Published: Tuesday, 07 September 2021 21:53
It’s hard to get a true sense of what future business travel demand will look like until international borders reopen and people can return to the office. But it is time to temper the optimism on any significant recovery happening by the end of the year. CEOs seem to finally get this. — Cameron Sperance
The peak summer travel season is in the rearview mirror, and, in normal times, this is when travel companies could rely on corporate travel to accelerate and compensate for diminishing leisure travel demand.
But that was pre-pandemic.
The return of business travel demand remains among the most difficult sectors to predict, as the rise of new strains of the virus push back the return to the office for many major companies. The longer people stay away from the office, the longer companies have to realize cost efficiencies from work-from-home arrangements and a reduction in travel spending.
Some travel executives are more optimistic than others when it comes to the return of business travelers. But there is a swelling sentiment the pandemic’s grip on corporate travel is likely to remain well into next year. It’s hard to accept rosy outlooks when the U.S. Transportation Security Administration reported last week the lowest air passenger traffic seen since May.
Here’s what some of the leading travel CEOs predicted about the muted return of corporate travel through the end of this year and beyond.
Accor CEO Sebastien Bazin
“I really believe that we stand to lose about 20 percent or 25 percent of that entire [international business travel] market,” Accor CEO Sebastien Bazin said last week at the International Hospitality Investment Forum, according to Hospitality Insights.
Delta Air Lines CEO Ed Bastian
“We won’t be at 60 percent [of 2019 levels this month],” Delta CEO Ed Bastian told the Wall Street Journal last week in reference to a prediction earlier this year the Atlanta-based airline would climb from 40 percent of pre-pandemic corporate travel demand seen this summer to 60 percent by September.
Hilton CEO Chris Nassetta
“In June, business transient room night demand was 70 percent of 2019 levels with rate over 80 percent of 2019 levels. We continue to see progress in July, with similar room night demand and rates at 90 percent of 2019 levels,” Hilton CEO Christopher Nassetta said on the company’s second quarter earnings call this summer before adding a caveat: “When you get 60, 90 days out, business transient stats — a lot of the bookings haven’t occurred.”
Nassetta was among the most optimistic hotel CEOs regarding the eventual return of business travel this year, despite soaring case counts around the world at the time of the company’s earnings call.
“I think you get after Labor Day, I do believe — I’m not a health expert, but I’m talking to a lot of them — I do believe we will have powered through the Delta thing, if you look at the stats on hospitalization and the like, they’re really not terrible. If you look at what’s happened in the UK and we’re sort of three or four weeks behind them, the patterns there right now are quite good.”
United Airlines CEO Scott Kirby
“There will be ups and downs, and we’re prepared to deal with whatever those are,” United Airlines CEO Scott Kirby said on the company’s second quarter earnings call, adding the Delta variant had “no impact” on bookings.
The company’s chief financial officer, Andrew Nocella, anticipated business travel demand would be 40 to 45 percent off 2019 levels in the third quarter, according to Airline Weekly.
Chalet Hotels CEO Sanjay Sethi
“Overall, our view is that domestic business travel will be back in [the third quarter] to at least 50 percent to 60 percent of pre-COVID numbers,” Sanjay Sethi, CEO of India-based hotel development and management firm Chalet Hotels, said on the company’s first quarter earnings call last month. “International travel, however, will probably have a lag of a couple of quarters after that.”
As much as a quarter of the company’s business is tied to corporate travel, Sethi added.
Air France-KLM CEO Ben Smith
Air France-KLM CEO Benjamin Smith’s “hopeful” outlook the U.S. would reopen to European travelers — there is no set timeline — was the most upbeat part of the airline group’s second quarter earnings call with respect to business travel.
While the airline planned to fly as much as 70 percent of its overall pre-pandemic capacity in the third quarter, domestic business travel demand is almost certain to be decimated. The French government prohibited the airline to resume routes on flights where competing train service clocks in at less than 2.5 hours — a condition of its bailout package.
“We’re never going to go back — we’re not going to go back to the [pre-crisis] levels,” Steven Zaat, Air France-KLM’s chief financial officer, said of the group’s domestic French network.
Bain & Co.
While not a travel company, consulting firm Bain & Co. is the kind of business airlines and hotels heavily rely on. The company announced plans in July to cut business travel emissions by 35 percent per employee over the next five years. But this plan was marketed more as something to offset global warming rather than cut costs in light of the pandemic.
Global Business Travel Association
The Global Business Travel Association anticipates overall corporate business travel expenses could slip to $1.24 trillion in 2024, down from the $1.43 trillion peak seen in 2019.
This forecast was incorporated into a Bloomberg report where a survey of 45 large business across the U.S., Europe, and Asia showed 84 percent of the respondents expected to cut travel costs post-pandemic. Most anticipated a travel budget reduction somewhere between 20 and 40 percent.
Deutsche Bank, which was included in the Bloomberg survey, anticipated a stark difference in spending between internal meetings and client-facing ones. Client-related travel will likely recover to 90 percent of 2019 levels while internal travel may only rebound to 30 percent of pre-pandemic levels.
Arguably, the boldest and most reported business travel forecast came last year early on in the pandemic from Microsoft co-founder Bill Gates, who is a partial owner of Four Seasons Hotels and Resorts.
“My prediction would be that over 50 percent of business travel and over 30 percent of days in the office will go away,” Gates said at the New York Times’ Dealbook conference.
Vaccine Passports in UK Will Be Scrapped as Part of Winter Covid Planning
Людмила Чмуневич Просмотров: 182
U.S. ‘Considering’ Vaccine Requirement for International Travelers
Людмила Чмуневич Просмотров: 95
The New Role & Structure of High Performing Tourism Boards, Post-Covid
Людмила Чмуневич Просмотров: 71
New York City Tourism Hopes Rise With Return of Broadway Musicals
Людмила Чмуневич Просмотров: 66
Crew Dragon splashes down to conclude Inspiration4 mission
Волошина Екатерина Просмотров: 19
SpaceX to launch Turksat 6A
Волошина Екатерина Просмотров: 4
Having SARS-CoV-2 once confers much greater immunity than a vaccine—but no infection parties, please
Вадим Дудченко Просмотров: 568
Having SARS-CoV-2 once confers much greater immunity than a vaccine—but vaccination remains vital
Вадим Дудченко Просмотров: 514
Russia’s Sputnik V protects against severe COVID-19 from Delta variant, study shows
Вадим Дудченко Просмотров: 233
Do Delta ‘breakthroughs’ really mean vaccine protection is waning, and are boosters the answer?
Вадим Дудченко Просмотров: 223
Has no connect to show!