What will the new world look like post pandemic? We’re starting to get some signs that the world will not be as open as it once was pre-coronavirus. Still, there is going to be some return to a version of normal. What that looks like remains to be seen.
Business travel: Post COVID
One significant reopening story is the fate of airlines and business travel. Obviously, travel has been negatively impacted by the pandemic and we are now just starting to finally see some return to travel activity. A survey conducted in December 2020 highlighted expectations from companies regarding the future of travel and how it will be impacted long-term by the pandemic. See the chart below.
A projection was recently provided in a CNBC article about what might happen to business travel going forward. Highlights of that article are listed below.
Business travel spending worldwide will likely jump more than 37% next year to over $1 trillion but the normally lucrative industry won’t fully recover until 2024, according new industry forecast released Wednesday.
Surges of Covid cases and new variants, uneven vaccination rates and supply chain problems hurt this year’s recovery, according to the Global Business Travel Association’s new forecast. Business travel spending this year will likely rise 14% from 2020 to $754 billion, slower than the 21% year-over-year increase it forecast in February.
The pace of recovery is crucial for large global airlines that are struggling to return to profitability as well as for hotel chains and restaurants that rely heavily on business travelers. Those customers are often more willing to pay higher prices compared with vacationers.
Global business travel spending fell 54% to $661 billion in 2020 from $1.4 trillion 2019.
China and the U.S. are expected to lead business travel spending growth this year with growth of about 30% apiece, according to the report.
Business vs Leisure
Business travel is different than leisure travel. Leisure travel takes advantage of consumers appetite to visit new places and enjoy time away from their normal routine. Business travel is pretty much face-to-face meetings with decision makers to provide services or close sales. One imagines that the new way of doing things, video conferencing, will have a long-term impact on business travel.
This topic is just one of the reopening themes that we are assessing at DWM and we will continue to review data as we go forward.