9 Reasons Business Travel Won’t Be Back This Year

We’ve had four days in the past week where the TSA reports more than half a million people clearing airport security checkpoints. That’s down from 2.3 to 2.7 million a year ago, but way up from 87,000 a day at bottom.

That’s mostly led by domestic leisure travel. Business travel, on the other hand, is a long way off – and likely won’t return to anything near normal this year. Here are 9 reasons why.

  1. Businesses are conservative. Businesses will hold off sending employees out on trips longer than individuals will hold themselves off from doing so. That’s because individuals can assess their own risk, but it’s tough to impose risk on someone else. That’s true both for ‘duty of care’ reasons and some sprinkle of fear of liability (even though it’s tough to identify where any particular person contracted the virus).

  2. Offices aren’t fully open. Business travel can’t recover until offices re-open at full capacity. People you need to visit aren’t there, and when they are they aren’t taking visitors.

  3. Remote workers don’t travel now. When offices aren’t opened back up at full capacity remote workers aren’t traveling to headquarters either. So that’s one segment of business travel that’s completely off the table.

  4. Conventions are a long way off. Conferences and major events aren’t happening any time soon, 100/1000/50,000 person indoor events will be the last to return. Moreover those get planned years in advance. And it only makes sense to go to one when you know everyone else is going. It’s not the sessions themselves that really provide the most value, it’s the in-person time with high value prospects and other relationships. So we need to wait not just for it to be possible to hold an event. We need to wait for events to be confident everyone will show up, since until most everyone does no one will.

  5. Some switching to online meetings. There were huge inertia barriers to getting people set up and comfortable with taking meetings online, those have been overcome. So we’ll see some meetings that used to be in person done online, fewer one-and-done meetings people used to fly to. This isn’t a claim that in-person doesn’t matter anymore. Rather there are meetings at the margin that can now be done electronically now that everyone has overcome the transaction costs to make that possible. That means less travel than before not no travel. This effect persists and is largely permanent.

  6. Businesses can send fewer people. Another effect of zoom et al is businesses no longer feel held hostage to airfares, and won’t pay for as many people to take last minute trips ‘at any price’ since there’s a second-best video option vs no option at all. That may limit travel along some margin, but also limits the ability for airlines to charge higher last-minute prices.

  7. Most international travel is cumbersome. Borders remain closed, and while leisure travelers may be willing to go through testing and quarantining to some extent businesses aren’t likely to either ask employees to do it or find it as worthwhile – it lengthens trips and adds expense, and businesses have typically been unwilling to make travel all that much onerous. This takes away international premium cabin demand, which in turn limits the international flights airlines are willing to run, which in turn makes flight schedules less convenient and therefore more arduous for business travelers, and limits international business travel even further.

  8. Recession. On March 6 I said a recession had already started. The National Bureau of Economic Research now says the business cycle peaked in February and then began its recessionary decline. Even if we’re moving up from the bottom we’re well below the economic trajectory we were on at the start of the year. The economic cycle alone suggests less business travel.

  9. Making up losses and paying down debt come first. Businesses are going to be working to rebuild their balance sheets. You might think it’s important to put people on the road, selling, generating business but travel budgets are an easy place to cut costs.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Good points.
    Work flying is 99% not necessary.

    Can already see the lawsuits when employees catch the virus and say their boss made them take the trip.

    And we all win, decrease in OPM flying will lead airlines to decrease elite qualification requirements.

  2. I agree with @gleff overall, although I think 1-4 and 7 are the big drivers, the others are in the noise.

    My personal opinion is that the affects of video teleconference tech on business travel are over stated. Quite frankly, the tech has been around for quite awhile, and companies who want to penny pinch have long had the ability to do so, but they haven’t.

    I have a job where the day-to-day tasks can just as easily be done at home as they can in the office. But I certainly have less incidental contact with influential people, and that’s going to be damaging in the long run.

    Back when Yahoo made a splash from eliminating work from home, I thought that was short sighted and an overreaction. Now? Not so much. I think full WFH is fine for small companies and startups. For big companies? I’m not seeing it on a grand scale.

  3. I also am in overall agreement with Gary but what I will find interesting is how this might affect the various carriers differently depending on how reliant they have been on business travel in the past. An airline like American would seem to be at a significant disadvantage compared to, say, Southwest. With the cash flow needed to service the debt piles becoming critical soon it’s probably going to become survival of the fittest which also seems to favor Southwest.

  4. @bob “And we all win, decrease in OPM flying will lead airlines to decrease elite qualification requirements.”

    And we wont have to listen to OPMs whining about people who got miles via sign up bonuses and credit card spend “stealing” “their” awards! #OPMlivesmatter LOL!

  5. My company pays to exhibit at these large conventions, and several have offered a “virtual exhibition”. We have declined to pay for any of these. Face to face matters.

    Also, re: getting out and selling. My company’s customers are usually on 12-18 month development cycles. We are chugging along doing fine now…but what happens when we haven’t been out selling for a year? I’m thinking that we’ll see a weird dip in sales in late 2021 and wonder where it came from.

  6. @Steve

    And TBH, conventions sort of serve as mini or partial vacations for a number of folks. Even though it’s still “work”, it’s a change of scenery away from the usual grind, and that has an appeal for a number of folks. My work-related conference travel is rather minimal, but it happens on occasion. Putting together a paper and presentation is quite a bit of work, and would I be inclined to do it just to give a presentation to a bunch of strangers over zoom? Not particularly. Plus, IME, the best networking happens away from the presentations themselves.

    I do agree with Gary that work/conference travel won’t resume this year, but I doubt COVID-19 is going to be the death of conferences and work travel.

  7. All relevant points. I wouldn’t count on business travel ever returning to pre-pandemic levels. Companies are learning how much can be accomplished without business travel. No reason to fly people all over the world for things that can be done online. There will always be business travel but it will be much more limited than what it was. For some of the reasons above I wouldn’t count on a lot of tourism travel either. Seems likely the south is going to lead the way to the US being shutdown again or making it so the rest of the world cuts us off from international travel.

  8. I also agree that it will take some time for business travel to be where it was in February. My company told us a month ago that they have no plans of reopening offices until after Labor Day (which means no business travel at all this summer.)

  9. I think we will learn a lot about convention futures with CES in Vegas. As of now they are stating that the show will still happen in early January.

    Natural Products Expo West in Anaheim (100,000 plus easily) canceled in March while people were starting to set up booths. They said they would still hold Expo East (much smaller crowd) in Philadelphia in September. Well, Expo East officially canceled this week, still 3 months out.

  10. Online meetings can take the place of most in-person meetings. Anyone who says otherwise is either a travel-aficionado or a salesman who wants to be able to treat his customers to food and drink. Conventions are an unnecessary part of corporate overhead.

  11. Some businesses — more so those that have seen that the revenue drop associated with less business travel is less than the travel expenses that would have been incurred from business travel for that lost business — are already slashing business travel budgets for 2021 travel too.

    I expect that business travel volumes won’t recover to meet 2019 levels until sometime beyond 2021.

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