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
Business Versus Leisure Travelers
This blog was written before the COVID Pandemic. The COVID epidemics played havoc on the travel business. In 2022, Fifty Plus Nomad decided to focus on traveling and living in Mexico and language learning posts. We will only update these long-term travel-related posts on a time-permitting basis. We would appreciate your comments and updates on these posts.
Who are Typical Business Travelers?
Business travel, according to Wikipedia, is a ¨travel undertaken for work or business purposes. Unlike other types of travel, such as for leisure purposes or regularly commuting between 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.
- Marketing or promoting a new or an existing product.
- Visiting the project site for evaluation.
- Strengthening relationships with customers.
- Maintaining 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 include sightseeing, shopping, etc. More and more businesspeople also bring their families along on their business trips.
Sometimes, business travelers share some of the leisure travel costs 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 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.
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 make up for the costs of providing more service to first-class or business services. In fact, on some flights, business passengers represent 75 percent of an airline’s profit.
- Business and high-end travelers bring substantial additional revenue through frequent-flier 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 airline tickets to attract customers). Plus, 15% of all Frequent Flyer points expire and never get used.
Airlines introduce innovative services on routes popular with business travelers to lure new business passengers. 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 other locations because businesspeople need quick and convenient vehicle access to their appointments. (That said, airport locations rent almost half of the rental cars).
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 the Developing World and Chinese tourists. However, business travel continues to increase much slower 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 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 seek hotels that incentivize them 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.