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Aug 11th - The Future of Business Travel

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Railway Age

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Choose a Route (Discussion Item):

With the prolonged recovery from Covid 19, there is an ongoing discussion on the future of business travel. Some reports are that the business travel will never be the same, as meetings will permanently take place on Zoom and frequent travel is permanently curbed due to worries about travelers health, as cited by the article from the BBC “Will Business Travel Ever be the Same?”.

Yes, for the rest of 2020 business travel will not be the same. However, we want to argue that in 2021 and beyond demand for business travel, and specifically demand for high speed rail, will be GREATER than before the pandemic.

Point 1: Virtual Meetings increase the demand for business travel

Yes, I know. It seems counter intuitive; but while a virtual meeting has temporarily replaced your Monday morning staff meeting, a virtual meeting is not as effective as an in person meeting. After all, in an on line meeting we all do it. While someone is speaking we flip to another tab in our browser or open Snapchat. Further, it is much more effective to be in person where you can hand someone a chart on paper that can be carried away; rather than clicking on a link which disappears once the online meeting ends. So in the end, we will find ourselves back in the 10am in person staff meeting (hopefully with bagels).

However, what the virtual meeting has done is allowed us to be more productive from a distance. On Zoom it doesn’t matter if you’re down the street, in a different city, or on a different continent. We have taught ourselves to effectively work on online. What this means is further globalization of the workplace. Now it will be easier than ever for the small company in Racine, Wisconsin to work with a vendor from Frankfurt, IL or Frankfurt, Germany.

Rather than competing, it is better to view the virtual world as a compliment to the in person meeting. The result is that more business can take place over greater distances, which in the end will increase demand for intercity travel.

Point 2: Your office can now be anywhere

Due to Covid, many organizations are reevaluating the need to actually have employees in the office in a dedicated workspace all of the time. Granted, employees will need to be at the office for meeting. However the need for a dedicated workspace is no longer needed. This is bad news for office space landlords, but will be a benefit to companies that can now reevaluate and renegotiate their office rent expenses.

The result is an expansion of suburban sprawl. However, no longer will employees live on the peripheral of the city in a suburb and commute into the city center (or live in the city and commute to work in the suburbs). Instead, the employee can live and work in a completely different cities and commute for the occasional meetings. This means working for Baxter Labs in Madison, WI and commuting occasionally to their headquarters in Deerfield, IL. Or working for Boeing in Minneapolis, and occasionally flying to Seattle. The end result is a lower cost of living for the employee, and greater demand for intercity travel.

Point 3: Business will pay for commuting costs

So what about commuting to work? Will we still have to endure the 1 hr traffic jam on the Chicago Expressway. Yes and No. Of course, there will still be a large amount of population that will need to commute for work (teachers, nurses, or anyone who has a hands on job), but a large amount of the population who work in the office will no longer need to commute daily, and will be able to live farther away. However, since someone can live anywhere more companies will chase this talented individual. This means an engineer who wants to live in Madison could be recruited by GE Healthcare in Madison, Johnson Controls out of Milwaukee, Boeing out of Seattle, or SpaceX out of California. To recruit this talented individual, Johnson Controls, Boeing, and SpaceX will offer to pay for the commuting costs (much as companies pay for relocation). The result is an employ living miles from the office, by being reimbursed for the travel expense to the office.

So the end result….is yes, business travel will be forever changed as a result of Covid 19. However, it will actually INCREASE demand for intercity travel! Not decrease it.

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