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Why business travel will not return to pre-pandemic levels

GlobalCapital Capital markets after the pandemic travel.jpg

International business travel is not expected to return to the capital markets on the same scale as before the pandemic, for more reasons than one

The Post-pandemic Capital Markets Series

This is the second in a series of GlobalCapital articles on life in the capital markets after the pandemic, including the results of the working practices survey that we carried out in summer. We will also be publishing the full results of the survey.

This article on the issues raised by the resumption of international travel will be followed by the third instalment, tackling the impact of the pandemic on digitalisation in the capital markets.


Twenty months after international business travel came to an abrupt halt, it is starting up again. But bankers say there are several reasons why they will not be racking up the same number of air miles as before the pandemic.

For one thing, the fact that cross-border transactions have been executed perfectly well without anyone getting on a plane for almost two years shows that it can be done.

Issuers and banks that have saved on the cost of travel will therefore be asking themselves whether it is worth the expense to send bankers and management teams around the world quite so much.


Then there are the sustainability concerns. In an era when environmental, social and governance investment criteria are at the forefront of everyone's minds, people are also considering the carbon emissions of all those flights.

For some, the pandemic has thrown the excesses of the past into sharp relief.

"Getting on a plane at seven in the morning to go wherever, you name it — Stockholm, Copenhagen — for one meeting, to turn around and fly home again, is a total waste of time," said a former banker who is now a recruiter. "And it used to happen every day!"

In GlobalCapital's recent working life survey, respondents on average predicted that just over 55% of business travel would return after international travel restrictions were lifted, using 2019 as a benchmark.

Nevertheless, people working in the capital markets still see travel as an essential part of their jobs, even if it will be dialled back compared with the pre-Covid era.

One key business route reopened on November 8, when the US lifted restrictions that had prevented non-citizens from visiting the country from Europe since March 2020. But more than a month before, at the end of September, the resumption of travel was demonstrated at the Global ABS conference in London, one of the first physical events to take place since the beginning of the pandemic. Attendees flew in from Amsterdam, Frankfurt, Dublin, Jersey and even Chicago. Shortly after that, Bank of America started to allow international travel for "important client-driven business" as long as it complied with local rules.

'Three levels'

Bankers have identified three main reasons why business travel, especially of the long haul variety, will not return on the same scale as before the pandemic.

Capital markets after the pandemic

"Certainly we are not going to come back to the level we had beforehand," said a senior syndicate banker in London. "There are three levels: Firstly, the system has proven that you can work differently; secondly there is the ESG angle; and thirdly there is the cost component. I think they are all interlinked. But I wouldn’t necessarily say one should go to the extreme and say the business doesn’t need any face to face meetings and therefore doesn’t need travel."

According to GlobalCapital's survey, most capital markets participants thought that the biggest change to travel after the pandemic would be that budgets would be slashed, followed closely by a reduction in the number of people going on trips. Few survey respondents thought that there would be no change.

The number of flights that will be eliminated is difficult to forecast, but one example to point to is Mars, which is planning to book 145,000 fewer flights a year as it cuts business travel by half, according to The Times.

Bankers tell GlobalCapital that their firms are not taking such a prescriptive approach, but that international travel will decline naturally.

"The budget, compared to what we were doing in 2019, will go down — that's a fact," said a second senior syndicate banker in London. "But it doesn’t go down because the banks force us to travel less. It is going to be organic."

"If you are planning the budget for 2022, you need to have that conversation about travel and entertainment, because it has been a big cost portion before and will continue to be in the future," added the first banker. "It will be lower. It's about the right balance, right? To be fair, you haven't seen your clients over the past 15 months — there is a bit of a catch up to be done."

Building back better

In the meantime, while spending on travel has been low, some bankers say their firms have invested the money they saved in improving the technology they use to conduct business virtually, such as video conferencing.

"We are certainly not going to save all that money and then throw the most lavish parties when we can again," said a senior debt capital markets banker in Frankfurt. "This money is now being spent on digitalisation, the projects we have that allow us to, in a way, replace and improve on aspects of physical meetings through digital services."

Such improvements in technology are part of what enabled the transition to executing capital and bond issuances remotely in the first place. However, the sudden reliance on tools such as Zoom and Webex exposed some of their weaknesses in areas such as cybersecurity — essential for high stakes transactions.

But even with the latest updates and patches, bankers say that there is still something about real life meetings that has not yet been captured by the new tech. Of the respondents to GlobalCapital's survey, 67% said they thought specific client relationship building and advice would gain a lot of value from physical meetings returning, and only 2.35% said they thought there was no need for physical meetings with clients.

The picture was more nuanced with regard to investor roadshows, with 23.26% of capital markets professionals saying there was no longer any need, compared with 26.74% who said that business would gain a lot of value from in-person events.

"I think on the roadshow front, technology has showed that it could be very, very efficient," said the second syndicate banker. "But we will have a mix of two. That’s my view. It's good to have a group lunch sometimes, or some one-on-ones, because you have a feeling in a physical meeting that you cannot have on a Zoom call."

Event organisers are also experimenting with hybrid meetings, where some people attend physically and others through screens. The London Stock Exchange and Barclays convened such a conference on September 30 in London — the Global DCM Forum. Not only were some of the attendees at that event "virtual", but so were some of the panelists. There were even mixed panels where some of the experts joined via video link and the others were in the room. This went smoothly, with any small glitches comparable to the technical malfunctions that can just as easily happen at a fully physical event.

"I do believe that the future of how we convene the markets, from roadshows to large public events, is going to be very much like this," said Julia Hoggett, CEO of the LSE's exchange business, during her remarks at the conference, which she delivered in person. "To maximise the value of everybody's time, but also to minimise the impact of our carbon footprint when we're doing business."

Attendees at that event and Global ABS in London largely went unmasked, which may put more cautious market participants off attending. At a recent conference in Florida, a banker in attendance reported that masks were being worn, though this detracted somewhat from the experience.

"I was a little uncomfortable," said the banker. "I didn't feel great to be honest with you. You know, like it was just weird, right? Being in the hubbub with everybody just wearing a mask. It took a little bit of getting used to, but I'm glad I went."

Return of the roadshow

For roadshows, the second syndicate banker said a combination of group meetings at a single venue and virtual meetings over the internet could be effective and would cut down on travel time, compared to the old way of rushing around a financial capital in a taxi to meet every investor in person.

In September, the European Stability Mechanism embarked on a physical roadshow with stops in Paris, Frankfurt and Milan. In an attempt to address sustainability concerns, members of the funding team walked between investors' offices rather than travelling by car. They also avoided getting stuck in traffic.

"When you were in Paris, you could do a maximum, realistically, of four one-on-ones in the afternoon, but then you were left stuck in a traffic jam," said the second syndicate banker. "Is it going to be more efficient to have a group lunch and then some Zoom calls or video calls? Yes."

Besides the practical considerations, there is another reason why bankers say they expect business travel to return, especially for client meetings: peer pressure.

"When Goldman Sachs and Morgan Stanley and co have started sending people to see clients, inevitably people will say, 'We've got to do it because Goldman Sachs is doing it'," said a fourth banker. "Or when one company says, 'Well, that company went on a physical roadshow so we need to go on a physical roadshow,' of course it will start."

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Richard Metcalf
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