We know that leisure travelers have gone back to their old habits and vacations are booming this summer. But the livery industry has been waiting for their other solid source of revenue—business travel—to start up again. We were seeing positive signs that business travel was coming back, but those hopes have been quashed as Omicron sweeps the nation.
Why Is Business Travel Such a Big Deal?
According to Newsweek, “volatility is the new status quo in corporate travel.” You can say that again. Yet, the return of business travel is critical to the travel industry’s and the global economy’s full recovery from the pandemic.
Before COVID started spreading, corporate fliers accounted for about 12% of total travel and up to 75% of airline profits, with companies spending more than $300 billion on corporate travel each year. According to Condé Nast, the tourism industry employs one out of every ten people worldwide. Unfortunately, this industry has been one of the hardest hit by the global pandemic and, now, it looks like we will have to wait until well into 2022 for it to recover. The Omicron variant is proving to be the latest setback in business travel recovery.
Everything WAS Pointing to a Rebound in Business Travel…
This summer, luxury travel has already rallied as individuals and families book their revenge travel accommodations. Yet corporate travel has not been so fast rebound, with domestic business travel averaging only 35% of pre-pandemic levels. And predictions are that it will take even longer for international business trips to pick up, according to Bloomberg.
By the end of this summer, “63% of corporations had either already returned to pre-pandemic levels or planed to within the next twelve months,” according to a poll done by the Association of International Certified Accountants. This represents the majority of organizations working across a wide range of industries.
Optimism was gauged in multiple commercial industries and the stats were ticking up last year. Companies were once again planning for growth, rather than recession as was the case for the previous 18 months. Thanks to eased restrictions, increasing vaccination rates, and an overall desire to ‘get back to normal,’ among employees and management alike, things had started moving in that direction. Hiring continues to be strong, however, which is one good indicator that businesses are generally returning to normal.
Another sign that corporate travel will eventually rise in this post-pandemic phase is that companies have and are re-opening their offices. Pivoting to remote work was a lifesaver for businesses that were able to function without going into the office. As of June 2021, nearly half of businesses had gone back to work in the office or had set a date when a presence in the office will be required.
With the return to in-person meetings, training, and services, leading airline executives were anticipating a steep rebound for U.S. business travel. And six months ago, about 40% of corporations had already resumed non-essential domestic business travel, according to a poll by Global Business Travel Association (GBTA) published in Chauffeur Driven. But, with the recent surge in cases related to the Omicron variant, some offices are taking a step back to hybrid and remote work.
‘Zoom fatigue‘ is a real thing. Professionals are getting tired of the near-constant video conferences, the difficulty of paying attention and absorbing information in an online format, and the lack of real interaction with clients and colleagues. When the pandemic situation was improving, companies were happy to return to face-to-face meetings both internally and externally. This was a positive sign for executive car services and black car fleets which had come to an abrupt halt when the pandemic first erupted.
Trade Shows and Conferences
Because employees were showing a greater willingness to travel, trade shows and conferences have been scheduled for the coming months. Already, before the Omicron wave, participation was not initially expected to reach pre-pandemic heights. Now, participants are unsure of their plans to attend or plan to join virtually.
Experts had expected crowds to return to conferences and expos in Las Vegas and other hubs in full force by this year. We will have to wait and see if that will be the case for 2022.
Last spring, travel buyers had reported an increase in business travel spend and global corporate travel bookings are recovering at a 10% rate, week over week. In June, United Airlines announced that it would be expanding service in two key hubs for business travelers: San Francisco and Newark. While Delta’s CEO, Ed Bastian, explained that he expected a “renaissance of business travel” this fall.
Some are calling this rebirth “corporate bleisure,” according to Travel Weekly. In response to the tense and tiring months of restrictions, working around home life interruptions, and glitchy virtual meetings, relaxing work trips are the latest trend. Some livery operators have noted an increase in groups of travelers who are essentially taking staff vacations. Companies that were not hit by the COVID economic slump and instead saved money on travel budgets over the last 24 months, are anticipated to feed the growth in bleisure later this year.
…Then Omicron Happened.
Going into the 2021 holiday season, international travel was still down by about 40% of the pre-pandemic rate and business travel continued to lag by 50%. This was a stark contrast to the expected rebound of travel. This is partially because not all offices have reopened, corporate managers are happy to go forward with a lower travel budget, and businesses have really adapted to remote operations, perhaps in a permanent way. The pandemic has altered the way business is done, according to Airline Weekly’s Madhu Unnikrishnan.
Thousands of flights were canceled, including 8,000 in one weekend, during the busiest time for travel. Christmas holiday travel was severely hindered by bad weather and lack of flight crew. And the disruptions continued through the new year.
This week, United Airlines alone confirmed that it has 3,000 employees currently positive for COVID. Consequently, the airliner reduced its regular schedule by 10% because so many pilots and crew are falling ill. “The Omicron surge has put a strain on our operation, resulting in customer disruptions during a busy holiday season,” explains United CEO Scott Kirby.
While we don’t know exactly how this will affect the rebound of business travel in the longer term, travel companies have already seen a decline in corporate bookings following the holiday cancellations.
Related article: Business Is Coming Back for the Livery Industry.
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