Travel & leisure industry updates
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The US airline industry’s recovery hit a milestone in June when more than 2m people passed through airport screenings in a single day. It was the first time since the pandemic began. Yet amid the crowds of luggage-toting visitors one group was conspicuously absent: business passengers.
In contrast with leisure, corporate travellers have been slow to return to the skies. Just 4 per cent of companies surveyed by Deloitte expect their travel spend to fully return to 2019 levels by the end of this year. A complete rebound could be years away. Only 54 per cent of respondents think they will return to their pre-pandemic spending ways by the end of 2022.
Business travellers tend to pay higher airfares than the rest. Their corporate accounts subsidise other passengers. In their absence, some airlines have already decided to raise prices on certain routes. Leisure travel is back but it is not cheap.
It is not just that companies have discovered how many face-to-face meetings can be replaced with video conferences. Ever-shifting travel restrictions and quarantine rules — especially in countries outside the US — mean office managers are reluctant to greenlight unnecessary trips.
At the same time, companies are being asked to scrutinise their impact on the environment. Commercial air travel is responsible for about 3 to 4 per cent of total US greenhouse gas emissions. Reinsurance company Swiss Re, Salesforce and EY are among those looking to reduce their carbon footprint by cutting back on business travel.
Zoom calls will not go away. Nor will important client meetings. But certain categories of travel will shrink more than others. Companies may permanently cut back on intra-company meetings and training. Trade shows and relationship building with clients will remain priorities.
These changes will have an outsize effect on the travel industry. Pre-pandemic, business travellers made up just a fifth of total travel volume, but accounted for 40-60 per cent of lodging and airline revenues, according to the US Travel Association.
Bill Gates believes that half of all business travel will never return. At the opposite end of the spectrum, JPMorgan boss Jamie Dimon laments the lost business that comes from bankers not hitting the road to visit clients. The future of business travel will probably fall somewhere between the two.
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