The road warriors will defeat the bean counters

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Last week, I took my first long-haul flight since the start of the pandemic: Heathrow-JFK has never been so gloomy. A week before the United States opened up to more travelers, both airports were quiet. On the return trip, the crew happily announced that there were only 91 passengers on board an Airbus A350 that can accommodate 351.

As pleasant as it has been, the travel industry cannot continue to put up with three-quarter-empty flights. The worry is that missing business trips will never come back. Many businesses thrived during the lockdowns and found they could rely on Zoom, Hangouts, and Teams. With the added excuse of corporate climate commitments, grain counters view travel requests with skepticism.

Last week, a Morgan Stanley survey of 170 business travel managers, collectively responsible for $ 7 billion in spending, added to the gloom. According to the survey, one in five corporate nights could be lost permanently, with 27% of respondents expecting business travel to never return to pre-pandemic levels; budgets for 2022 would be 31% lower than in 2019. Surprisingly, even as countries start to open up, those numbers have worsened compared to the last poll a few months ago.

But on the ground – and in the air and in hotel lobbies – things are much more positive. The surge in profits that Marriott and Hilton just reported for the third quarter were among the strongest in the S&P 500.

This comes from a weak base last year. But the rapid recovery continues, with key sectors rebounding. Marriott reported a 35% increase in accountants and consultants business from September through October and, somewhat ironically considering its role in enabling remote working, a 31% increase in the tech industry. Small businesses are already back. Historically, 60% of Marriott’s clientele is made up of small and medium-sized businesses; now that figure has risen to 75 percent.

“I think of them as your classic road warriors, whether it’s sales, consulting or project management,” said Leeny Oberg, chief financial officer of Marriott. “I think big corporate business travel is limited by the fact that people aren’t fully back in the office. “

In other words, there is no point in some people hitting the road if their customers or suppliers are still working from home.

“The proxy we’re looking at is are they opening their offices?” Said Drew Crawley, commercial director at American Express Global Business Travel, which organizes business travel.

The share of business travel that is permanently lost due to new communication habits is likely to be quite small as companies remember the benefit of meeting in person. “We act like customers just found out about this Zoom thing,” Crawley said. “It existed before. “

Hotel groups are convinced that they can benefit from changes in working methods. Indian group Mahindra told investors this week that international business travelers may be scarce, but locals combine work and vacation: “Leisure, business and leisure, or what we now call work. “. Western groups report the same phenomenon.

The final proof is in the prices. Oberg notes that after September 11 and the 2008 financial crisis, it took them years to recover. After Covid, she said, it’s almost already happened. The average daily rate at Marriott-owned hotels jumped 31% to $ 175.96 in the quarter. Normalcy returns. If only we could keep the planes quiet.

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