Executive Travel : What Role Will Video Calling Play in Travel Picture?
Just how essential is travel to getting business done? That has been the multimillion-dollar question facing the videoconferencing and travel industries ever since the first picture phone was unveiled at the New York World’s Fair three decades ago.
This year, the picture should begin to clear. In 1995, for the first time, all desktop videoconferencing equipment will meet standards that will allow different systems to work with one another.
And the number of phone lines capable of carrying digital video signals has increased to a point where such communication can be widespread.
At the same time, the price of desktop videoconferencing units has fallen to about $1,000, a third of what it was just a year ago.
As a result, industry analysts are projecting a large increase in sales of the equipment. According to the International Teleconferencing Assn. in Virginia, there were 20,000 desktop video units in use in 1994. By 1996, there are expected to be 7 million.
Jeremy Goldstein, president of PicturePhone Direct Inc., a Rochester, N.Y.-based reseller of videoconferencing equipment, is already seeing the increased interest.
“Our sales are growing about 20% a month,” said Goldstein, who has been involved in the telecommunications industry for more than two decades.
He also heads Navitar Inc., which manufactures videoconferencing accessories, such as microscope and slide projectors that attach to cameras.
If videoconferencing booms, does that mean business road warriors can trade in their frequent-flier miles for office armchairs?
According to Todd Burger, who directed a study for Arthur D. Little Inc., a Cambridge, Mass.-based consulting firm, the demand for air travel will continue to grow. It just won’t grow at the same rate it would have without the introduction of cost-effective videoconferencing.
The study predicts that videoconferencing will substitute for approximately 15% of business travel by 2030. It currently substitutes for only about 0.5%.
The impact on companies would vary depending on the type of traveling they do. For example, Union Pacific’s telecommunications subsidiary has already reportedly reduced its business travel an average of 25% by using video communications. Some departments have been able to cut travel as much as 70%.
By contrast, a European study found that videoconferencing reduced business travel just 14%. In that study, videoconferencing technology had the greatest effect on intra-company trips, reducing them by 30%. It had the least effect on travel for conferences, reducing the number of those trips by 5%.
Many business travel managers say they are not overly concerned about videoconferencing replacing travel.
“My sense is that it has not grabbed hold of people like cellular phones or fax machines,” said Lou Togneri, director of travel management for Mariner Health Group in Mystic, Conn., and former chairman of the strategic planning committee for the National Business Travel Assn. “Conducting business on a handshake and eyeball-to-eyeball is still outrunning it.”
Togneri, like others in the travel industry, believes videoconferencing will not so much reduce travel as change the nature of it.
“It will never replace face-to-face meetings,” said Gordon Lambourne, a spokesman for Marriott Hotels in Washington. Nine years ago, many hotels began installing satellite dishes for videoconference rooms.
“At that time, people predicted it would eliminate or cut into business travel, but it has not. It has some applications, but as far as getting out and making sales calls or having meetings with clients, it’s not replaced it at all, Lambourne said.”
Indeed, many in the travel industry predict that videoconferencing will become part of a menu of options that include business travel.
It may be the preferred choice for emergency meetings or to cut costs on one-day meetings, but it can’t replace large or lengthy conferences or substitute for a tour of a facility.
The availability of videoconferencing may affect who gets to travel. For example, trips that were previously budgeted for engineering or design group members may go instead to sales and marketing, where the benefits of meeting in person may be more dramatic.
There will still be a need for “wheeling and dealing with personal visits,” Togneri said.
However, there is some risk in underestimating the impact of videoconferencing. The ADL study notes that in 1903, Mercedes-Benz commissioned a study to assess the ultimate demand for automobiles. The company concluded that the total market for its cars would be 1 million units, based on the limited availability of chauffeurs. The study made the faulty assumption that only people who could afford chauffeurs would be able to afford cars and that driving a “horseless carriage” would require the expertise of a chauffeur.
PicturePhone Direct’s Goldstein is optimistic that videoconferencing is poised for much wider acceptance. In many ways, he said, the technology is following a growth and acceptance curve much like that of the fax machine.
When those first came out, the only people who bought them were business people who had to make frequent contact with overseas operations. And fax machines had no standards, which meant you couldn’t fax from your machine to anyone who didn’t have the same brand. When standards were developed, prices came down and the machines became ubiquitous.
Goldstein sees the same thing happening with videoconferencing. Four or five years ago, there weren’t enough fiber-optic phone lines to make it practical, he said. Today, about 60% of the phone lines in the country are wired to transmit digital data.
And today’s technology is vastly improved. Many people have seen the old AT&T; videophone, which transmits a picture at one to three frames per second, Goldstein said. The image looks jerky because “the eye is looking for 24 to 30 frames per second,” the numbers used in television and movies, respectively, he said.
Most equipment today runs at least 12 to 15 frames per second, and you can get systems with full-motion video of as high as 30 frames per second.
“You will always need to see people in person,” Goldstein said. “But this is the next best thing you could possibly have.”
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(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Travel or Teleconference?
A study taken over the last year indicates that videoconferencing is taking the place of some meetings on the road. Travel to meet employees within the same company has been reduced the most.
TRIPS AVOIDED
Meeting type / Reduction in Air Travel: Intra-company: 30% Inter-company: 15% Training: 15% Conferences: 5% Other: 5%
TRIP PURPOSES Intra-company meetings: 14% Inter-company meetings: 40% Training: 15% Conferences: 15% Other: 16%
Source: Arthur D. Little Inc. Trip reduction data from a study of European companies; trip reason categories from a study of U.S. companies.
