- COVID-19 pandemic has drastically reduced the demand for business travel in 2020
- This puts additional stress on the travel and hospitality industry, which derives a significant share of its revenue from business travelers
- Business travel is likely to return slowly and at lower levels
Business travel has dropped precipitously during the COVID-19 pandemic, as public health concerns and shifts in how companies operate have slashed demand for in-person meetings or conferences. While the likelihood of a widespread distribution of a COVID-19 vaccine next year could start business travel on the road to recovery, it is almost certain to be less robust than pre-pandemic levels.
Global business travel fueled approximately $1.4 trillion in spending in 2018, accounting for just over one-fifth of spending in the travel and hospitality sector. More than half of this spending was concentrated in the economies of the United States and China.
During the pandemic, demand for business travel dried up as quarantine restrictions and remote work arrangements made these trips unnecessary or inconvenient. Businesses also feared that employees might be more likely to contract the virus during travel, and that companies requiring travel could be held liable for any infections that occurred.
Leisure travel is likely to bounce back more quickly than business travel once vaccines are widely distributed and restrictions are eased. Several surveys have shown that businesses are planning to reign in their travel expenses, and some may prefer to use the more cost-effective option of teleconferencing, which became more widespread during the pandemic. Microsoft founder Bill Gates predicts that business travel will be reduced by 50 percent after the pandemic, as companies will no longer be willing to arrange travel “just to discuss things.”
A reduction in business travel would put additional strain on airlines and hotels, though its impact would likely vary across the sector. A report by McKinsey & Company suggests that low-cost air carriers and resorts catering more to tourists would experience less of an impact than major carriers and hotels that specialize in conventions.
In addition, industries that weathered the pandemic well are more likely to return to business travel sooner than those that suffered severe revenue losses. Regional travel for sales, client meetings, and essential business could return more quickly than longer distance travel for events like trade shows and conferences.
