Business Spotlight

Global Business

Covid-19 hat den Reisesekto­r hart getroffen. Herdenimmu­nität und Impfungen lassen eine baldige Erholung erhoffen, doch so wie vor der Pandemie wird es nicht mehr sein. Videokonfe­renzen und Homeoffice werden auch in Zukunft zu einer Verringeru­ng der Geschä

- Von OLIVE KEOGH ADVANCED

The future of business travel

Business travel has fallen by more than 50 per cent since the coronaviru­s pandemic began. This is worse than the catastroph­ic drops that followed both the 9/11 attacks in 2001 and the global financial crisis of 2008. Eighteen months into the crisis, the corporate travel sector is still reeling. Hotels remain closed, MICE (meetings, incentives, conference­s, events) traffic has collapsed and normally busy airports are still eerily silent.

Virgin Atlantic CEO, Shai Weiss, has predicted that corporate travel will be 20 per cent lower than normal for the next two years. Over at American Airlines, the company’s president, Robert Isom, told investors that Covid-19 had cut the airline’s business traffic by 90 per cent. “The last year has been clearly the worst experience I’ve had in my long career in the airline business, and at other places, too,” he said.

In April of this year, the global management consultanc­y Oliver Wyman published its “Airline Economic Analysis 2020– 2021”. It predicts no general recovery in internatio­nal travel until 2023 or 2024, depending on the destinatio­n. “The return to the workplace will be driven by vaccinatio­n rates and, ultimately, by herd immunity. That will govern the recovery of business travel,” Tom Stalnaker, partner and head of global aviation practice, told Business Spotlight. “Satisfying customer needs will reignite external business travel first. Internal travel between company sites may take a lot longer to fully recover, thanks to the explo sion in videoconfe­rencing and people’s apparent satisfacti­on with it.”

The only bright spot for aviation is freight. Revenues from cargo flights climbed last year. The Internatio­nal Air Transport Associatio­n is predicting a 25 per cent rise in activity for 2021.

Is that trip really necessary?

Statistics aside, the pandemic may have other far-reaching effects on business travel. Industry watchers expect executives to travel less in the future. Large savings on corporate travel budgets during lockdown may have changed the definition of a “necessary business trip” forever.

The consulting firm Mckinsey is anticipati­ng an early bounce back in leisure travel but says a rebound in business travel may take years. This is also what happened following the 2008 global financial crash. Holiday-related trips recovered within two years; internatio­nal business travel took five years to rebound.

As this global health crisis moves into its second year, travel managers are predicting a permanent loss of 10 to 15 per cent in business travel. Analysts at Citigroup are even more pessimisti­c. They are forecastin­g a lasting fall of 25 per cent. The yearly business travel index from the Global Business Travel Associatio­n (GBTA) says 2021 will be a “year of survival”. The picture it paints for 2022 is more encouragin­g, with anticipate­d growth of 38 per cent. However, it says not until 2025 will volumes recover sufficient­ly to surpass the $1.4 trillion global business travel peak of 2019.

Business travel spending accounts for roughly 20 per cent of the global travel and hospitalit­y sectors. But for some airlines and hotels, it is much more significan­t than this number suggests. Mckinsey estimates that up to 75 per cent of profits for major carriers and large city hotels depend on jet-setting executives.

An uneven recovery

Over half of the world’s business travel takes place in two economies, China and the United States. The bounce back has already begun in Asia but is expected to be slower in the Americas and Europe because of their more complex economic compositio­n. The situation in Europe is particular­ly difficult as a result of stop-start lockdowns and constantly changing travel rules. Brexit has also created its own problems for business travellers. GBTA estimates that business travel in Western Europe will fall by 58 per cent this year from $335 billion (€278 billion) in 2019.

The recovery is expected to happen in phases and to be uneven, as the corporate experience of the pandemic has not been universal. As Mckinsey noted in its commentary on the long recovery faced by the corporate travel sector: “While all industries were affected by the Covid-19 crisis, some sectors (such as energy and retail) were hit harder than others and may face more budget constraint­s, which could slow their pace of travel recovery.”

Domestic trips are expected to resume first and early movers will include the manufactur­ing, pharmaceut­icals and constructi­on sectors. Phase two will see the return of domestic air and train travel for sectors such as tech, property and finance. Phase three will open up internatio­nal air travel and events.

Cancelling any large-scale event is a nightmare and cancellati­ons do not get much bigger than pulling the plug on the Worldexpo. This huge event is held only every five years and attracts hundreds of countries wishing to showcase their achievemen­ts. The Expo should have drawn an estimated 25 million visitors during its six-month run in Dubai last year, but it fell victim to the coronaviru­s. It will run later this year instead. Despite continuing travel restrictio­ns, its organizers are optimistic. “The world has gone through these galactical shifts over the last year but now with vaccines being rolled out, we believe that situation will settle by October,” says managing director Reem Al Hashimy.

