Business travel worldwide has basically come to a standstill in the coronavirus pandemic.
When it will come back, and in what form, is anybody’s guess.
“Everyone will have to learn how to be comfortable around people, especially in large airports, on crowded planes, and in very large convention hotels and resorts,” said Henry Harteveldt, founder of Atmosphere Research Group, a travel analysis firm in San Francisco.
In a survey taken earlier this month by the Global Business Travel Association, a trade group for corporate travel managers, nearly all its members said their employers had canceled or suspended all or most previously booked or planned international business travel, while 92 percent said all or most domestic business travel had been canceled or suspended.
“The current crisis,” said John Snyder, chief executive of BCD Travel, one of the largest travel management companies, “is like nothing we’ve ever seen before.”
The latest findings of STR, a lodging research company, were equally stunning: In the week that ended April 11, hotel occupancy in the United States was down 69.8 percent from the same week in 2019, to 21 percent; and hotels’ revenue per available room, the major barometer of profitability, was down 83.6 percent to $15.61.
These declines, said Jan Freitag, senior vice president of STR, are the “steepest” ever measured by the firm, whose data goes back to 1987.
About a third of the association’s corporate travel managers said they expected business travel to resume in the next two months, while about one-fifth said in three months. Another 16 percent didn’t even hazard a guess.
A poll earlier this month of 106 corporate travel managers who work for BCD clients found similar pessimism about any quick return, with a little over 40 percent saying that they expected business travel to return to former levels later this year. Another 10 percent predicted it would not fully return until at least 2022, while 3 percent said it would never return.
“Business travel won’t come back before we hear from public health officials that it’s safe to travel,” Mr. Harteveldt said. “Once we hit the point where the virus is contained and, hopefully, treatment is available, I believe business travel will start to resume, assuming the economy hasn’t gone into a deep recession or, worse, a depression.”
And regardless of timing, experts anticipate both short- and long-term changes in business travel.
Airlines including American, Delta and Lufthansa are already blocking middle seats on flights, said Michael Derchin, an airline analyst, although that’s easy to do when planes are flying with a lot of empty seats.
He predicted that after stay-at-home orders are lifted, airlines “will do a lot of soul-searching about what the nature of travel will be going forward,” and possibly even re-evaluate how they seat passengers on planes to provide more space, if social distancing becomes the “new normal.”
Paul Metselaar, chief executive of New York-based Ovation Travel Group, a corporate travel agency, said he anticipated that carriers would offer “discounts like you’ve never seen before, since they will be desperate to get people back on planes.”
And expect efforts to promote cleanliness.
In late March, Delta announced that it was extending to all aircraft a cleaning process previously used on international planes: a nightly “fogging” program, which involves spraying high-grade disinfectant, effective against communicable diseases. It will fog planes before every flight by early May, it said. And it is also disinfecting high-touch areas like tray tables, armrests and seat-back pockets before every flight.
As to hotels, Mr. Freitag, of STR, wrote in an article earlier this month, “Brands and hotels will need to convince the travelers that have not yet been infected that their hotels are safe spaces.” He added that hotel operators will have to “come up with new and novel ways to communicate to guests that the surfaces, door handles, phone receivers and toilet seats are clean and free from the virus.”
Mr. Freitag said in the article that his firm was predicting that revenue per available room this year would be down 50 percent from last year, “with a sharp rebound” of 63 percent in 2021. “These numbers are in flux, but the tenor of the prognostications is clear: This is temporary disruption. Severe, yes. Deadly, yes. But nonetheless temporary. With that in mind, it is not too hard to imagine recovery scenarios that will point at prolonged, slowed growth for the U.S. hotel industry.”
The recovery of the airline industry may have a different trajectory.
Helane Becker, who follows U.S. airlines for the financial services company Cowen, said she believed it could take from two years to five years for traffic to return to “some level we could call normal.” She expects corporate travel will bounce back before leisure travel, “since leisure travelers don’t have the money to travel at any price.” But, she added, corporate travel may never “fully recover.”
Mr. Harteveldt said the recovery of the air travel system could be spotty, especially if travelers were fearful of visiting current virus hot spots like New York, or going through hub airports there.
He predicted that airline service could initially be reinstated on a piecemeal basis, determined by health conditions in each state or country. And he anticipated that carriers would rebuild their systems “at a lower level of operation” that could last six to 18 months.
Mr. Derchin said he thought that the airlines’ current cash crunch would speed up their retirement of older, less fuel-efficient airplanes. American has already said it was accelerating retirement of those planes, as have Lufthansa, KLM and Virgin Atlantic.
Evan Konwiser, executive vice president of product and strategy for American Express Global Business Travel, another large travel management company, predicted that new procedures could be tacked onto existing airport security measures, including the taking of passengers’ temperature before departure or upon arrival, among other possible measures.
Mr. Snyder, of BCD Travel, said he expected that the firm’s corporate customers would put even more emphasis on risk management and the well-being of their travelers.
The travel experts also said the pandemic would affect meeting and convention travel, which they said would probably come back after individual business travel.
One of the biggest unknowns is the possible long-term impact of the current widespread use of videoconferencing tools, like GoToMeeting, Webex and Zoom.
Mr. Derchin, for one, said that the longer “we have the quarantine,” the more people who haven’t used such tools previously “will get used to it.”
That, he said, could lead to a possible decline in the growth of international business travel — particularly to large hubs like London, Paris, Frankfurt, Miami, Los Angeles and Tokyo — and thus in demand for wide-body aircraft.
Mr. Snyder said that although companies will take a closer look at virtual meetings, “the value of in-person meetings can’t be replaced by technology.”
Mr. Konwiser predicted that conferences for a mix of virtual and in-person attendees could become more popular.
“People will still need to network, learn, build relationships,” he said. “None of this will change. There will probably be less density and more hand sanitizer.”
But Mr. Harteveldt said he did not expect videoconferencing to replace business travel.
“People are social animals,” he said. “A lot of businesspeople enjoy traveling. I suspect their spouses also can’t wait for them to get back on the road.”
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