The delta variant continues to slow the recovery of corporate travel.
Business travel is showing signs of improvement, but is still well below pre-pandemic levels with lingering employee and client concerns hindering corporate travel’s immediate return, according to a survey by Deloitte LLP.
It’s expected to reach 25% to 35% of 2019 spending by Q4 2021 (better than the 10% to 15% in Q2 2021), but it’s not expected to reach 65% to 80% of 2019 levels until the end of 2022, according to the survey.
"Companies definitely have recognized a lot of cost savings from reduced travel," says Anthony Jackson, a principal at Deloitte LLP based in the Dallas office.
He said the second half of 2021 is showing signs of recovery as offices continue to reopen and vaccination rates climb, but he’s not certain it will ever get back to pre-pandemic levels with ongoing health concerns and shifting workplace priorities.
As of late, staffing issues also plague airlines with most recently American Airlines having to cancel flights over Halloween weekend reportedly in part due to weather and staff shortages. Southwest Airlines has also reportedly had similar issues.
"I’m not sure there’s going to be a full recovery," he said. "There’s likely going to be some long-term shift in some of the behaviors and reasons for traveling."
Companies have grown accustomed to doing many meetings via video conference, and things like internal and leadership meetings can often be accomplished through those technologies, he says.
A bright spot for travel
Trade shows/industry conferences are one component driving corporate travel, with many executives wanting the in-person networking aspect, Jackson says.
Jamie Austin, a consultant with Seaford-based CAS Worldwide, a process improvement consulting firm, agrees that trade shows are a bright spot. He said he’s also seeing less focus on internal staff gatherings for a meeting but more for meetings with face-to-face meetings with clients.
"Companies discovered they could succeed virtually," said Austin, who worked in the travel industry for over 30 years in his family firm Austin Travel, which was sold in 2010.
He was starting to see recovery in corporate travel in the summer (40% to 45% of what it was pre-pandemic), but said it dropped back down in the fall to about 25% of pre-pandemic levels because of the COVID surge, which pushed back some companies' reopening plans.
Impact on LI hotels
Michael Papierno, Regional Director of Sales at Westbury-based Samar Hospitality, which owns and operates nine hotels including three on Long Island (the Viana Hotel & Spa in Westbury, Four Points by Sheraton in Melville and Inn at Great Neck), says the latest COVID surge has definitely impacted corporate travel’s recovery.
He said Q2 and Q3 2021 were starting to show signs of recovery in corporate bookings, but that activity has dropped in Q4 because of COVID’s resurgence.
Still, he’s seeing an increase in bookings of more "local" meetings, meaning those within driving distance in the tristate area. That's because some companies are hesitant to require participants to get on a plane in order to attend. These events have included some with video technology for colleagues that can’t be there in-person, Papierno says.
Dede Gotthelf Moan, owner of the 90-room Southampton Inn, says she’s also seen more companies opting to stay local that would have normally met elsewhere for business. She’s seeing companies coming to the hotel from Long Island, as well as New Jersey, Westchester and Connecticut.
She said she’s hearing that many want to be in-person, but may not be ready to get on a plane to do so. But they’re essentially "zoomed out."
As a result, "we have pretty robust corporate bookings for October, November and December," Gotthelf Moan said.
She noted that activity is encouraging, "but we don’t know how long it’s going to last," adding that she refers to it as the "COVID bump" with many people still preferring not to fly right now.
Companies' vaccine mandates
Some have concluded that the benefits of meeting in person outweigh the risks.
"I think that face-to-face interactions are the lifeblood of a good client relationship," says Jody Fisher, vice president of public relations at Austin Williams, a Hauppauge-based ad and digital marketing agency, who flew to Washington in October to meet a new client.
Due to COVID, this is his first in-person business trip since March 2020, but he said the fact that his own firm and the clients' firm have vaccine mandates for employees made him and two colleagues comfortable with the meeting.
He expects in-person travel will continue as needed at the firm, noting there’s only so much you can accomplish through Zoom.
Jamie Austin agreed, adding, "While companies discovered they could succeed virtually, I see that to be a near-term solution and expect a hybrid future with travel returning to and growing beyond pre-pandemic levels in the years ahead."
During the pandemic, companies spent less on travel, and it appears they’re looking to hold onto those savings. Seven of 10 companies in a Deloitte survey said they plan to reduce travel to bolster the bottom line.
Source: Deloitte LLP (tinyurl.com/2exfaw3a)
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