Business travel is struggling to recover
In much of the economy, the big question is when it will be safe to revert to pre-pandemic spending patterns. For business trips, it’s more: who wants it?
Business leaders have Noted the effectiveness of video conferencing tools – and the money they saved. Many are also committed to reducing carbon emissions. The result can be bad news for anyone eager to resume a road warrior lifestyle.
The Global Business Travel Association estimates that global spending on commercial travel will not return to its pre-pandemic peak of $ 1.4 trillion until 2025. In the United States, the latest Census Bureau survey of small businesses found that only 27% of companies plan to spend the money on travel in the next six months.
“The results of the meetings held on Zoom against those held in person aren’t much different, but the costs are different day and night, ”said Richard Curtin, director of the University of Michigan Consumer Survey, in an interview. “It will be difficult to justify the costs that were once covered.”
‘Found new ways’
Most business travelers said they believe they can maintain existing business relationships – and develop new ones – by teleconference, according to a study by management consulting firm Oliver Wyman.
Business travel rebounded from the 9/11 attacks and the 2008 financial crisis, both of which led to long-term turnaround forecasts.
But the GBTA estimates that the impact of the pandemic on the industry was about 10 times worse than either of these episodes. And this time around, companies may have found better substitutes – a theme that has surfaced in recent earnings calls.
“We were able to save about $ 1 billion in shipping costs,” said Brian Olsavsky, chief financial officer of Amazon.com on Feb. 2. “Our sales teams have found new ways to reach customers.”
In 2019, Amazon ranked second after Deloitte among the top 100 business travel programs measured by flights booked in the United States, according to Business Travel News. Quasi-public entities such as the World Bank and the International Monetary Fund were also on the list, and The Church of Jesus Christ of Latter-day Saints ranked 44th.
The travel industry as a whole expects a short-term increase in pent-up demand for leisure travel as the rollout of vaccines makes potential vacationers. feel More comfortable.
“We anticipate that business travel will lag behind consumer travel,” Jeff Campbell, chief financial officer of American Express Co, said during an earnings call.
As with other pandemic business trends like the shift from offices to remote working, there is also a school of thought that says changes in travel habits will prove to be temporary.
Debates may not be resolved until the health emergency is over.
Even if the return to business travel is slow, companies won’t give up on methods that have worked, Stephen Berman, general manager of toy maker Jakks Pacific Inc, said on a earnings call. “Once you have a salesperson who wins a customer with the personal visit, versus someone who just tried to win a customer on Zoom, he’s going to take a lot of people traveling.”
© 2021 Bloomberg