Winging It: Facing the 'new normal'

The brutal recession we're in has spawned some remarkable bargains in air fares and hotel costs this year as travel companies struggle against a sharp downturn, especially among business travelers.

But some of those who manage multimillion-dollar corporate-travel budgets are worried that many companies have made such drastic reductions that they're losing sight of why businesspeople travel in the first place. The budget cuts have been particularly acute in the number of business meetings companies are holding.

People in the travel business now have a fresh buzzword to describe what's happening. The term is new normal, meaning that airlines, hotels, conference centers, and car-rental companies are expecting their revenue has plunged to levels that could be typical for years to come.

The term was flying around last week at the annual education conference of the Association of Corporate Travel Executives (www.acte.org) in Washington. The conference draws both buyers, such as corporate travel managers and meeting planners, and industry suppliers, such as airlines and hotel companies.

I've attended this event off and on for more than 20 years and can't recall a time when there was more concern among both the buyers and the suppliers about what the economy is doing to curtail travel.

The travel-budget cuts started last fall but accelerated rapidly in January after members of Congress, the Obama administration, and the media pilloried American International Group and other companies receiving bailout funds for holding events at upscale resorts.

The politicians backed off their criticism after travel organizations banded together to protest, pointing out that business travel was not a frivolous endeavor and actually contributed substantially to economic activity.

Think about it: When a hotel is only half full and has to lay off housekeepers and waiters, that means fewer paychecks coursing their way through the local economy.

A survey done in late March by the association, answered by 110 corporate travel managers, found that fear of "perceived corporate excess" had prompted them to cancel meetings or move them away from destinations with reputations for frivolity.

Where did the meetings go? At least some of them went to cities where costs were actually higher, the association found.

Las Vegas has particularly suffered from the cancellation of meetings because of its reputation as a place where the fun never stops, despite having some of the country's lowest hotel and air-travel costs.

"This is a radical departure from good sense for the sake of political correctness," Doug Weeks, president of the association, said during the conference.

Weeks and other association officials said that by moving a meeting from Las Vegas to, say, San Francisco, many companies' 2009 travel and meetings budgets are likely to be spent more quickly, leading to fewer meetings' taking place.

Travel managers and business travelers themselves say that despite what non-travelers may think, there is no substitute for human interaction, whether it's at a conference for thousands or a gathering of a dozen employees of one company.

Susan Gurley, the executive director of the travel association, said there was real concern that companies could suffer "an intellectual depression" if they permanently reduced the size and frequency of face-to-face meetings.

In another survey, done for Egencia, the corporate-travel arm of the Expedia online travel agency, more than two-thirds of the 500 frequent travelers questioned said they'd had to cancel or delay a business meeting because of budget cuts.

An equal number of the travelers said they believed their jobs had suffered from a lack of face time with clients, prospects, or fellow workers.

Rob Greyber, senior vice president of Egencia, told me that the survey showed how acutely aware travelers were of the need to save their companies' money. Among other things, more travelers are sharing taxis and rental cars, staying in cheaper hotels, and taking one-day trips that avoid a hotel stay completely, he said.

"It's encouraging to us that employees are doing that," Greyber said.

"Business travelers understand they need to get the most out of every trip."

Whether we're at a "new normal" level of business travel will depend, of course, on the pace of economic recovery, both domestically and worldwide. The concern right now is that it will take a decade to climb out of this very deep hole.

But the travel business has been in these depressions before. Each time, resourceful people have found good reasons to get out of their offices on prospecting trips for new business. Remember, the recession of the early 1990s was followed by the dot-com boom.

In coming years, as just one example, the need to develop more renewable-energy sources and reduce global warming is expected to be a powerful driver of economic activity. And that in turn should spawn a whole new generation of business travelers.

Let's hope so.