- More South African corporates are eyeing opportunities in the metaverse.
- But that doesn't include scrapping business travel in favour of fully immersive virtual reality experiences.
- The greatest threat to the recovery of South Africa's business travel segment is sky-high fuel costs.
- With the price of jet fuel increasing by more than 70% over the past year, airline fares have become much more expensive, and corporate travel budgets have been found lacking.
- For more stories go to www.BusinessInsider.co.za.
South African companies are unlikely to ditch business travel in favour of metaverse meetings, but rising fuel costs, making flights more expensive, will suppress the recovery of work-related trips.
International travel is recovering from two years of coronavirus-induced restrictions. This rebound is most noticeable within the leisure segment, where summer holidaymakers in Europe, for example, have returned to the skies en masse, creating chaos at short-staffed airports.
In South Africa, the recovery hasn't been as swift. In the first quarter of 2022, international arrivals were at less than 40% of levels seen before the pandemic. Recovery in the domestic segment is also struggling, and by June, passenger activity at Johannesburg's OR Tambo International was at 68% of pre-pandemic levels, according to Airports Company South Africa (ACSA).
Reluctance around business travel is one of the major factors behind the stunted recovery of passenger activity at OR Tambo and other main South Africa airports, explained ACSA CEO Mpumi Mpofu. Travel budgets, cut during the height of the pandemic, remain tight and virtual meetings, used extensively by companies during lockdown, still provide an affordable alternative to in-person conferences.
But trends are changing as offices reopen and employees rekindle personal connections with colleagues.
"We're noticing a clear virtual and screen fatigue among South African corporates," said Bonnie Smith, the general manager of FCM Travel South Africa, during a recent event on global travel.
"For two long years, they were forced to adopt virtual means of communicating. But it's important to remember that this digital-first attitude was dictated by external circumstances. There was no cultural preference for being online instead of meeting in-person."
Smith's comments came amid a debate around the metaverse's potential to disrupt business travel.
Taken a step further than simple Zoom meetings, the virtual reality space presented by the metaverse holds potential for immersive work-related functions and has the ability to make people feel like they're in the same space even though they're spread around the world, according to Dan Nieves, head of commercial sales at Meta's Reality Labs.
And while South African corporates are becoming more interested in the metaverse, travel experts believe replacing business trips with fully immersive virtual reality experiences is still a long way off. Widespread adoption of the metaverse is still at least a decade away.
"Digital has become a powerful tool to enhance meetings, trainings, and conferences. The metaverse will take these digital meetings to a further and better level, but it won't replace in-person experiences," said Smith.
"In fact, face-to-face meetings are more powerful now than ever before."
And while the metaverse poses no significant risk, a far more imminent threat to business travel to, from, and within South Africa exists.
The price of jet fuel is 74% higher than it was a year ago, according to Platts, largely because of oil price volatility emanating from Russia's conflict with Ukraine. Soaring global inflation coupled with fears of an economic recession has also done little to instil confidence in corporate travel budgets.
"Fuel prices are already affecting people personally, and there's no doubt the rising cost of fuel will impact airlines, airfares, and in turn, decisions around business travel," said Smith.
"For South Africans, and South African companies, it is going to be the biggest concern this year."
Although soaring fuel prices are the main drivers for rising airfares, a wounded airline sector, both internationally, where pandemic-era cost-cutting measures haven't healed, and domestically, where the demise of Comair has reduced capacity and competition, has made travel more expensive and complicated.