When will business travel recover? Not for years

You’d think that all those road warriors who used to rack up 20, 30, or 40 trips a year for their employer or their business would be the first to head back to the airport in the wake of the coronavirus travel crash. But it’s starting to look like business travel will take years to return to its former volume – if it ever gets there at all.

It’s true that we’re seeing a resumption of some air travel – on two dates this month, TSA screening exceeded 800,000 passengers per day for the first time since March (still way below its year-ago level of 2.5 million a day) – but much of that is from leisure trips.

In a survey of corporate travel managers conducted earlier this month, the Global Business Travel Association (GBTA) found that 74% of business travelers reported most or all of their company’s domestic trips are still curtailed by coronavirus concerns. That’s down from 93% who said so in mid-April, but it’s still a long way from a dramatic recovery. In the new survey, 93% also said all or most of their company’s international travel is still curtailed as well.

While three-fourths of the respondents said their companies have started to put together a travel recovery plan, “the return to travel remains slow and is taking longer than previously expected,” GBTA said.

Another study of business travel trends by McKinsey & Co. came to the same conclusion, based on interviews with corporate travel planners. “As the pandemic continues and travel-industry players look ahead for a rebound, our research shows that the post-crisis return will take years and that business travel will return at a slower pace than leisure travel,” the company concluded.

This is critical for cash-strapped airlines and big-city hotels, which depend on high-spending business travelers for most of their revenues. McKinsey estimated that business passengers provide 55 to 75% of a typical major airline’s profits, even though they might account for as few as 10% of its passengers.

“Given the volatility of business-travel patterns on top of significant modern technological and connectivity advancements,” McKinsey said (referring to travel alternatives like Zoom meetings), “the economic disruption from the COVID-19 pandemic will have critical implications for the rebound of business travel — and indicates a long road ahead for the sector.” The company noted that after the 2008-09 global recession, which impacted travel much less than the current pandemic, it took international leisure travel two years to recover, but international business travel didn’t return to its previous volume for five years.

While many business travelers themselves might have personal safety concerns about returning to the skies, their corporate employers have a legal responsibility to protect them, too – a concept called “duty of care.” (Remember how Senate Majority Leader Mitch McConnell has been insisting on a waiver of liability for corporate employers as part of any additional recovery legislation? That’s because of “duty of care.”)

According to GBTA, many of its member companies are tightening the rules for traveling employees in the wake of the pandemic. More than half said they have imposed new requirements for pre-trip approvals, while 35% are requiring “more frequent or detailed pre-trip communications or briefings,” and 24% have started collecting health information from employees.

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On the international side, the biggest obstacle to business trips is the adoption of strict entry bans and/or mandatory quarantines by most of the world’s nations. Another problem hindering the resumption of all business trips is the fact that many companies have cut their travel budgets along with other expenses as they try to cope with recession-based financial difficulties.

McKinsey said its research found that business travel is likely to come back in phases, depending on the distance traveled, the reason for the trip, and the type of business. In terms of distance, the earliest recovery will be regional travel in personal or rented cars, followed by domestic air travel, and eventually by international airline trips depending on what happens with government restrictions, the company said.

The huge CES show in Las Vegas has already been canceled for next year; it's going all-digital instead. Photo: CES

The huge CES show in Las Vegas has already been canceled for next year; it’s going all-digital instead.

Looking at the reason for a trip, McKinsey predicts that the first to come back will be “in-person sales or client meetings and essential business operations,” followed by small-group internal meetings and training sessions. Last to return will be industry conferences, trade shows and other large events. For types of business, the researchers expect travel in the manufacturing, pharmaceutical and construction sectors to recover first; followed by tech, real estate, finance and energy; and then eventually by health care, education and professional services.

The researchers said the last segment of business travel to recover will be giant conventions and trade shows – especially those that draw a big international contingent. “Although conferences and trade shows are critical networking opportunities and difficult to conduct virtually, they are also high-risk, given the number of attendees, which can range from several hundred to more than 100,000,” the company said. Based on their interviews with meeting planners, the McKinsey researchers said those kinds of huge gatherings will probably have to wait for development and distribution of a COVID-19 vaccine before they can resume.

The dim outlook for such large gatherings is reflected in the recent decision by the massive Consumer Electronics Show, normally held in Las Vegas during January, to cancel its 2021 extravaganza. Instead, it’s going online. The 2021 version “will be an all-digital experience connecting exhibitors, customers, thought leaders and media from around the world. The new format will allow participants to hear from technology innovators, see cutting-edge technologies and the latest product launches, and engage with global brands and startups from around the world,” CES said.

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Chris McGinnis is SFGATE’s senior travel correspondent. You can reach him via email or follow him on Twitter or Facebook. Don’t miss a shred of important travel news by signing up for his FREE weekly email updates!

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