Post-Pandemic Drop in Business Travel Seen as 'Entrenched'

​Business travel post-pandemic has lost more than it has gained – measured at 18 percentage points lower overall.

Of those who are traveling, few have increased the frequency with which they travel for work, according to a new report from Morning Consult.

“While the category does have room to recover further, behavior changes over the past three years are slowly but surely becoming entrenched,” it writes.

Shifts in corporate policies have restricted travel, even among those who wish to do so. Nearly one-third of workers say their company has made changes to its travel policies, and while most say they expect the changes will be temporary, 12% of employed adults say they’ll likely be permanent.

Will Nelson, Director of Real Estate Lending, Columbia Pacific Advisors, does not see his firm reducing business travel.

He tells GlobeSt.com, “We are firm believers of in-person collaboration and the invaluable insights it provides. The advantage of a physical presence in the office enables us to play to our internal strengths, make decisions as a team, and provide for constant collaboration.

“This philosophy also shapes our engagement with borrowers and investors. These face-to-face interactions foster robust relationships and build trust, which has resulted in more prosperous dealmaking. Despite the diminishing trend of business travel, we maintain our conviction that it remains the most effective approach to conducting business.”

Areas with the most significant cutbacks include company retreats, trade shows, incentive travel, or trips provided by a company as a reward for employee performance.

More than 40% said they feel the changes are related to finances, tied to either concern of a recession or to more general cost-saving measures.

To be sure, RevPAR growth by business travel-oriented hotels increased 28.3% in the first quarter year over year, suggesting these hotels are benefiting from a return of corporate travelers, Jan Freitag, national director of hospitality market analytics at CoStar Group, tells GlobeSt.com.

Zach Demuth, Global Head of Hotels Research at JLL, notes the same trend, telling GlobeSt.com that U.S. business travel has accelerated over the past three months evidenced by rising urban market RevPAR.

“Through Q1, urban RevPAR is up 1.3% relative to the same period in 2019 and is growing faster than any other market type across the country. Markets such as Chicago, New York, and Washington, D.C., have seen meaningful RevPAR gains driven in part by rising midweek occupancy stemming from increased business travel,” Demuth says.

Still, though, despite the robust quarterly RevPAR growth, “pre-pandemic occupancy results remain elusive as occupancy is still almost six points below the first quarter of 2019 results,” Freitag said.

One cost-saving option for corporate traveler managers is new technology that presents cheaper fares, but interestingly not many appear to be taking advantage of it.

Jeff Klee, CEO and co-founder of AmTrav, said corporate travel booking companies that have not or will not transition to New Distribution Technology become are left offering higher prices to their corporate clients.

Those using the legacy Global Distribution System were insisting on getting content from just that one source, Klee said.

“I get that that’s much easier for them, but today’s reality is that there is no single source of content that provides all of the best rates and options that travelers want,” he said.

For example, American Airlines’ decision to restrict their lowest fares to only corporate channels connected to modern New Distribution Technology has helped travel agencies present fares reduced fares by as much as $128 per booking.

Today, American Airlines’ NDC fares are lower than non-NDC fares on 36% of bookings.

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