Business travel likely to be down as much as 15% versus 2019: Analyst
Jason Guggenheim, Boston Consulting Group Global Leader of Travel and Tourism joins the Yahoo Finance Live panel to discuss what the evolution of travel means for business.
AKIKO FUJITA: COVID-19 restrictions and the economic shutdown resulted in a huge pullback in travel and tourism last year, contributing to a 4 and 1/2 trillion dollar loss in global GDP. Now, while we've seen some of the leisure travel pick up, things certainly haven't been moving along as quickly on the business side of things.
And for more on that, let's bring in Jason Guggenheim, Boston Consulting Group global leader of travel and tourism. Jason, when you think about business travel, it feels like, more and more, there has been this permanent shift in the way that companies think about travel. We've heard a lot of executives say, look, we may not be traveling for meetings anymore, for deals they will. What did you find in your study about how that's likely to pick back up?
JASON GUGGENHEIM: Yeah. Thanks, Akiko. Thanks for having me.
I think there's a few things at play, right? One, I think you definitely have the headwinds of sustainability, technology, and how it's changed our behavior and how we even interact together using Zoom and other medias to engage with people. So I think those are definitely going to influence the way business travel comes back.
There's a range of perspectives, from the more bullish, where I think we are, which believes that business travel, when it returns to normal, will probably be in the 10% to 15% down versus 2019. But you also have people who tend to be a lot more bearish and think that that number could be double or even triple that in terms of the amount of business travel that we see removed from the marketplace as we return to normal.
ZACK GUZMAN: You also dig into the sustainability aspect of travel and maybe business travel specifically. I mean, how important is that maybe also weighing on the idea of, look, if we don't need to travel, maybe we should just you Zoom call because it's better for everybody?
JASON GUGGENHEIM: I think that's exactly right. And I think we're hearing a lot from our clients and CEOs and travel managers, really rethinking travel policy. And I think travel policy is going to differ by industry. It's going to differ by type of interaction.
So as you said, Akiko, is it customer facing? Is it in order to go and visit customers or sell or service customers versus internal meetings that may be more easily replaced by digital interactions?
But we're also finding that, as companies come back into offices, you're also seeing people revalue the human interaction. And we've all become so used to this digital interaction. But I think, as people start to return to offices and actually have meetings in person, I think people sort of going back into the recesses of their memory not that long ago, but it feels like a long time ago, and saying, wow, there actually is a benefit to putting people in a conference room, even if it is an internal meeting.
So I definitely think you're going to see a mix. But I definitely think you will see a sustainability impact. And the leaders who are making net zero pledges will obviously need to cut back in business travel in places in order to meet those ambitions.
AKIKO FUJITA: Jason, if we are seeing a permanent pullback in business travel, what kind of implications does that have for airlines? For years, we have seen business travel, business class seats. That has been a big revenue driver for these airlines around the world. What kind of structural changes do you anticipate as a result of this shift?
JASON GUGGENHEIM: Yes. So I think airlines, coming into the pandemic, the early part of the pandemic, obviously, many of them reevaluated their fleet composition. You have parked airplanes, a lot of widebody airplanes that generally fly, obviously, long-haul routes where you have a lot of business class seats flying.
So I think they're going to have to be much more agile in how they think about network. How do they deploy the planes they have into different markets and be much more fluid in how they balance between leisure markets like Floridas and other parts versus business markets, right, into New York or Chicago, et cetera.
And so I think you're already seeing a rebalancing. And I think you'll continue to see that. I think it's also going to force them to really get disciplined around cost structure, a lot more agile as to how cost comes back because they may not have the same premium traffic, certainly not to the same extent as they had in 2019, in order to drive margin. And so some of that margin is going to have to come from cost discipline going forward.
ZACK GUZMAN: At the very least right now, security lines still pretty easy to navigate, more kids though, since we're not dealing with as many business travelers. So there's always a pro to the con out there. But Jason Guggenheim, Boston Consulting Group global leader of travel and tourism, appreciate you taking the time.