It could be years before business travel recovers

New York

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".

Two to three years may also 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 up to seven years, if not longer, to recover.

While business travellers make up about 10 per cent of all passengers on the major airlines - including American, Delta, United, Lufthansa and Singapore - they generate half the airlines' revenue, Mr Derchin said.

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Mr Harteveldt estimated that business travellers were responsible for 55 per cent to 75 per cent of major airlines' profits worldwide.

Not only do business travellers buy more expensive and profitable plane tickets, they are also more likely to hold airline credit cards and buy airport lounge memberships, among other services.

As for hotels, business travellers generate about 70 per cent 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 financial services firm Baird, also does not see revenue per available room recovering until 2023 at the earliest, he said. He added that he believed that large, urban US 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 travellers in vacation destinations. It said that about 70 per cent of its corporate clients worldwide were expected to ease or lift restrictions on employee travel within the next three months.

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 travellers are keeping cars up to seven days, compared with less than three days before the pandemic. They are driving distances 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 per cent of the more than 300 global companies surveyed in May by the BCG Henderson Institute, the research organisation of the Boston Consulting Group, expected to permanently change "remote working and meeting policies", while 66 per cent anticipated permanently changing travel policies.

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 added, "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."

Also potentially dampening business travel is the prospect of a lawsuit if a traveller gets sick.

Mr Janssen said that 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 programmes as quickly as they would like to," he explained.

Adding to the complications for Americans is the European Union's decision to bar travellers from the US, as well as recent decisions by England and Scotland to maintain their 14-day self-quarantine requirement for US travellers, even as they ended it for dozens of other countries.

Michael Premo, chief executive of the Airlines Reporting Corporation, which settles ticket transactions between airlines and travel agencies, said that 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. NYTIMES