Minnesotans still taking fewer business trips but are tacking on leisure

Since grinding to a halt in early 2020, business travel has yet to bounce back to 2019 pre-pandemic levels despite nearly four years of rebuilding.

The U.S. Travel Association reported it expects domestic business travel volume to end this year at 95% of 2019 levels, with spending not recovering for at least another couple of years. The Global Business Travel Association forecast business travel will return to $1.4 trillion of yearly spending this year because the cost of travel — from airfare to hotels to rental cars — increased dramatically during the pandemic and continues to rise. The actual number of business trips and corporate travelers, though, will likely still lag.

In a Global Business Travel Association poll last month, 83% of those surveyed said their 2023 business travel bookings increased versus 2022, and 59% expected the volume of travel at their company to increase in 2024 compared with last year.

Rob Church used to travel often to meet potential or current customers and is relieved his technology company is planning to resume business travel soon.

"I miss getting to know people and taking them to lunch and talking to them about business for a bit and then getting to know them personally," said Church, who's been working remotely from his Minnesota home.

Church isn't alone in missing that aspect of his job. A study led by Prithwiraj Choudhury, an associate professor at Harvard Business School, last year found that face-to-face meetings still matter in the business world, at least in some respects.

"It seems that, if the two locations are in the same time zone and are culturally similar, then Zoom is good enough," Choudhury said in the study's announcement. "But if you're working with a colleague who lives in a faraway time zone or is culturally different from you, you have to get on a flight and meet that person in person. That's a big takeaway."

Business and pleasure

Higher expenses pressing companies to cut corporate travel plans aren't the only reason this sector of the travel industry has stalled even without COVID-19 restrictions. A rise in the mixing of business with pleasure thanks to the adoption of remote/hybrid work models has also blurred the lines between being on the clock and leisure time.

Delta Air Lines Chief Executive Ed Bastian told CNBC last month that business travel spending was about 90% recovered for the airline, but that didn't account for those working remotely while on vacation or tacking on personal days to business trips.

"So collectively, business travel is much higher than pre-COVID levels," said Bastian, whose airline caters to corporate and premium leisure travelers.

Fewer midweek business travelers is a reality for airlines and hotels now. Many companies still rely on virtual meetings and cross-country calls to engage with distant connections, unless higher-ups approve attending a large meeting or flying to seal a deal in person.

Because the midweek traveler has become rarer, the hospitality sector is trying to attract what professional services firm Deloitte calls "laptop luggers" — leisure travelers working remotely on vacation. The firm also expects a bump from attendees of large events hanging around to see the sights or catch a game.

"From a corporate travel perspective, the bigger events and the laptop luggers are two of the bigger drivers for this year," Deloitte U.S. Partner Eileen Crowley said.

The share of travelers who plan to work on their longest leisure trip surged from about one in five in 2022 to one in three last year, Deloitte reported. These leisure travelers take more trips (47%) and longer trips (27%) and are more likely to look for local activities, visit attractions and take guided tours. Crowley herself said she enjoys extending her vacations by adding some remote work days.

On a recent trip to San Diego to work at a large event, John Cosgrove, the Minneapolis-based co-founder of VoiceHive software events platform, tacked on some vacation days to enjoy the sun. In November, he saw a good fare to Ireland and flew there for pleasure, working afternoons into evenings to stay on the U.S. time zones of his clients. As an experiment, he told no one. It went so well, he said he'd do it again.

Cosgrove even worked remotely during a vacation with his kids to Barcelona last summer.

"The upside is you can work from anywhere," he said. "The downside is you can never truly switch off because you're always accessible."

Hospitality on trend

The Saint Paul Hotel used to reserve 40% of midweek rooms for individual business travelers and the rest for large meetings and events. Now, the hotel's director of sales and catering, Leslie Ingiald, books events as they come up, no longer holding space for potential business travelers.

Tuesday and Wednesday used to be peak nights at the hotel.

"Now we're seeing that blend throughout the week because people are tacking on that leisure part because they have more flexible travel schedules," she said.

In response to the new patterns, the Saint Paul Hotel added an events center across the street and a coffee bar in the lobby of its downtown location.

"We kind of have to create our own destination within the hotel," Ingiald said.

At the Moxy Minneapolis hotels in downtown and Uptown, visitors can often find live music and games in the lobby.

"Brands like Moxy have always activated their lobbies with fun games and performers," said Benjamin Graves, chief executive of Graves Hospitality that operates hotel brands nationwide, including the two Moxy locations here. "Now, you're seeing that at many hotels."

Despite the changing nature of business travel, Jose Ferreira was so confident it would eventually rebound that he expanded that segment of his portfolio from 15% five years ago to 40%.

"I never doubted for a second that corporate travel was going to come back," said the president of Riverdale Travel agency in Coon Rapids. "But I do believe corporations have determined what's valuable travel, and they stick to what is valuable."