The road to normal corporate travel is far away

Gulf Today Report

If there is one sector that has been considerably battered by the coronavirus pandemic, it is the travel industry.

With all kinds of regulations crimping flights, some airlines shuttered; hundreds, if not thousands, of jobs slashed among staff; travel agencies hit – clearly wanton misery has been the reigning theme that no one wants.

READ MORE

European, Asian shares rise over the prospect of a COVID-19 vaccine

Dollar declines as hope for vaccine decreases

Those affected by the travel bug can also put, on the backburner, vacation plans at exotic beach resorts overseas, which has become a no-no for fear of health risks.

And with more and more people resorting to an indoor life online rather than physical transition through airports, it may be a long time before things get back to normal.

For the lucrative business travel industry, Brian Contreras represents its worst fears.

A partner account executive at a US tech firm, Contreras was used to traveling frequently for his company. But nine months into the pandemic, he and thousands of others are working from home and dialling into video conferences instead of boarding planes.

A travel agency temporarily closed is seen next to Wing On travel agency in Hong Kong.

Contreras manages his North American accounts from Sacramento, California and doesn’t expect to travel for work until the middle of next year. Even then, he’s not sure how much he will need to.

"Maybe it's just the acceptance of the new normal. I have all of the resources necessary to be on the calls, all of the communicative devices to make sure I can do my job," he said. "There's an element of of face-to-face that's necessary, but I would be OK without it.”

That trend could spell big trouble for hotels, airlines, convention centres and other industries that rely so heavily on business travellers like Contreras.

Work travel represented 21% of the $8.9 trillion spent on global travel and tourism in 2019, according to the World Travel and Tourism Council.

Delta Air Lines CEO Ed Bastian recently suggested business travel might settle into a "new normal” that is 10% to 20% lower than it used to be.

"I do think corporate travel is going to come back faster than people suspect. I just don’t know if it will be come back to the full volume,” Bastian told The Associated Press.

Right now, Delta's business travel revenue is down 85%.

The online shopping giant, Amazon, told it employees to stop travelling in March.

Amazon, which told it employees to stop travelling in March, says it has saved nearly $1 billion in travel expenses so far this year. The online shopping giant, with more than 1.1 million employees, is the second-largest employer in the US.

At Southwest Airlines, CEO Gary Kelly said while overall passenger revenue is down 70%, business travel – normally more than one-third of Southwest’s traffic – is off 90%.

US hotels relied on business travel for around half their revenue in 2019, or closer to 60% in big cities like Washington, according to Cindy Estis Green, the CEO of hospitality data firm Kalibri Labs.

Peter Belobaba, who teaches airline management at MIT, said business travel is down partly because some people are afraid to fly and partly because companies fear liability if employees contract COVID-19 while travelling for work.

Companies have also reined in travel because times are lean, he said. ExxonMobil cut business travel in February – even before the pandemic’s full impact was felt in the US – because of falling global demand for oil.