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Business Travel May Never Be the Same



By the Numbers


The business travel industry was worth $1.5 trillion before the pandemic. In 2019, American workers embarked on over 464 million business trips. In 2020, everything changed. Airlines, car rental companies, hotels, and other parts of the business travel ecosystem have suffered severely during the COVID-19 pandemic. As of March, the industry has lost about $518 billion.

People across industries have adapted to doing their jobs without travel. Analysts say that business travel will likely increase eventually, but it may never get back to pre-pandemic levels.

Checking in on Airlines


Airlines saw both business and leisure travel numbers sink when the pandemic set in. Flying for leisure showed glimmers of recovery near the end of May when coronavirus cases were waning. Since then, the number of people booking flights for vacation has dropped again, but this uptick demonstrated that leisure travel will likely be fairly resilient when coronavirus infections go down.

Business travel, on the other hand, has remained at all-time lows during the pandemic. Business travelers account for about 10% of airline passengers for the big carriers like American (AAL), United (UAL), and Delta (DAL). However, business travelers’ spending makes up 55%-75% of revenue for airlines, because they tend to make last-minute changes to their bookings.Plus, they fly in first class and business class.

Hotels and Rental Cars


Business travelers also generate a huge chunk of the hotel industry’s revenue. About 70% of Marriott (MAR) and Hilton’s (HLT) global revenue comes from people staying in their hotels for business. Analysts expect that revenue per available room for hotels will likely take until 2023 or 2024 to return to pre-pandemic levels. It is expected that large hotels in urban areas will be slower to recover than their counterparts in smaller cities.

One bright spot for the business travel industry is the car rental sector. While every sector of the travel industry has been battered by the pandemic, including car rental companies, Enterprise, National, and Alamo, reported that the length of business travel rentals has gone up, which has lifted their revenue. This trend seems to be because business people are renting cars to drive places that they would have flown before the pandemic.

Investors will have their eyes on travel industry stocks to see how they continue to respond to changing conditions. Some may be able pivot and cater to more vacationers than business travelers. Others may have a long wait until companies feel safe sending people on business trips again. Even if a vaccine is discovered or cases go down, business travel will likely remain lower than it was before the pandemic.


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