Two structural changes will yield a permanent change in demand for
business travel after Covid, according to one of the speakers at today’s thrive
2.0 virtual conference organised by ITM.
Jarrod Castle, head of business services, leisure and transport research at UBS, speaking during an industry healthcheck at the event said that a permanent increase in employees working from home and responses
to the climate crisis are likely to suppress business travel levels in the
future.
Castle said that while the term “unprecedented” is bandied about
frequently, in the case of the decline in airline traffic due to the pandemic,
it really is unprecedented.
“In some places, airline traffic was down almost 100%,” he said. “In
the most recently reported figures from the end of July, international traffic
was down 90% and domestic down 60%.”
A key driver of the problem is that 95% of air routes are
currently subject to some form of travel restriction, up from 10% at the beginning
of March. He added that the potential for a second wave meant we were moving
into an environment “where it is one step forward and two steps back”.
Economists are predicting a recovery in GDP next year – this year’s
4% decrease will be followed by a forecast 6% increase in 2021 - but business travel, which
is normally linked to GDP, is not necessarily going to follow because of structural
changes.
“The working from home trend has clearly been with us for at least
two decades but it is different this time,” said Castle.
The bank has carried out research on the trend which says that
post-crisis at least 55% of people say they are going to work at least one day from
home and 40% say three days.
“If you think about your own business travel, are you going to be
able to access the people you are going to see? I can’t tell you how many
clients are not in the cities I normally see them,” he said.
The other structural trend is the environment, he said. “There was
concern for the environment before but it is speeding up and people are
thinking about their carbon footprint more. A third of the people we surveyed said
they are going to reduce their business travel from an environment perspective.”
“People are going to reduce business travel going forward. Our latest
survey for next year predicts business travel
would reduce by around 20% in 2021. It could be even more because the economic background
will still be challenging in certain parts of the world.