While the omicron variant has put a damper on expectations for the return of business travel, hotels and the travel industry have reason to feel optimistic. It looks as if this latest surge may be remembered as a hiccup on the road to recovery rather than part of a broad, longer term decline.
At the start of the pandemic, early predictions suggested that companies would rethink their strategies around the need for business travel. The move to remote and hybrid work, it was thought, would make business travel unnecessary or at least change the calculus companies use to weigh its costs and benefits. Why spend on airfare, accommodations and other expenses when workers could meet to accomplish the same tasks virtually?
These dire reports about the death of business travel, however, now seem to have been greatly exaggerated. Nothing can replicate the value of a handshake and a face-to-face meeting, of course, and the ability of workers to have these interactions is becoming more likely every day. The lifting of travel restrictions and mask mandates as well as the pervasive availability of vaccines is continuing to make business travel safer and more predictable.
In fact, it looks as if business travel was already making a comeback before the emergence of the omicron surge. United Airline Holdings has reported that in early December, corporate domestic travel had rebounded to 40% below pre-pandemic levels compared with 90% below during the second quarter. While these numbers remain low by 2019 standards, that’s a significant recovery that United expects will continue as omicron cases continue to decline.
Hotels may even fare better and bounce back faster than the corporate airline industry. Lingering uncertainty about COVID-19 could lead businesses to focus on regional travel and meetings in lieu of sending workers over longer distances. This shift would open up hotels to more room bookings and event space rentals from companies closeby.
Another interesting trend is that smaller companies have been returning to business travel more quickly than larger ones. A survey from the Jefferies Financial Group found that 80% of respondents at companies with fewer than 1,000 employees expect to travel this year as much as they did before the pandemic compared with 55% at bigger companies. And with startups and new businesses on the rise, hotels that can attract these kinds of customers will be more likely to regain business travel revenue.
While business travel still has a long way to go to return to pre-pandemic levels, these are all signs that the bumpy road this segment of the travel industry has taken may be smoothing out after all.