Business Travel Resumes, Though Not at Its Former Pace

Business travel appears to be returning, albeit unevenly, after all but disappearing for most of the pandemic.

Despite early predictions that Zoom meetings would supplant face-to-face encounters even after the coronavirus had receded, industry trade groups and hotel companies are pointing to significant upswings in small business meetings as well as larger conventions and trade shows in the last couple of months. Airlines also say bookings by business travelers have recently jumped.

What is not returning so quickly, executives and experts say, are business trips by individuals. Some employers continue to set limits on travel. In other cases, because of Covid restrictions, visitors are not allowed in the offices of the people they want to see.

And reflecting the disparate pace of the recovery, domestic business travel has returned faster than international, and travel to and from Europe has had a bigger rebound than Asia bookings.

Even within the United States, the strength of the return of business travel depends on the destination.

In Las Vegas, the number of trade shows and events scheduled is actually higher this year than in 2019. But, said Steve Hill, president and chief executive of the Las Vegas Convention and Visitors Authority, attendance is projected to be only 60 to 65 percent of the prepandemic level. In New York, the city’s tourism promotion body forecasts that business travel will not exceed 2019 levels until 2025.

Henry Harteveldt, a travel industry analyst for Atmosphere Research, pointed to data on worldwide airline ticket sales that “shows a steady increase in the number of business travel tickets being issued.” That, he said, is “concrete evidence that the rebound in business travel is underway.”

Yet for all the positive signs that business travel is taking root again, Russia’s war in Ukraine, China’s “zero Covid” lockdowns and the unpredictable path of the pandemic all threaten to stifle a widespread return to 2019 levels from happening anytime soon.

Robert Crandall, the former president and chairman of American Airlines, said that the war in Ukraine could have significant consequences on the global economy. “People want to feel safe,” he said. “This will make them feel less safe, which will have an adverse impact on travel.”

Mr. Harteveldt was more optimistic about the prospects for business travel. “If developed countries’ economies remain strong and the war in Ukraine doesn’t spread, then the business travel industry will have a good fall and winter,” he said, “and 2023 will be a good, possibly great, year for it.”

The renewed hope contrasts sharply with the mood two years ago, after most business trips were abruptly canceled or suspended. The U.S. Travel Association, a trade group, said that in 2020, domestic business travel spending was down 68 percent from 2019 levels. And while the spending grew in 2021, the group said, it was still about half of what it was in 2019.

But by last month, Suzanne Neufang, chief executive of the Global Business Travel Association, said, the association was seeing “significant gains in the return of business travel, especially over the past month or two.”

One active business traveler is Jonathan Adkins, executive director of the Governors Highway Safety Association in Washington, who has been traveling extensively since last July for conventions, trade shows and speaking engagements.

He has 11 trips planned between now and the end of September, which, he said, “feels like a lot, more now than what I did before the pandemic, in part because I want to meet with partners and people whom I haven’t seen in two and a half years.”

He added, “We’re catching up.”

In recent earnings calls, the major U.S. airlines all reported upticks in their business travel bookings. American Airlines, for one, said its business demand had already recovered to 80 percent of 2019 levels.

United said that its business travel bookings were “rapidly returning,” but that they had not fully recovered. It also said it was finding no “meaningful recovery in business traffic” in Asia, where strict coronavirus restrictions are still in placein countries like China and Japan.

Delta Air Lines reported that its domestic premium revenues in March were “100 percent restored to March 2019 levels,” with business travel reaching its highest levels since the pandemic started.

And all the major airlines reported that they were able to raise fares to cover higher fuel costs without diminishing the appetite for travel.

Similarly, hotel companies reported that even though they raised room rates, demand was strong, including from business travelers. Jeff Doane, chief commercial officer for North and Central America for the hotel company Accor, said last month that the company was seeing “exponential growth in business travel year over year, well outpacing expectations for 2022.”

Hilton said on an earnings call this month that it expected individual business travel “to be roughly back to 2019 levels by year end” and that it was forecasting that demand for company meetings and convention business would accelerate in the second half of the year.

And Marriott said on its earnings call this month that the number of room nights booked by individual business travelers in the United States and Canada was down 10 to 15 percent in March compared with 2019 levels, “obviously a very meaningful improvement over what we saw in the fourth quarter,” when they were down about 30 percent.

“The volume coming out of small- and medium-sized companies has effectively fully recovered, while the demand from larger companies still has a bit of the hill to climb,” it said.

In a report last month, the American Hotel and Lodging Association and Kalibri Labs, which evaluates and predicts hotels’ revenue performance,said they found that urban markets were being “disproportionately impacted by the pandemic,” noting that the markets hit hardest by a decline in business travel revenue were San Francisco, New York and Washington, D.C., with projected decreases of 69 percent, 55 percent and 54 percent.

Jan Freitag, national director for hospitality market analytics at the research firm CoStar Group, said the pandemic hit large, urban, downtown convention hotels “extremely hard.”

Chip Rogers, president and chief executive of the hotel association, was only partly joking when he said that the three biggest challenges facing the lodging industry were “staffing, staffing and staffing.”

The labor shortage at hotels has affected business travelers’ stays almost since the start of the pandemic. Jobs at hotel front desks, hotel bars and restaurants, and housekeeping departments have been cut radically. All but the most luxurious hotels generally no longer clean guest rooms daily, instead offering only fresh towels and garbage removal. Many hotel bars and restaurants have shut down or offer only limited service, and technology has replaced many transactions that once involved human beings, such as front-desk check-in, bill payment and room-key delivery. Robots for housekeeping and other services, which had been introduced before the pandemic, have become more prevalent.

Ron Hernandez, who lives in New Orleans and is a clinical applications trainer for a biomedical company, said he stopped his business travels only during the first seven weeks of the pandemic in 2020. Since then, he has been traveling regularly domestically.

He said that he has found that prices of all travel services — including flights, hotel stays and car rentals — are climbing, and that many hotels that once offered restaurant and 24-hour airport shuttle services no longer do. He said airlines are only now gradually reinstituting first-class services, such as a drink before departure.

But the cuts in services and the higher costs did not deter him, he said, because he can’t work remotely or by Zoom. “I have to be out in the field constantly,” he said.

But business travel is evolving. Mr. Harteveldt, the analyst for Atmosphere Research, said business travelers “are more likely to view themselves as free agents” and “less likely to be loyal to a hotel brand or an airline than they were prepandemic,” partly because of changes to loyalty programs that have made them more complicated to use and less valuable to consumers.

Mike Janssen, global chief operating officer and chief commercial officer of BCD Travel, said that with the increase in remote work, a “business trip” now often means an internal meeting at a company’s “head office, at a conveniently located office or an off site.”

Some travel experts question how much, if at all, individual business trips will recover. Michael Derchin, a self-employed airline analyst, said that while small and medium-size businesses will continue to send employees on the road to meet customers face to face, “a substantial portion of the employees of large corporations will not travel permanently again,” as the companies focus on productivity and cost savings.

Still, after more than two years of remote work and meetings for many people, Evan Konwiser, executive vice president of product and strategy for American Express Global Business Travel, said he believed most travelers were “happy to be back on the road to see and meet with their colleagues and customers in person.”