Best Guess on When Business Travel Will Recover? It Could be Years

1 BUSINESS

Business News - Opportunities - Reviews

 

 

While business travel evaporated in a flash when the coronavirus hit, it may take two to three years for it to fully recover — far longer than many travel experts initially predicted.

Even that timeline, said Henry Harteveldt, president of Atmosphere Research Group, a travel market research firm in San Francisco, depends on “the broader economy, the industry a firm operates in and demand for its products or services, as well as the public health environment.”

And two to three years may be too optimistic — at least for a recovery by the major airlines.

Michael Derchin, an airline analyst, described the effect of the coronavirus pandemic on carriers as “Sept. 11 and the Great Recession on steroids.” He estimated that it could take airlines seven years, if not longer, to recover.

While business travelers make up about 10 percent of all passengers on the major airlines — including American, Delta, United, Lufthansa and Singapore — they generate half the airlines’ revenue, Mr. Derchin said. And Mr. Harteveldt estimated that business travelers were responsible for 55 to 75 percent of major airlines’ profits worldwide. Not only do business travelers buy more expensive and profitable tickets, they are also more likely to hold airline credit cards and buy airport lounge memberships, among other services.

As for hotels, business travelers generate about 70 percent of Marriott’s and Hilton’s global revenues, said Robin Farley, lodging analyst at UBS. She predicted that the common measure of hotels’ financial health, revenue per available room, would not return to 2019 levels until 2023 or 2024.

Michael Bellisario, lodging analyst for the financial services firm Baird, also doesn’t see revenue per available room recovering until 2023 at the earliest, he said. He added that he believed that large, urban U.S. markets, which generally contain bigger, more profitable hotels, would lag behind smaller ones.

Marriott is seeing a slow return of domestic bookings, though many are by leisure travelers in vacation destinations. It said about 70 percent of its corporate clients worldwide were expected to ease or lift restrictions on employee travel within the next three months.

Image
Credit…Cayce Clifford for The New York Times

The car rental industry is perhaps the brightest spot among travel suppliers. The average length of business travel rentals at Enterprise, National and Alamo has risen recently, said Donald Moore, senior vice president of business rental sales and global corporate accounts at Enterprise Holdings, the brands’ parent company.

Some business travelers are keeping cars up to seven days, compared with less than three days before the pandemic. They are driving distances — like from St. Louis to Chicago — that they previously flew, Mr. Moore said.

Recent polls also raise questions about the timing of a rebound in business travel and its possible replacement by virtual meeting platforms. In a survey by Institutional Investor magazine last month, more than half of the chief information officers, portfolio managers and other investment decision makers said they did not expect to travel again until November and December, at the earliest. And 93 percent of the more than 300 global companies surveyed in May by the BCG Henderson Institute, the research organization of the Boston Consulting Group, expected to permanently change “remote-working and meeting policies,” while 66 percent anticipated permanently changing travel policies.

Typical of the people who would normally be traveling for work but aren’t is Erin Eckert, director of the infectious-disease portfolio at the nonprofit organization RTI International in Washington. Before the pandemic, she spent about a quarter of her time traveling for malaria-related research across Africa. Now she is grounded indefinitely, working out of her home.

Then there are self-employed business travelers whose visits to clients’ offices have been suspended, like Paul Grizzell, an organizational consultant in Woodbury, Minn.

Mr. Grizzell, who used to spend three weeks each month visiting clients, mostly in the United States, hasn’t traveled since late February, he said. Instead, he has been working with clients remotely on Zoom, which, he said, “is not the same as being in a conference room with a team of people, working on a business problem, eating lunch together, catching up on family.”

He hopes to resume his domestic business trips this summer and international travel “maybe in December or January,” once his clients return to their offices.

Among the challenges with resuming business travel are the varying guidelines put out by airports and airlines. For companies to be comfortable sending employees on business trips, “there have to be somewhat consistent, clearly communicated guidelines,” said Mike Janssen, global chief operating officer and global chief commercial officer of BCD Travel, a travel management company.

“If I’m flying to Reno and connecting in Denver,” he said, “I may not run into the same rules at each airport, and I don’t know what to prepare for. I can’t determine if there’s risk, which will keep me from wanting to take that trip.”

  • Frequently Asked Questions

    Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


Also potentially dampening business travel is the prospect of a lawsuit if a traveler gets sick. Mr. Janssen said he had heard “plenty of talk” about liability waivers that would protect companies from being sued, and they are the source of debate in individual states and on Capitol Hill.

“The threat of litigation will potentially prevent some companies — even ones that are going to great lengths to exercise caution and safety protocols — from restarting their travel programs as quickly as they’d like to,” he said.

Similarly, Mr. Harteveldt said that until companies were confident about their legal responsibility to protect the health, safety and well-being of their employees, “they won’t want to take the responsibility and risk of sending them back on the road.”

Companies, he said, “will need to feel confident it will be easy to travel to a destination; that there’s a safe, clean and healthy environment created by airlines and airports; that accommodations are safe; and that employees can quickly return home if there’s a spike in the disease or a shutdown at either end.”

Adding to the complications for Americans is the European Union’s decision to bar travelers from the United States, as well as recent decisions by England and Scotland to maintain their 14-day self-quarantine requirement for U.S. travelers, even as they ended it for dozens of other countries. In the United States, some states are requiring quarantines for travelers from other states where virus cases are rising. Chicago imposed similar rules last week.

Michael Premo, chief executive of the Airlines Reporting Corporation, which settles ticket transactions between airlines and travel agencies, said countries’ borders would not fully reopen until there were a vaccine and treatment for the virus, as well as “more stringent travel protocols.”

“Until international travel returns somewhat to normal, it will put a big damper on corporate travel activity,” he said.

In the meantime, the business travel lockdown has an upside for Michael Chang, a health care technology consultant in Robertsdale, Ala.

Mr. Chang, who before the pandemic spent five days each week at the University of Texas M.D. Anderson Cancer Center in Houston, has been working from home since early March and will continue to do so at least until the end of August.

Although he misses seeing colleagues at the center and accruing frequent-flier miles on Delta Air Lines and loyalty program points at Hilton and Marriott — which he uses toward family vacations — he said working from home and spending time with his wife and four children “definitely outweighs not getting” the miles and points.

1 BUSINESS

Business News - Opportunities - Reviews

 

 

Leave a Reply