Business Travel and Coronavirus

If any one industry has taken a hit more than the restaurant and entertainment industries, it’s the travel industry. According to the U.S. Travel Association, the COVID-19 pandemic has resulted in $491 billion in cumulative losses for the U.S. travel economy since March, 2020. In addition to that, the continual depressed level of travel spending has caused a loss of $63.1 billion in federal, state, and local tax revenue in the same period. 

For those Americans who travel regularly for business, things have certainly changed this past year. The new “working-from-home economy,” which is likely to continue long past the current situation that spawned it, poses new challenges — from job inequality to an erosion of city centers.

According to Nicholas Bloom, a Stanford economist, we are seeing an incredible 42 percent of the U.S. labor force working from home full-time. About another 33 percent are not working — a testament to the impact of the lockdown recession. And the remaining 26 percent (mostly essential service workers) are working on their business premises. So, by sheer numbers, the United States is now a work-from-home economy. Almost twice as many employees are working from home as at work. 

What makes this new way of conducting business likely to continue into the future is the forced workaround for many companies, using technology like Zoom and teleconferencing by necessity, since travel and in-person meetings were not an option. The upshot of that is businesses started to realize that travel and in-person meetings weren’t totally needed anymore.

The long-term effects on the travel industry, specifically the business travel industry, may be something that airlines and hotel chains are seriously considering for their future bottom lines since a lot of companies may scale back on their travel budgets.

Think about it in terms of the numbers. Bill Gates said he thinks that over 50 percent of business travel won’t come back after the pandemic, which has major implications for the airline industry. Those who travel for work make up around 10 percent of airline passengers, but they account for between half and three-quarters of revenue, since business class is more expensive and the profit margin is higher. Bank of America estimates business trips contributed $334 billion in revenue to the entire travel industry in 2019. 

And while some people are chomping at the bit to resume normal life and get back to traveling for pleasure, business travel may be (at least in part) a thing of the past.

 

 

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