Why Zoom Can’t Save the World
Business travel, which used to represent $1.5 trillion a year – about 1.7% of world GDP – has slowed to a trickle. But the economic impact will extend far beyond lost jobs at airlines and in the hospitality industry, because it will also lead to a substantial decline in the transfer of knowledge.
CAMBRIDGE – Before COVID-19, spending on business travel totaled $1.5 trillion a year (about 1.7% of world GDP). Now it is down to a trickle, as countries have closed their borders and social distancing has taken hold. Planes have been grounded, hotels are closed, and executives are not earning frequent flier miles. Many travel and hospitality jobs are feeling the consequences. But if this were all there was to it, the impact, however large, would probably be much smaller than the decline in general international tourism and easily reversible, once the pandemic is over.
Alas, recent research by Harvard’s Frank Neffke, Michele Coscia of IT University in Copenhagen, and me, just published in the peer-reviewed journal Nature Human Behavior, finds that the impact of closing down business travel may be much larger and more durable. To understand why, we first must ask ourselves why business travel was so big to begin with. And why had it been growing at three times the rate of global GDP, despite the availability of Skype, Facetime, WhatsApp, or just e-mail – all tools that predate both COVID-19 and Zoom?
Was it all about perks, or was that $1.5 trillion mostly money well spent? If so, why, and what are the implications if those activities are now restricted?