Corporate travel’s rebound from Covid-19 will pick up speed throughout the remainder of 2021 but likely will remain significantly below pre-pandemic levels for at least another year, and some types of travel may never fully return, according to a new study from Deloitte.
The report was based on a survey of 150 U.S.-based travel managers and executives with travel budget oversight conducted from late May to mid-June, along with interviews with company executives whose 2019 air spending averaged $123 million.
Based on that research, Deloitte projects U.S business travel in the fourth quarter of this year to reach 25% to 35% of the level of the fourth quarter of 2019 — a significant improvement from second-quarter 2021 spending, which totaled just 10% to 15% of 2019 volume.
Deloitte attributed the projected recovery to the reopening of corporate offices along with continued improvement in vaccination rates. The potential easing of border restrictions would lend additional steam for a faster recovery, while a significant outbreak in the U.S. or declining vaccination progress would hinder travel’s return, Deloitte said.
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Last week, the Centers for Disease Control and Prevention recommended that even people fully vaccinated against Covid-19 should wear masks while indoors in local areas with high transmission rates, due to data suggesting that even vaccinated people can transmit the now-dominant delta variant of the virus in some cases.
However, assuming generally positive developments over the next year-and-a-half, Deloitte projects U.S. business travel spending to rebound steadily over the period, reaching 40% to 60% of 2019 levels by the second quarter of 2022, and 65% to 80% of 2019 levels by the fourth quarter of 2022.
Whether travel spending will bounce back beyond those levels remains unclear. That’s largely due to lessons learned amid the standstill, when the stoppage of travel activity resulted in “hundreds of millions of dollars” in cost savings for many companies — a significant portion of which will seek to continue limiting spending even as the pandemic fades, according to the study.
Nearly 70% of companies included in Deloitte’s research planned to reduce travel frequency in a bid to improve the bottom line, while 45% will require stricter compliance with travel booking policies.
Further fueling a potential long-term reduction in travel is an increased emphasis by many companies on environmental sustainability and reducing their carbon footprint. Nearly 80% of companies canvassed by Deloitte have made a carbon-reduction commitment or were working on such a plan, and 48% planned to make sustainability-related changes to their corporate travel polices over the next year.
“Companies are … eyeing their carbon footprint and bottom line,” said Anthony Jackson, principal of Deloitte Transactions and Business Analytics LLP and U.S. airlines leader. “While [those concerns] may not cause huge cutbacks, they will slow the rate of return as companies see controlling trip frequency as a top option to address both.”
Reducing the frequency of trips has been made easier by the rise of the virtual meeting technology that has become ubiquitous since stay-at-home orders and office closures went into effect as the Covid outbreak took hold globally in the early spring of 2020.
Among companies with plans to improve travel sustainability, holding internal meetings over such platforms instead of in person was the most common element of those initiatives, cited by 76% of such companies.
“For internal and content-related use cases, the pandemic experience has convinced companies that tech platforms often suffice,” noted Jackson. “This embrace of virtual for internal use challenges the hypothesis that newly dispersed work forces will increase travel demand for team meetings.”
On the other hand, types of travel activity that are considered essential to business and are more dependent on face-to-face interaction — including sales and client acquisition trips, project work and networking conferences — will lead the return to travel for most companies, Deloitte said.
Source: Business Travel News
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