As vaccination rates have increased, so has leisure travel. The summer of 2021 has seen a significant rise in domestic travel and even some international travel. Therefore, it’s not much of a surprise for analysts to predict that business travel will soon make its return. The comeback of corporate travel has been highly anticipated, especially among hotel and airline industries. But it’s not yet clear just how robust business travel recovery will be as the delta variant of COVID spreads. Concerns about safety as well as trends favoring remote work could hinder its return.
Given the situation, business travel recovery is likely to come in spurts. Certainly, new coronavirus variants could throw a wrench in future business travel plans. But there are other issues that might need to be considered as well. While some corporate activities are best served by in-person meetings and conferences, others may not be. As many businesses are embracing a shift toward working-from-home, they may reexamine business travel as well. These factors are likely to affect the comeback of corporate travel over the long-term.
(The official Bold Business survey results are clear: most favor work-from-home over going back to the office. Read more in this important Bold story!)
“We expect events with more U.S.-based membership and participation to be closer to previous years than those with a more international audience.” – Clifford Rippetoe, President and CEO, San Diego Convention Center Corporation
Business Travel Recovery and COVID
The airline and hotel industries hoped all forms of travel would soon return to normal as vaccination programs rolled out. But to date, only leisure travel has seen significant increases. Many companies are still hesitant to resume normal business travel activities. This has been further complicated by the fact that many countries have yet to open their borders to international travelers. Now, as the Delta variant of COVID spreads, most companies are taking an even more cautious approach. This has delayed the comeback of corporate travel as much as anything.
In recent surveys of business travelers, it’s clear COVID concerns continue to exist. The vast majority expect that the COVID situation will worsen in the coming months rather than improving. This occurs as additional variants of the virus are now being found in South America. These same surveys also report that most travelers have concerns for their personal health. And they also express less confidence about being able to travel safely at the current time. These sentiments reflect other reasons why a full business travel recovery is not likely in the immediate future. To realize a significant comeback of corporate travel, business travelers will need to feel such travel is safe to resume.
“Companies used to send maybe eight people to close a deal. Now they’ll send two people, and the rest will be on Zoom.” – Charlie Leocha, President of Travelers United
Analyzing Business Travel by Type
When analysts attempt to predict business travel recovery, they often fail to differentiate the different types of travel. Some companies utilize business travel to conduct internal meetings among different regional offices. Other use corporate travel in order to pursue in-person interactions that produce sales. And of course, many business travelers attend various conferences and events where they can network with others. In the past, each of these have been utilized to increase company performance. But the benefits of each type are different. And the risks related to business travel today may not justify the comeback of corporate travel in every case.
Statistics suggest that this is indeed true, especially as the come-to-me economy has taken hold. (Read more about the Come-to-Me Economy in this Bold story.) Recent surveys report that three-quarters of businesses plan to reduce business travel for internal meetings. Instead, they plan to conduct these via remote online platforms. Likewise, more than half are planning to reduce sales business trips to some extent. The costs associated with business travel are so great, especially compared to remote interactions, companies are reevaluating their travel. The only area where most agree that business travel is essential involves conferences and networking opportunities. This may be the only area where the comeback in corporate travel returns to pre-pandemic levels.
“The majority of our corporate accounts have shared their expectation for travel to pick up moving into the fall, and we expect a full business travel recovery in 2022.” – Rachel Warner, Public Relations, American Airlines
Pleas From the Travel Industry
The pandemic significantly affected the travel and tourism industry due to a standstill in both leisure and business travel. Hotels and airlines have struggled to survive, and the recent increase in leisure travel has certainly been a lifeline. But compared to business travel, consumer trips fail to compare. For example, Hilton and other major hotel chains receive a fifth of their revenues from group events and conventions. Likewise, roughly 55 percent of the chain’s income can be assigned to individual business travelers. Without a comeback of corporate travel, hotels and convention centers will remain in the red. This is why many in the industry are earnestly hoping for business travel recovery.
The same thing is true for the airline industry. Overall, business travelers only comprise 10 percent of all passengers. But when it comes to actual revenues, they account for nearly two-thirds of most airlines’ income. Because business travelers often book travel last minute, they tend to pay a premium for their travel. Similarly, they also tend to book higher priced seats and schedules as well. Both these explain why so many in the travel industry are wishing for business travel recovery. Without a comeback in corporate travel, it may soon be that airlines will have to increase their prices across the board.
Predicting a Business Travel Recovery
According to most executives in the travel industry, many expect business travel recovery to begin in the fall of this year. They also anticipate a partial comeback in corporate travel that is at least 50 percent of 2019 levels by the end of 2021. But COVID variants, health concerns, and changes in corporate practices may prevent this from happening. In fact, some suggest that a permanent reduction between 20 and 40 percent in business travel is likely. If this is the case, then airlines and hotels will have little choice but to seek revenues elsewhere. And if so, leisure travel expenses can be expected to increase substantially. In this regard, it’s in everyone’s best interest to hope a business travel recovery occurs sooner rather than later.