Global mobility at a crossroads: what is the future for business travel?

31 July 2020

Lockdown has given many mobile employees time to consider their ‘ordinary’ working patterns. Whether they were hot desking from a number of UK offices or living out of a suitcase and spending hours at airports, many have questioned whether it has all been necessary.

Some have found it easy to maintain productivity, retain and even build client relationships without leaving their own home. But others long for a return to familiar working patterns and miss the day-to-day, face-to-face interaction with colleagues and clients.

Before we consider what long-term impact the pandemic will have on global mobility, we should examine the reasons for such significant growth in cross-border business travel in recent decades.

The growth of business travel: how we got to where we were

As global economies became ever more closely connected, business travel for face-to-face meetings was a significant driver in the continued growth of global trade. Market opportunities in developing economies, coupled with cheaper flights and accessible hotel accommodation, led to an expectation of business travel as the fuel for global growth – as well as being an opportunity for individuals to develop their careers and broaden their cultural horizons.

After the global recession in 2008/09 many business sectors cut back on formal, long-term assignments - certainly within western Europe. The days when an employee, often accompanied by their family, would spend more than three years in a host country were largely over.

This led to the rise of the short-term business traveller. The global war for talent and the arrival of millennials into the job market led to a desire for ever greater flexibility in workplace location. And this pattern, despite the increased complexity in compliance associated with frequent cross-border travel, seemed to suit most.

But then the pandemic happened.

What does business travel look like in post-pandemic 2020?

After months of global economic turmoil, businesses are looking for stability and a return to operational normality. In key locations, you may decide the best way to get back out into the market is by placing a long-term assignee in country or permanently relocating a senior leader to help rebuild. This gives your employee broader career development opportunities and supports their long-term retention.

But you’ll need to take care with regard to costs. Some businesses have made significant savings in travel costs during this crisis and will also be eyeing savings on office space. So it’s important to consider your longer term cost-savings strategy, and the part that long-term assignments could play in certain locations.

Greater employee demand for overseas postings on the horizon?

From an employee perspective, lockdown restrictions on their freedom of movement have given many a chance to reflect on their work-life balance. For some, missing out on an overseas holiday this year will have reminded them just how much they want to travel the world and explore different cultures. One thing businesses should be aware of here is that healthcare provision is likely to be much higher up the list of assignee priorities in the new normal.

Many will have also realised that some of their perceived barriers to working overseas, such as missing family and friends and the impact on their children’s education, are not necessarily deal breakers. Video calls have become the new normal and, after weeks of no formal schooling, perhaps a new experience is what the children need to broaden their horizons. This could lead to a higher demand for longer-term assignments or permanent overseas relocations.

Business travel in the long term: where do we go from here?

We will look back on 2020 as the year we made significant changes to our day-to-day working practices. Almost overnight, many businesses took a step forward in their use of remote working technology. Many also took short-term support from the government schemes available, whilst also paying close attention to cost cutting measures. Travel expenses form part of this review and the challenge going forward will be to better quantify the return on any investment.

It is human nature to want to travel, and also to keep using the social norms we have learned since childhood to build long-term trusted relationships through face to face interaction. Economic drivers at governmental levels will get people moving cross-border once again for both business and tourism. Airlines, some financially backed by the state, will be keen to see business travellers return and pricing may be set to entice them back on board. But some employees may not feel comfortable with travelling cross-border again just yet, and businesses must build this into their recovery planning too.

Policies and planning will be crucial to getting business travel right

We’re already seeing a demand for increased flexibility in working arrangements, creating new challenges for HR teams. Many employees are requesting to work remotely from another country on a permanent basis. This will in due course give rise to accidental expats, creating additional compliance and reporting obligations for both the individual and their employer. Even flexible working within the UK, with a move towards differing tax rates across the devolved nations, creates challenges. It is therefore more crucial than ever for HR teams to work closely with their in-house tax colleagues or advisers to ensure cross border tax risks are managed.

Businesses will need to rebuild post pandemic and bringing expertise to the right locations at the right time will be front and centre to this. Also, certain sectors such as pharma and medical tech have experienced significant growth and attention during the pandemic and will be looking to the global market to sustain and accelerate market development. The recovery will of course take time, but some countries and geographical markets will recover more quickly and businesses need to be agile to take advantage of this.

The scale of future business travel remains uncertain. The world of work has changed and no one should expect a return to the way things were. Nevertheless, many of us have no wish to spend the rest of our careers building relationships and driving business growth through a laptop screen - and that means business travel won’t be completely cancelled any time soon.

If you have any questions regarding the above, please contact Joanne Webber or Ainsley Wainwright