An in-depth look at how the relocation market is evolving due to COVID-19.
By Debbie Bolla
The relocation industry is no stranger to change. Often driven by the current economic state, mobility has been greatly impacted by the COVID-19 pandemic, especially in terms of volume, service delivery, and supply chain.
“The most visible impact of COVID-19 on corporate-sponsored relocations was a contraction in activity level, typically reflecting scrutiny over avoidable or deferrable expenditures,” explains Adele Rota, vice president of client relations for NuCompass. “For some organizations, this meant a reduction in relocations up to 50%, while others may have experienced a more moderate decline of 10 to 30%. International assignments for most companies declined by a greater percentage than domestic relocations due to the relative complexity, expense, and degree of potential change experienced by the employee and their impacted family members.”
Steven John, president and CEO of Home Services Relocation (HSR), says some industries took it harder than others. “From a transferee volume perspective, we saw many industries reduce transferee volume in 2020,” he notes. “Hospitality, technology, air transportation, energy, and certain retailers were hit particularly hard.”
Many service options went virtual -and perhaps for the better. “Virtual services for nearly every service blossomed during COVID, including home tours and household goods surveys,” says Rota. “Most of the suppliers have maintained virtual options even as they return to face-to-face service delivery, and often at a cost savings to clients.”
As for the supply chain, disruption is the name of the game, often causing additional obstacles to the relocation experience. Rota shares three examples that have caused wrinkles in the process:
- The shipping industry is experiencing a lack of vessel availability and a decreased workforce.
- The housing market has skyrocketed with more interested buyers than inventory.
- Auto shipping prices are on the rise due to a domino effect from the rental car market offering premiums for truck drivers, creating a driver shortage.
Many experts argue that relocation is on the rebound. “Relocation volume in 2021 has increased over 2020 -though not yet close to 2019 levels -as companies begin to feel confident enough in their future prospects to start hiring and offering relocation assistance again,” says Rota. “There is also pent-up demand from relocations that were supposed to occur in 2020.”
As it was prior to the pandemic, relocation will continue to be a strategy to attract and mobilize top talent. “As companies grow and hire, relocation demand increases and we are seeing robust demand from those sectors of the economy that are hot,” says John.
But what changes are anticipated? Like many other parts of the employee lifecycle, flexibility is becoming central to the relocation experience.
“While traditional permanent move and assignment programs are still being offered, flexibility is becoming central to the benefits conversation,” says Mark Woelfel, SVP of global client services for CapRelo. “This ranges from allowing employees to pick from a broader menu of support services to additional financial support (think COVID testing and self-isolating hotel stays), all the way through to expanding the definition of the family unit.”
According to the 54th annual Atlas Corporate Relocation Survey, one in four companies expect to shift policies this year with an eye of flexibility. Respondents either plan on being more open to relocation timelines or offering remote work assignments. Rota says some organizations are leveraging larger temporary housing accommodations to provide work-from-home space for employees on assignment.
But pairing remote work and relocation comes with challenges, especially around compliance issues. “Employers should be mindful that such policies do not establish a recognized presenc in states or jurisdictions in which they had not previously resided,” informs HSR’s John. “The simple fact of having an employee work substantially from home in a state not previously occupied results in a variety of payroll related reporting and taxes and may subject the company to additional state and local income taxes on total revenues, regardless of where earned. Some employers have allowed transferees to work from home, but only after moving to an acceptable state for employment record keeping purposes to avoid these issues.”
While what the new norm of work looks like is still unclear, employees will not lack options for when and where they get their jobs done. Between virtual work, hybrid schedules, or even a “hoteling approach,” where employees book a desk in advance, Rota says that relocation options will have to pivot along with these trends.
“As an industry, the types of relocations will likely change, with alternative approaches being implemented to attract talent, such as short-term domestic assignments,” she says. In addition, the Atlas Corporate Relocation Survey finds one in five companies expect to offer extended business travel (EBT) and expanded lump sum options as well.
Technology will also aid in relocation’s transformation. “We’re seeing some shifts in incentives and programs with a focus on technologies that combine the human elements of relocation with interactive experiences,” explains Anthony Horton, CEO of Corporation Relocation International (CRI). Horton says some of their Dallas-based clients are leveraging their Pivt app, which combines self-service with customer service. Rota agrees that technology allows for organizations and transferees alike to manage relocation activities online. “Rental assistance, for example, is an area where more people have now become comfortable with online virtual tours and selecting an apartment sight unseen, compared to pre-pandemic rental tours,” she says.
As with many other human capital management practices, the pandemic has forced processes to evolve quickly. “2020 has felt like an 18-month-long year, with severe disruption to the mobility industry,” says CapRelo’s Woelfel. “I don’t believe we’ll ever be business as usual again. We underwent some accelerated and forced growth in our service delivery models, the technologies we used to accommodate special circumstances are here to stay, and the way we support relocating employees has permanently changed, and mostly for the better.”
Horton agrees. “We believe that the industry is ready for a disruption. All of our experiences through 2020 and COVID have put a bright light on how important the employee experience is and how professional consultation is such a critical part of the relocation experience. We’re seeing a real appetite in the market for expertise and counselling through the entire relocation process.”