Who are Business and Leisure Travelers? How Does the Travel Industry View Business and Leisure Travelers?
“We’re a business-oriented airline. We love all our customers; we just love some more than others, and those are the business travelers.”
Jeff Smisek, former CEO of United Airlines
Who are Typical Business Travelers?
Business travel, according to Wikipedia, is a ¨travel undertaken for work or business purposes. As opposed to other types of travel, such as for leisure purposes or regularly commuting between one’s home and workplace.¨
Some typical business travel activities include (also from Wikipedia):
- visiting customers or suppliers.
- Meetings at other company locations.
- Professional development.
- Attending a conference.
- Market or promote a new or an existing product.
- Visiting the project site for evaluation.
- Strengthening relationships with customers.
- Strengthening employees’ loyalty to the business.
- Building new partnerships.
- Identifying trends and new markets.
Mixing Business and Leisure Travel
Increasingly, business travelers extend their visits to do leisure travel activities (i.e., sightseeing, shopping, etc.). More and more businesspeople also bring their families along on their business trips.
Sometimes, business travelers share some of the costs of leisure travel with their employers. Companies often agree to share costs because:
- Longer stays can result in lower airfares. (Airlines charge more for flights that depart when convenient for businesspeople. If employees stay longer, they can leave on a cheaper, leisure travel-oriented flights).
- Extended stays help retain employees.
How Does the Travel Industry Attract Business People?
The travel industry works hard to attract business people. Here is a list of things that the industry knows are essential to attract business travelers:
- A convenient location: Hotels must be close by where businesspeople attend conventions and are likely to have business meetings. Airlines plan non-stop flights between business and convention hubs because business people are willing to pay for convenient transportation.
- Easy access to communication networks: Businesspeople depend on high-speed internet connections. Nothing can kill a business-oriented hotel faster than if their clients cannot open and send large files, have video conferences, etc.
- Vital loyalty programs: Business travelers are more likely to use the same hotel chain, airline, or rental car company than leisure travelers. 65% of business travelers belong to a hotel loyalty program, according to a Google study. Plus, a much higher percentage of business than leisure travelers participate in Frequent Flyer programs.
Why are businesses so attached to particular travel brands? Because businesses:
- Want to book travel products quickly and efficiently.
- Use travel brands that they trust will provide their employees with a comfortable stay.
- Appreciate travel providers that offer exclusive deals, free upgrades, and exceptional amenities to loyal customers.
- Free amenities. Business-oriented hotels provide amenities like continental breakfasts, business centers, in-room coffee makers, and irons to help businesspeople prepare quickly for their meetings. They also design their rooms so that businesspeople rest well. (Good lighting, comfortable temperature, and bedding). Airlines provide first and business-class services and clubs to attract business people, as well.
Why Does Travel Industry Prefer Business Travelers?
While seventy percent of all airline business revenue comes from leisure passengers, business travelers are responsible for a much higher share of the industry’s profitability than their leisure counterparts. Why?
- The additional ticket prices more than make-up for the costs of providing more service to first-class or business service. In fact, on some flights, business passengers represent 75 percent of an airline’s profit.
- Business travelers and high-end travelers bring substantial additional revenue through frequent-flier programs and other incentive programs. Frequent-flier miles programs:
- Allow companies to track business travelers’ consumption and spending behaviors. Business travelers usually have large incomes. Companies value information about their spending habits highly.
- Provide a powerful incentive for people to use specific services, particularly credit cards. (These companies buy large numbers of tickets from the airlines to attract customers). Plus, 15% of all Frequent Flyer points expire and never get used.
To lure new business passengers, airlines introduce innovative services on routes that are popular with business travelers. They also refit aircraft for more first-class legroom, add lie-flat seats and mini-suites, and offer more legroom to attract businesspeople.
Business customers are golden to other parts of the travel industry as well. Rental cars are much more expensive at the airport than in other locations because businesspeople need quick and convenient access to a vehicle to get their appointments. (That said, almost half of the rental cars are rented at airport locations).
In addition, hotels go out of their way for business clients by providing office space, etc., because business travelers generally are more willing to pay higher prices for a room than leisure travelers.
What is Leisure Travel?
According to a US Today article entitled Definition of a Leisure Traveler, leisure travel is ¨travel in which the primary motivation is to take a vacation from everyday life.¨
According to a 1979 report in Sociology by E. Cohen, Phenomenology of Tourist Experiences, there are two primary motives for leisure travel:
- Recreational — undertaken to reenergize the body and mind.
- Diversionary — as a diversion or escape from the boredom of making religious pilgrimages. (Until sixty years ago, these were the primary reasons for leisure travel).
Worldwide, leisure travelers represent around 70% of all the industry’s customers. The number of leisure travelers is snowballing, particularly with the rise of Third World and Chinese tourists. Business travel continues to increase; however, at a much slower pace than leisure travel.