Rethinking business travel

As vaccinatio­n rates speed up, the corporate travel sector is crossing its fingers that people will soon feel more confident about resuming business trips. But even when things get moving, 2021 corporate travel budgets are expected to be 50 per cent or less of what they once were. The sector is also anticipati­ng a

“Even before the coronaviru­s crisis, companies making net zero emissions pledges had been rethinking their travel policies”

delay between the easing of restrictio­ns and the resumption of travel as companies build in a buffer in case there are new lockdowns.

A March 2021 poll by GBTA found that 84 per cent of its members would feel comfortabl­e travelling for business once they have been vaccinated. Two thirds said that digital health verificati­on, such as vaccinatio­n passports, would further help the resumption of safe business travel.

Speaking to Business Spotlight, GBTA’S VP for Europe, the Middle East and Africa (EMEA) Catherine Logan said that “a full recovery will require critical mass in global vaccinatio­n, the implementa­tion of health controls into duty of care policy, favourable business traveller sentiment and a return to open national travel policies.”

Even before the coronaviru­s, companies making net zero emissions pledges had been rethinking their travel policies. Consultanc­ies such as PWC (Pricewater­house Coopers) have traditiona­lly gone to wherever their clients were. But the firm’s commitment to net zero by 2030 means a 50 per cent reduction in the emissions associated with its business travel. In 2019, emissions associated with flights represente­d around 85 per cent of Pwc’s total carbon footprint. Bob Moritz, global chairman of the firm’s network, believes this must change. “The Covid-19 pandemic has accelerate­d the shift to remote working and demonstrat­ed the feasibilit­y of new client delivery models, as part of a longer-term transforma­tion of our services,” he said.

WELCOMING BACK THE GUESTS

“A year ago, I could have hit a golf ball down Park Avenue and it wouldn’t have struck a thing. Not any more. Life is getting back to normal in New York City,” hotelier John Fitzpatric­k, who runs the Fitzpatric­k Hotel Group in the city, told Business Spotlight. “Our bar is busy most evenings with workers who have returned to their offices. We are bringing staff back and everyone is beginning to feel more optimistic.” The pandemic played havoc with New York’s hospitalit­y industry with accommodat­ion that cost $300 a night pre-covid falling to less than half that amount. “Corporate travel is returning, but slowly and at much lower rates,” says Fitzpatric­k. “It will be September before there is any big improvemen­t. As people begin to travel again, I think we will see a trend away from big hotels to smaller properties where guests feel safer, with less people around. We get a lot of repeat corporate business — or at least we did before everything fell off the cliff.” A sign of the times is that guests at the Fitzpatric­k Hotel Group are now given a personalhe­alth safety kit with gloves, a mask and hand gel. Guests also get compliment­ary slippers. And because the TV remote is one of the most frequently used items in any hotel room, the Fitzpatric­k hotels now sanitize theirs and put them in disposable sleeves.

NIGHT MOVES

Worries about the environmen­tal impact of short-haul flights and people’s hesitation to spend time in long queues at airports have reawakened interest in sleeper trains. In April, French lawmakers moved to ban short-haul flights where a rail alternativ­e exists. Initially, the lawmakers wanted to make it mandatory for people to take the train for journeys of under four hours. This was subsequent­ly changed to twoand-a-half hours. The French consumer group UFC-QUE Choisir champions the four-hour limit. “On average, the plane emits 77 times more CO2 per passenger than the train on these routes, even though the train is cheaper and the time lost is limited to 40 minutes,” it says. France is resuming its Paris-to-nice night train, and Sweden has announced two new overnight routes connecting Stockholm and Malmö with Hamburg and Brussels. Sleepers connecting Hamburg, Berlin, Munich and Düsseldorf to Austria, Switzerlan­d and Italy are also being resumed. From 2022, the rail company European Sleeper will run a new overnight service from Brussels, Antwerp, Rotterdam and Amsterdam to Berlin, Dresden and Prague. “You wait years for a Brussels-berlin sleeper, then three turn up at once,” says Mark Smith, who runs the www.seat61. com rail travel website. “Within an hour of European Sleeper’s announceme­nt, another company founded by Belgian entreprene­urs announced plans for a Brussels-liège-berlin night train [while] ÖBB [Austrian Federal Railways] plan a Brussels/paris-berlin/vienna Nightjet from December 2023.” With a Brussels-copenhagen route planned to start in August 2022, Brussels, with its Eurostar connection to London, looks set to become the new hub for night train travel.

 ??  ?? Spare seats: airports are often eerily silent
Spare seats: airports are often eerily silent
 ??  ?? More optimistic: New York hotelier John Fitzpatric­k
More optimistic: New York hotelier John Fitzpatric­k
 ??  ?? Back in demand: many new routes for night trains
Back in demand: many new routes for night trains
 ??  ?? OLIVE KEOGH is a contributo­r to the Business, Technology and Innovation pages of The Irish Times.
Contact: global@businesssp­otlight.de
OLIVE KEOGH is a contributo­r to the Business, Technology and Innovation pages of The Irish Times. Contact: global@businesssp­otlight.de

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