A piece in the Wall Street Journal in late July that explored the future of travel has been making the rounds on social media recently. The airline execs and regulators interviewed there agreed on a number of things, most important that business travel is going to be in real trouble even after the immediate dangers of COVID are past. A number also thought that leisure travel would come back “robustly” once travelers feel sufficiently safe.

 

I think that broad picture is probably right, but I wanted to add a few additional thoughts to consider. First, it’s important to disentangle the relative weight of leisure versus business travel from the question of the overall level of the total amount of travel. That is, are we looking at a future where people travel less overall but a greater proportion of that travel is for leisure, or will that overall level recover or surpass where it was pre-COVID?

 

No doubt, business travel is in trouble. Just as many in-person meetings within an organization generate the “this could have been an email” reaction, we’re looking at a future where in-person meetings across geographical distance will generate “could this be a Zoom?” considerations. (I ignore the question of what proportion of Zoom meetings also could have been an email!) Firms are going to have to think very carefully about the marginal benefits of in-person meetings involving travel compared to teleconferencing, especially as the software continues to improve and we learn to take advantage of that specific mode of interaction. Even if we assume away all health risks, can organizations really afford to pay travel expenses and sacrifice employee time when a Zoom meeting can accomplish most of the same things? And will employees be as willing to travel for business, with all of its headaches from the TSA to potential health risks to whatever health protocols stick around?

 

The WSJ piece suggests this will raise the cost of leisure travel, especially by air, as sellers lose the segment of their market that would pay high prices. That seems right, but the elasticity of demand might matter here. Leisure travelers are more price-elastic with respect to airfares, and if air travel becomes more of a hassle, the full cost of flying will quickly get prohibitive. Many folks have become used to driving longer distances the last few months, and the car might look like a better option on an increasingly large margin. Car rental places may have to re-orient their business more toward leisure travelers.

 

One piece of evidence of the tilt toward leisure is the recent decision by the airlines to waive change fees for essentially all travelers. This is one way to appeal to leisure travelers who previously might have been hesitant (on the margin) to fly if there was significant uncertainty. The elimination of change fees is a reduction in the total cost of the ticket in any case. But it also takes away a perk from frequent flyers, who are more often business travelers, by making it available to everyone.

 

Hotels will be in better shape, but here too, they will have to adapt to business that is relatively more leisure-oriented. Think about a chain like Marriott’s Courtyards, which are clearly designed for business travelers (e.g., no free breakfast). Many hotels got rid of pools, often for liability reasons. And it’s hard to find ones with adjoining rooms anymore. Chains that don’t allow pets will find it tougher going. If travel does tilt toward leisure, amenities such as free breakfasts, pools, adjoining rooms, and pet-friendliness will be part of that shift.

 

The WSJ piece also concludes with a call by former Transportation Secretary Ray LaHood to have clear and strict national safety and health standards for air travel. Just as hotels are going to compete to provide not only leisure-friendly amenities but also to assure customers of their health protocols, so will airlines compete to make clear how safe air travel is, even in the absence of national mandates. And this is the way it should be. Let the travel industry be free to experiment with different methods of addressing the concerns of their potential customers. If it’s correct that travel is going to be a challenging business for the near future, these firms have every incentive to figure out the right combination of safety and affordability to meet people’s desires. One-size-fits-all mandates squelch experimentation and assume we know things that only market proceess can discover.

 

Finally, just like the many Econlib readers who are academics, I’m not sure what this means for the future of academic conferences. Presenting papers and the other forms of more formal interaction can actually be done pretty well by Zoom, as can the preliminary rounds of job interviews that are central features of many such conferences. However, I do think there’s something really valuable about the in-person informal interaction at such conferences that cannot be replicated by Zoom. With colleges suffering in a post-COVID world, budgets will be even thinner, especially for travel. And while professional organizations might be able to negotiate really good hotel deals if total travel is down, it probably won’t be enough to entice a lot of academics to come who wouldn’t otherwise attend. Professional organizations are going to have to think very creatively about what pieces of their conferences do and do not have close enough substitutes over the web and just what their members are willing and able to pay for. Here, as everywhere, letting professional organizations experiment will be key to finding out what works best for their members.

 

 

Steven Horwitz is Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University in Muncie, IN. He is also an Affiliated Senior Scholar at the Mercatus Center in Arlington, VA, and a Senior Fellow at the Fraser Institute of Canada.