Business travel

When will business travel rebound?

While many people have taken at least one post-pandemic pleasure trip, business travel has not been so quick to rebound. Here are some of the latest projections for when people will start traveling for business.

Levels of business travel before the pandemic

A report by the US Travel Association estimates that households and businesses spent a total of $ 1.1 trillion on travel in 2019. Of the $ 1.1 trillion in spending, business travel accounted for about 334.2 billion dollars, that number fell by about 70% in 2020. Leisure travel fell only 27% last year, according to the association.

While travel agencies were optimistic about a rebound in business travel in early 2021 following the rapid rebound in leisure travel, the Delta variant, travel restrictions and other factors are delaying the resumption date .

Business travel in 2021 (so far)

While experts expect leisure travel to return to the pre-pandemic standard as early as 2022, business travel will take a few more years. In general, there was a sense of optimism as recently as July 2021 among airlines that business travel would return in the fall once the peak leisure travel season ended on Feast Day. Job. For example, domestic airlines predicted a good year after suffering large and unexpected losses (and government bailouts) in 2020.

Unfortunately, the Delta variant appeared in late summer and now carriers and travelers are recalling their travel plans.

The US Travel Association has yet to release estimates for the 2021 calendar year, but currently predicts that business volume will not return to normal until 2024 or later.

Airlines are recording business travel volumes at around 40% of their 2019 levels. Prior to the Delta variant, airlines estimated business travel in the fall to be 60% of pre-pandemic levels. . For example, in Washington, DC, hotels rely heavily on business spending. But business travel bookings are down 86% since 2019 and are also lower than in 2020.

Hawaiian hotels and resorts could lose up to $ 1 billion in business travel revenue for 2021. This tropical state is a popular vacation getaway for leisure travel during the summer months and vacations. But it’s also a year-round favorite for business and leisure travel.

As the travel industry tries to weather the storm, federal lawmakers are trying to pass the “Safeguarding Hotel Jobs Act” to offer tax credits and wage subsidies to help businesses. hospitality workers with fewer hours and lower wages.

Business travel challenges

Here are some of the challenges that airlines, hotels, and other business travel providers face.

More variations

The Delta variant has prompted many companies whose workers returned to the office earlier in 2021 to return to work from home indefinitely. Other variants also delay plans to return to the office and therefore the resumption of business trips.

The increase in variants is also forcing airlines to delay the return of some of the planes currently in storage and reintroduce routes and flights. Airlines don’t want to expand their catering operations to business travel because of false expectations until there is consistent demand.

Travel restrictions

Travel restrictions imposed by countries and states discourage business and leisure travel. While business can be a “go-to” reason for travel, there is still a process workers must follow before booking travel. Going through the permitting process and potential quarantines may not be worth the legwork when a video conference can sort out most of the details.

While the health situation is not changing as quickly as it was in early 2020, restrictions can change quickly and force companies to postpone in-person meetings and switch to virtual sessions instead.

One of the most recent examples is the European Union’s travel restrictions on non-essential travel at the end of August 2021. The EU currently discourages non-essential travel from high-risk countries, including United States.

While countries and popular business travel destinations want business travel to come back and increase revenue, the reopening process is slower than initially expected.

Fewer business conferences

Several business conferences are back this year after being only virtual in 2020 across the United States. There are also international business gatherings in the second half of 2021 as the world begins to reopen for summer travel.

However, capacity restrictions for large gatherings and a general reluctance to mingle with many others at once in a confined space discourage business and commercial conventions.

Instead of being in person only, many conventions offer a hybrid platform so that attendees can travel to the convention site. However, non-travelers can still network with others online. Other trade conventions continue to be purely virtual, as the health threat may not be worth the potential fruits of in-person gatherings.

We could see more congresses in 2022 if the health situation does not deteriorate and if popular congress destinations accommodate large gatherings as much as possible. For example, the iconic Consumer Electronics Show (CES 2022) will be in person after going virtual in 2021. 2021 could be a year of transition and the trend for local gatherings will increase in 2022.

Proof of vaccination

Companies may require their employees to be fully vaccinated to travel for business reasons. JP Morgan is one of the first leading companies to ban its unvaccinated workers from company travel.

Events are also starting to require participants to be fully immunized. For example, CES 2022, one of the largest trade shows in the United States, requires all attendees to be fully immunized.

As vaccination rates rise around the world and in the United States, not all workers can choose to be vaccinated. More people might also be willing to attend, knowing that everyone in the building is also vaccinated or recently recovered.

Business travel prices remain relatively low

Delta Air Lines said more of its business travel revenue in 2021 came from small and medium-sized businesses rather than corporations.

Large companies have larger travel budgets and more employees available to fly. Until conglomerates increase their travel budget for meetings, training sessions and conference attendance, airlines will continue to look for ways to bring back business travel which traditionally has higher profit margins. .

Reduced business travel budgets

Businesses of all sizes are slashing travel budgets after realizing that more than expected interactions with colleagues, suppliers, and potential customers can be happening digitally. Of course, virtual meetings don’t have the same interpersonal benefits as face-to-face meetings. But it is still possible to complete most negotiations by video, audio or e-mail.

Many companies tailor their business plans to relatively uncertain earnings due to several economic factors such as inflation, supply chain issues, and the potential drop in consumer spending. Travel is an overhead expense that is easily reduced, thanks to today’s video conferencing technology. Rising business confidence can trigger a return in business travel.

Summary

It will be at least two more years before business travel returns to pre-pandemic levels. Many companies always try to use virtual gatherings as much as possible, whether you’re in the C-Suite or a new hire.

Domestic business travel for important in-person meetings will be the first to rebound, and trade conventions may be the next. However, international business travel could possibly be the last to recover due to travel restrictions and additional expenses.

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