Conference travel is back. But many companies haven’t fully returned to office. Those that are back frequently don’t have everyone back, every day. Companies like Tesla have grown but haven’t expanded their real estate – or bought more chairs. Marriott has a new corporate headquarters but a smaller head count and most employees don’t have to come into the office every day.
That means there’s a lot of business travel which no longer makes sense.
- Visiting customers in their office happens less when those customers aren’t in their office.
- Consultants don’t need to spend the week at their clients’ offices. The “Monday – Thursday consultant travel week” doesn’t exist in the same way anymore.
- More work from home means former office workers have invested in becoming optimized for Zoom, and more meetings can be taken that way. It’s much easier to do Zoom meetings than it used to be, so at the margin that means fewer in-person meetings.
None of this should come as a surprise. It’s been clear that the pandemic has changed work, at least for office workers, and that means a change in business travel. Work from home is persisting even after pandemic fears have subsided and people are willingly traveling and going out to eat again.
Airlines have been generally optimistic in public pronouncements about the return of business travel, and some of it has come back. But Southwest Airlines told the SEC in an 8-K filing on Thursday that business travel hasn’t come back as much as they’d expected and they are adjusting their expectations for the return of business travel downward.
July and August 2022 managed business revenues were down approximately 26 percent and 32 percent, respectively, both compared with their respective 2019 levels. The Company now expects third quarter 2022 managed business revenues to be down in the range of 26 percent to 28 percent, compared with third quarter 2019 levels, compared with its previous estimate to be down in the range of 17 percent to 21 percent.
Some companies are pushing for return-to-office. They’re looking at metrics like how many meetings are being held on Fridays instead of how productive employees are. A recession may give companies more bargaining power. But even so return-to-office doesn’t always mean returning every day, and as long as there’s less in-office work than there used to be certain kinds of business travel will remain impaired.
Eventually total business travel numbers will grow beyond what business travel numbers used to look like because of the pandemic, the result of compounding growth, but we won’t be as high as we would have been without this exogenous shock.