What are the Characteristics of Leisure Travel?
Leisure travelers have the following differences from business travelers. Specifically, leisure travelers :
- Are highly price-sensitive: According to Google’s 2014 Traveler Study, 63% of leisure travelers say they are price-sensitive when picking a hotel.
- Spend more time planning their trips: They are willing to dedicate considerable time in:
- Choosing the perfect hotel based on amenities and location.
- Comparing hotel prices between different search engines (like hotels.com, booking.com).
- Finding the lowest airfare among several various search engines (like travelocity.com) and airline websites.
- Pay attention to reviews and recommendations: Leisure travelers listen to family, friends, colleagues, and online reviews for guidance. They report that they will not choose a hotel with many negative reviews, even if the price is low.
- Search for packages and specials: Most leisure travelers look for hotels that provide them with incentives to stay there. (Some typical amenities include free breakfasts, coffee and water, and leisure activities).
- Desire extra on-site hotel facilities: Leisure travelers seek hotels that offer pools, fitness areas, and restaurants. They are less concerned with in-room amenities than business travelers.
Want to Know About the Future of the Business and Leisure Market Post-Covid?
Here is an exciting report on future predictions for the Travel Industry and the Business and Leisure Travel Marketplace from Accenture.
The Travel Economics 101 Posts
Here are several posts designed to give Fifty-Plus Nomads a basic idea of how Travel Economics works. Being armed with a better economics education should make you a better travel consumer. (These can be read in any order)
- Why Alliances are Essential to Travel Providers. Are they Good or Bad for Consumers?Travel industry alliances are essential to the business´s survival. However, alliances have both good and bad implications for consumers
- Extra Fees: What are Ancillary (Extra) Fees and Why Are They Increasingly Becoming A Travel Industry Lifeline?More and more the travel industry depends on the sale of other products to expand and maintain its profitability. Expect to be bombarded with hints to buy other things (ancillaries) on your next cruise, flight, etc.
- The Internet Has Changed the Face of the Travel Industry More than Any Other Major IndustryThe internet has changed the travel industry probably more than another industry. This article discusses how these changes affect the consumer.
- Travel Industry Cost Saving Techniques: The Good, the Bad, and the UglyThe travel industry has made several changes to save costs in recent times. Some like using more fuel-efficient planes do not affect consumers that much. Others like reducing staff have made the experience worse for consumers.
- Business Travelers Versus Leisure TravelersThe travel industry gets most of its clients from leisure travelers. However, it makes more money from business than leisure passengers. The airlines put up with us leisure travelers because they couldn’t survive without us. However, they don’t hide their preference for business travelers.
- Why Are There So Many Connecting Flights? A Discussion of Why Airlines Love the Hub-Spoke Model More than ConsumersUnbeknownst to most consumers, the cause of most of our airline-related complaints is the hub-spoke model. Unfortunately, however, the hub-spoke model is also essential to the airline industry’s financial viability.
- Airline Schedule Changes: Why Don’t Airlines Keep their Promises?Learn why airlines change their schedules after you buy your tickets and what you can do about it.
- How Many Taxes, Fees, and Other Charges Do Consumers Pay For Airfare, Hotels, and Other Travel Services?The amount and number of travel taxes, fees, and other charges added to your bill will probably surprise you. Many are hidden and like everything else, taxes keep going up.
- Airline Consolidation: What Are the Disadvantages and Advantages For the Consumer?The airlines have consolidated so fast in the USA and Canada that only 5 players dominate the market. Learn what this means for consumers.
- Travel Industry Consolidations (Non-Airlines): The Effect on Consumers (Negative or Positive)?Probably the most significant change in the travel industry in the past couple of decades has been the industry’s rapid consolidation. Read this post to discover how few travel players really exist in the market today. and how this rapid consolidation has affected consumers.
- Why the Sharing Economy Has Become So Popular in the Travel Industry?The sharing economy like Uber and Airbnb has made a major influence on the travel industry and will continue to affect the industry far into the future.
- Third World and Chinese Travelers: The Biggest Future Travel TrendThe biggest change affecting the travel industry is the gigantic increase in emerging countries and Chinese travelers. These travelers will change the future face of tourism more than anything else.
- The 3 Reasons Travel Prices Are So Radically Different than Other Products: Perishability, Capital Costs, and Yield ManagementHave you ever wondered why travel products seem to be priced so crazily? Learn the three economic factors that contribute to the pricing of travel products: perishability, high capital costs, and yield management.
- Travel Economics 101: Learn How the Industry Works and Save Yourself Money and HeadachesPaul Heller, the Fifty-Plus Nomad founder, has developed a series of posts about travel economics. Reading these posts will help Fifty-Plus Nomads deal with some of the problems with the travel industry they are likely to encounter during their long-term, round-the-world journeys.