“Business travel as we knew it will never come back completely,” says Airbnb CEO
When countries went into lockdown to stop transmission of the coronavirus, travel – especially business travel – was hit hard.
“Business travel as we knew it will never come back completely,” Brian Chesky, CEO of Airbnb (ABNB) told Yahoo Finance Live (video above). “The bar for getting on a plane to a meeting is now higher, and fewer people are going to do it.”
And although travel demand is slowly increasing as the country heads into summer, business travel will still face an uphill struggle, according to a new report from Barclays.
“Global business travel – especially long-haul travel – will likely be among the last markets to recover,” Barclays economists wrote in a special report on May 25. “Businesses quickly halted international travel when the pandemic hit, and businesses will be cautious as well. when it comes to resuming travel for business purposes. “
Spending on business tourism before the pandemic accounted for 21.4% of the global travel and tourism industry in 2019, with larger contributions in countries like Canada, Japan, the United Kingdom and the United Kingdom. United States, the authors said.
Business tourism contributed 1.5% of global GDP and had grown an average of 3.6% over the past five years, they added, with the United States and China accounting for nearly 45% of all business trips around the world.
But between April and the end of December 2020, global spending on business travel fell 68% and is said to have fallen by more than 50% year on year. (In contrast, in 2001, business travel fell by about 11%; in 2009, it fell by about 7.5%).
“Business travelers are disproportionately important to the aviation industry,” noted Barclays. “They represent only 12% of air passengers, but are twice as lucrative as non-business passengers and account for almost 75% of airline profits in some cases.”
One of the main reasons for a possibly anemic recovery is that a state of “persistent pandemic can make some border restrictions permanent,” Barclays said, “making international travel more difficult.”
In other words, the dizzying variation in entry requirements and quarantine rules may give businesses a reason to rethink how many flights their employees actually need.
“Business travelers will likely re-evaluate the number of flights they need to take, balancing the health risks associated with mixes versus virtual meetings in the comfort of their desks,” Barclays said. “Working from home and the rapid adaptation of many work categories to video conferencing has resulted in behavioral changes that can be difficult to reverse. Increased productivity, with less time, energy and money spent traveling is an added benefit. “
And while people are eager to get back on the plane, various country border restrictions “will force companies to re-evaluate what may or may not justify travel due to the higher cost of compliance and the risk of traveling for the country. work in an uncertain or insecure environment. environment, ”added Barclays.
For example, if a country imposes a quarantine requirement of several days or several weeks (like in Australia), travelers must spend it in hotels at their own expense. This is a “key obstacle” to the industry’s recovery, Barclays stressed, given that some quarantine periods are longer than the travel time in a typical pre-COVID period.
Chesky believes that “there will be a new type of business travel that … will emerge.” For example, when employees who are totally distant (having left their company state, for example) return for meetings, they may stay longer than traditional business travelers before the pandemic. So, added Chesky, “when they take trips, they’re going to make them longer. It could be longer stays.”
US airlines are doing much better
The international aspect is essential.
Nationally, while the situation is not that much better for travel in general, some airlines are outperforming their competitors, Jefferies senior research analyst Sheila Kahyaoglu told Yahoo Finance Live (video above).
“Airlines focused on the domestic market are doing their best,” she said. “[Southwest Airlines] LUV was our first choice in the space. And if you look at the second quarter, their capacity is down about 16%. Other airlines are down 25 to 40%.
While traveling to the United States is much easier for citizens due to the lack of restrictions for Americans, there is still plenty of room for recovery.
“Overall, what we’re seeing for the air capacity of major US airlines is [we are] about 40% down from 2019 levels, ”Kahyaoglu said. “Nationally, we’re down 22% for the coming week and through Memorial Day… And internationally, we’re down about 67%. The international is therefore still quite weak. “
Aarthi Swaminathan is a senior reporter for Yahoo Finance.
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