Corporate travel isn’t what it used to be, and we don’t mean frequent flier status.
Signals are mixed from the economic control tower. CNBC reported Wednesday (Nov. 17) that “Global business travel spending fell 54% to $661 billion in 2020 from $1.4 trillion 2019” as offices emptied and work from home was normalized for tens of millions in the U.S. alone.
Also on Wednesday, the Global Business Travel Association (GBTA) issued guidance in its latest business travel index, the BTI Outlook, stating that “Business travel recovery in 2021 proceeded at a slower, more cautionary pace than expected from a year ago. However, global business travel spending is expected to surge in 2022 with full recovery expected in 2024 — ending the year on pace with the 2019 pre-pandemic spend of $1.4 trillion, and a year sooner than previously forecast.” Earlier this year, the GBTA predicted full recovery by 2025.
Either year seems a long way off to the airlines, hotels, convention centers and ancillary services that for years have relied on a steady stream of business travelers.
As vaccinations reached meaningful levels and pandemic fears began subsiding in the third quarter, players in business travel sounded cautiously optimistic. A chief barometer of a comeback will be in the conventions sector, and while meetings are happening, they’re sporadic at present.
As the Associated Press (AP) reported in September, “A lot is riding on the revival of in-person meetings. Prior to the pandemic, conferences and trade shows generated more than $1 trillion in direct spending and attracted 1.5 billion attendees annually around the world, according to the Events Industry Council [CEIR], a trade group.”
The story added that “events alone were expected to generate $105 billion in direct and indirect spending in 2020. Instead, that plunged to $24 billion. CEIR doesn’t expect a return to growth for the industry until 2023.”
See also: Hopes for Business Travel Recovery Rise as Rides to Airports Triple
Reevaluating the Benefit of Business Trips
According to the GBTA’s new BTI Outlook, a poll of chief financial officers in North America, Latin America, Asia-Pacific and Europe found that 52% of respondents said they think their company’s corporate spend will return to 2019 levels by next year.
Asked about the value of business travel to their operations, “CFOs felt the top return-on-investment reasons for business travel are sales and business development (68%), internal business planning and strategy (50%), client account management (48%) and employee training and development (48%),” according to the GBTA report.
While trade groups are staying understandably upbeat, not all market watchers are convinced that business travel will ever return to pre-pandemic levels as remote work is working.
Anthony Jackson, U.S. airlines leader at Deloitte told The Wall Street Journal (WSJ) that “Companies are re-evaluating and trying to understand where does travel make sense and where does it not make sense. Technology will change behavior and how companies will do their jobs.”
That’s great news for companies like Zoom and other online collaboration tools, but the travel and hospitality sector isn’t viewing its predicament through a videoconferencing lens.
As TIME reported, “During the pandemic, rental car companies like Hertz, hotels like the Fairmont in San Jose, and international airlines including Aeromexico, Virgin Atlantic and LATAM all filed for bankruptcy protection. Government supports that kept the U.S. airline industry afloat ended Sept. 30. The hotel industry is expected to earn $59 billion less in business travel revenue this year compared to 2019, according to the American Hotel and Lobby Association. Airlines are expected to lose $51.8 billion in 2021 alone.”
See also: Delta Airlines’ Q3 Profit May Signal Wider Takeoff of Pent-Up Travel Demand