17th July 2020 - 3 min read

When will business travel restart?

By Joni Lindes

In March this year, Covid-19 became a global pandemic, causing around 98% of business travel to be cancelled in April alone. In July, we all want to know when business travel will restart and, once it recovers, what the new normal will look like.

Business travel return

At PredictX we are seeing the following trends:

1. Domestic flights will return first

Evidenced by what we are already seeing in the domestic travel market in China, we will see domestic corporate travel picking up sooner than international travel.

This is mainly due to different quarantining, social distancing and port-of-entry rules for every country. These rules will be changing on a constant basis so corporates will need to make sure their policies and checklists are updated.

2. Leisure travellers will be the first in the air

According to travel agency executives, distribution operators and ticketing data, leisure travel will be the first to begin bouncing back to pre-covid volume.

“Corporations that are facing financial crisis are likely to cut into their appetite for travel that’s not business critical,” wrote Travelport CEO Gregg Webb whose travel industry experience spans the Sept. 11 attacks, prior pandemics and the 2008-09 financial crisis.

Employers do not want to be liable for employees becoming infected whilst on the road. In the wake of an economic downturn, corporations also want to be careful where they spend their money. 

“With many people working from home efficiently, business travel is an avoidable expense for the short term,” said Webb.

Airfares will be cheaper at first but become more expensive due to seating restrictions.

As airlines try to gain traveller confidence and get bookings for the summer months, it is likely they will lower their prices at first. 

As demand starts creeping up, charging more for each ticket price may be required to keep servicing certain routes.  

3. The markets will fluctuate dramatically.

In Air, according to Phocuswire, pre-COVID pricing volatility fell in the range of 11% of the ticket price. Now, their data tracks pricing volatility for the remainder of the year at bands exceeding 100%.

In hotel, we are seeing the same trends. Steve Reynolds, CEO of TripBam wrote in a BTN op-ed, that, based on TripBAM data and research from consulting firms, hotel chains and property ownership groups, rates will be highly volatile for the remainder of 2020—and likely well into 2021 and 2022. At some points, demand will outpace supply due to closed hotels. At other points, hotels will scramble to reopen quickly – making supply greater than demand.

Video conferencing technology and an economic downturn also promises to limit travel spend through the rest of 2020, 2021 and even into 2022. Revenue managers trying to increase occupancy and revenue per available room promise to raise and lower rates more frequently than they have during the past decade.

With travellers avoiding rail due to social distancing guidelines, ground transport promises to get back on its feet more quickly. Its survival, however, is rooted in the many small companies rather than a few giants. As economic crisis tends to impact small businesses more, the industry must continue to support ground transport providers. 

David Kilduff, CEO of DK Consulting points out in a BTN op-ed that “even with additional stimulus, ground transportation suppliers won’t come out of this disaster unchanged. There’s no question that many will either not exist or will be unrecognizable. For now, however, the entire transportation network—air, ground, car rental, rail—needs to pull together and fight to be seen and supported. They need to understand how the whole system works together, including the essential role of “the little guys.”

4. Travel will only fully start to recover in 2021.

“Any uptick in business travel will be dictated by prevailing economic conditions,” says Charuta Fadnis, Senior Vice president of Research at Phocuswright. In previous economic crises, Fadnis says the travel industry has recovered in around two to three years.

STR forecasts it will take up to 2021 for the number of room nights sold to be the same level it was in 2019.  

In light of these circumstances, a thorough analysis of data is essential. As we start to return to business travel, buyers need to make sure they receive a holistic view of what travel is happening and encourage transparency and open communication with suppliers. When the market promises to be volatile, looking to data for answers will become more important than ever. 

If you want to learn how you can get access to a total trip cost of all spend in your travel programme with advanced insights into supplier and programme management, feel free to book your demo with us. 

 

Joni Lindes
By Joni Lindes
3 min read

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