is not mission critical, such as governmental organizations.

However, he said the “fear of missing out” kind of businesses, where in-person visits can be critical, would lead the recovery, with smaller firms increasing corporate travel at a faster rate. This segment includes banking, professional services and pharmaceutical companies, and before the pandemic represented 60 percent of corporate travel spend in the U.S.

“Technology companies have the culture and infrastructure to embrace virtual collaboration and may have a higher percentage of ‘never return,’” said Mark O’Brien, managing partner of Avenue 5 Consulting.

“We see industry verticals such as professional services, finance and banking, and insurance companies taking a more cautious return. A major travel industry dynamic is driven by the technology and online retailers, where 50 percent of the top 10 corporate travel and meetings global spend resides.”

Speaking at an online even this week, “Returning to corporate travel: How do we get it right?,” fellow partner Jillian Tellez added that sales meetings were now among the first types of trips to recover.

Her comments echo what’s happening on the ground at the UK’s London City Airport.  “If your trip brings value, which is usually the case because it’s the first wave of travelers, sales development, they can go,” said head of aviation Anne Doyere, discussing the current state of travel policies.

The webinar was held in part to offer advice on the skills all travel stakeholders need to master to adapt to a dynamic future, while the consultancy has also identified how they can emerge stronger through a renewed focus on customer experience, with the findings published in a new Skift Research-McKinsey joint report.

Top of that list for the stakeholders was using new types of data, and Krishnan urged corporate travel planners to use real-time data, including local vaccination rates. Suppliers also needed a “war-room type mindset to having meetings to act on real-time data,” he added, which could help them gain back share earlier than their competitors. “A delay of even a few hours could make a difference to you winning the recovery, or your competitor,” he said.

McKinsey has committed to net zero climate impact by 2030, and will reduce its scope 3 greenhouse gas emissions from business travel by 30 percent per employee.

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