A grim future for business travel
Coronavirus lockdowns and the grand work-from-home experiment killed the business travel industry — and, just like everything else, it's not going back to normal anytime soon, if at all.
Why it matters: Traveling for work is a $1.5 trillion industry that encompasses transportation, hospitality and much more, and this moratorium is threatening countless firms and jobs.
- "There is no doubt that COVID-19 has a devastating impact on global business travel, with business travel almost grounding to a halt overnight," says Dave Hilfman, executive director of the Global Business Travel Association, a trade group with around 9,000 members, including many airlines, hotels, ride-sharing and rental car companies.
- Since March, the industry has lost around $518 billion, the group estimates.
And if all the management consultants, techies, campaign workers and journalists have shown that they can handle travel-heavy jobs from home, doing away with business trips could be a huge way for firms to cut costs in the post-pandemic world.
By the numbers: American professionals took more than 464 million business trips in 2019.
- Business travelers make up around 10% of airline passengers across the major global carriers, but they account for 55%–75% of revenue, because they're typically more willing to spend big on last-minute tickets or book premium seats, reports the New York Times' Jane Levere.
- Experts tell the Times that business flights won't be back to normal for a few years or longer.
- People traveling for work make up a big share of hotel occupants, too. Hotel occupancy in the U.S. — which stood at 65% in February — dropped to a low of 22% in April and rose to around 46% as of the beginning of July, according to STR, a hospitality industry market research firm.
- McKinsey projects it'll take until at least 2023 for hotel occupancy to return to pre-pandemic levels.
There are glimmers of hope. "For the first time since the start of the pandemic, we are now starting to see some positive signs of recovery," Hilfman says. He tells Axios that his trade group's members are reporting upticks in bookings in the last few weeks.
- But even as travel slowly comes back, business travel looks like it'll be the last to recover.
- "Leisure demand has started to return before business demand," a United Airlines executive told reporters last week, per Axios' Joann Muller.
- Nearly a third of Global Business Travel Association members say they believe the worst is yet to come in terms of layoffs and furloughs as well as revenue loss.
The bottom line: "We don’t believe we’re going to see full recovery until we see significant advancement in the treatment of COVID-19 and until we see a vaccine for COVID-19," the United Airlines executive said.