Future of business travel unclear as virus upends work life

  • FILE - In this Thursday, April 9, 2020, file photo, a lone airline crew member pulls his bags behind him as he walks through the baggage-claim area at Denver International Airport in Denver, amid the coronavirus outbreak. (AP Photo/David Zalubowski, File)

Brian Contreras represents the worst fears of the lucrative business travel industry.

A partner account executive at a U.S. tech firm, Contreras was used to traveling frequently for his company. But nine months into the pandemic, he and thousands of others are working from home and dialing into video conferences instead of boarding planes.

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Contreras manages his North American accounts from Sacramento, California and doesn’t expect to travel for work until the middle of next year. Even then, he’s not sure how much he will need to.

“Maybe it’s just the acceptance of the new normal. I have all of the resources necessary to be on the calls, all of the communicative devices to make sure I can do my job,” he said. “There’s an element of face-to-face that’s necessary, but I would be OK without it.”

That trend could spell big trouble for hotels, airlines, convention centers and other industries that rely so heavily on business travelers like Contreras.

Work travel represented 21% of the $8.9 trillion spent on global travel and tourism in 2019, according to the World Travel and Tourism Council.

Delta Air Lines CEO Ed Bastian recently suggested business travel might settle into a “new normal” that is 10% to 20% lower than it used to be.

“I do think corporate travel is going to come back faster than people suspect. I just don’t know if it will be come back to the full volume,” Bastian told The Associated Press. Right now, Delta’s business travel revenue is down 85%.

Dubai-based MBC Group, which operates 18 television stations, says it’s unlikely employees will travel as often once the pandemic ends because they’ve proven they don’t need to.

“We have managed to deliver projects and negotiate deals very successfully, though remotely,” MBC spokesman Mazen Hayek said. MBC has reduced trips by more than 85%, Hayek said.

Amazon, which told it employees to stop traveling in March, says it has saved nearly $1 billion in travel expenses so far this year. The online shopping giant, with more than 1.1 million employees, is the second-largest employer in the U.S.

At Southwest Airlines, CEO Gary Kelly said while overall passenger revenue is down 70%, business travel — normally more than one-third of Southwest’s traffic — is off 90%.

“I think that’s going to continue for a long time. aI’m very confident it will recover and pass 2019 levels, I just don’t know when,” Kelly told the AP.

U.S. hotels relied on business travel for around half their revenue in 2019, or closer to 60% in big cities like Washington, according to Cindy Estis Green, the CEO of hospitality data firm Kalibri Labs.

Peter Belobaba, who teaches airline management at MIT, said business travel is down partly because some people are afraid to fly and partly because companies fear liability if employees contract COVID-19 while traveling for work.

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Companies have also reined in travel because times are lean, he said. ExxonMobil cut business travel in February — even before the pandemic’s full impact was felt in the U.S. — because of falling global demand for oil.

Those who want to travel may also be limited by travel restrictions, Belobaba added. Last month, Polestar CEO Thomas Ingenlath observed a mandatory 14-day quarantine in China after flying in from Sweden for the Beijing Auto Show.

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