A quick scan of the trade press spotlights an aspirational outlook for business travel. Headlines read “Execs Choose (Real) Face Time Over Zoom” and “Business Travel Ignores Inflation.” But a less selective read offers more muted conclusions. “Business Travel Resumes, But Not at Its Former Pace” may best capture the industry spirit right now.
Uncertain expectations are validated by just-released data from hotel-industry consultant STR. In their survey, 43% of respondents either disagreed or strongly disagreed with the statement, “I think travel for business purposes will return to the levels experienced before Covid-19.” In contrast, 31% of respondents agreed or strongly agreed. The results tilt toward the pessimists, but there may be a sampling error.
Our interpretation of industry assessments is behavioral. Hospitality professionals want to believe that business travel will rebound, given the better profit margins in that segment. They do not have enough information to declare emphatically that a turnaround is taking place.
One of the most convincing arguments in favor of a recovery is found in weekday hotel occupancy rates. STR’s data indicates this measure in the United States is now only 5% below levels seen in 2019. European results are similar. That number seems conclusive, but insiders have been fooled in the past. In both March and April, we saw a sharp improvement in weekday occupancy rates before they again collapsed.
What is keeping professionals off the road? We see three issues:
Duty of Care. While we are experiencing substantial improvement in Covid-related data, the pandemic is not over; the trajectory remains volatile. Executive perceptions are based on local-market bias. In Miami, you may be inclined to believe that the coronavirus was merely a fictitious distraction. Those in Hong Kong may feel differently. Companies on the international grid still have limits on inbound visitors and outbound activity, never mind country-by-country restrictions.
Airline Turmoil. There are flight cancellations everywhere. Executives with long-haul itineraries may be seeing less upheaval than those sure-footed in intra-regional travel. Still, fast-changing schedules are upending the best-planned meetings. In America, thousands of flights were cancelled in the first days of June, indicative of recurring problems. Our international colleagues face similar challenges. Air Malaysia announced last month that it was operating only 40% of its aircraft because of a maintenance backlog.
Geopolitical Disorder. The war in Ukraine looms heavy over European travel. Flights from Helsinki to Tokyo, for example, now take three hours longer because they circumvent Russian aerospace. Finnair has shrunk its weekly schedule between these two cities from 40 flights to 7 flights. Meanwhile, even if you do not want to travel to Dalian or Shanghai, Chinese executives cannot meet you in Singapore or Dubai because of Beijing’s zero-Covid policies.
Business travel will remain lumpy. Prospects are dependent on how data is sliced and diced. In our backyard, the popular Hospitality Industry Technology Exposition and Conference (HITEC) to be held in Orlando at the end of June appears to be on target, if not oversold, for registrations. But Orlando is easily reached from almost any domestic and many international gateways on a direct-flight basis. And for large corporations, a conference pass in a pleasant Florida city, with an abundance of recreational facilities, may be an easy-to-budget incentive. The rhythm is different elsewhere. In New York City, for instance, tourism officials do not expect business travel to recover until 2025. ■
Our Vantage Point: The outlook for business travel is unresolved. Extrapolating from local or regional trends to frame a global recovery is a hazard. Former road warriors may travel just selectively, lingering at home by choice or circumstance.
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