COVID-19: Past & Future Impact on Business Travel
On September 30th, we hosted a fascinating webinar on the impact of COVID-19 on business travel. Our in-house expert in analytics and data Fred Gatali presented a retrospective of the pandemic's impact on the travel industry, and also shared his insights on the future of business travel in Canada and explained how Encore can help you and your business get through this crisis. Here's a summary of the presentation! You can also click here to watch the recording of the entire event.
WestJet and Air Canada proportionately increased their flights over the summer. WestJet managed to almost triple flights between May and August. Air Canada overshot its outlook on the pandemic and had to retract some routes as the forecasted pick up in certain regions did not go as expected. As a passenger, what you should be noting is that flights are surely but slowly returning, and dependent on overall consumer sentiment.
Flights between the three-week period between June 19th and July 6th were on average more than double the amount of flights that were seen in the three-month period from March 18th to June 19th. When we talk about the exasperation of this air industry and air travel, this is a very good graph because it highlights the full decrease in flights taking place, where governments and airlines were struggling to make sense of how to go forward.
Change in Flights
By 2025 we expect that the average trip length should have at least reached 2013 levels. Between the year 2013 and the year 20 14 there was a spike in Trip length. This was a result of the growth in passenger travel on airlines in emerging markets including those in the Asia Pacific region and the Middle East. These areas today continue to show a gradual improvement in flights and passenger travel which still should be a positive indicator for the travel industry going forward. So as the current trip length might not show a necessary recovery for the next four years, overall, we should expect a quicker recovery due to the additional airlines from these regions that are often supported by their governments.
The segments of business travel that are likely to return first is looked at through the type of travel, the reasoning behind this travel and the industry in which the travelers work.
Travel companies should look towards pre-COVID trends for redesign of their processes such as the shift toward a more digital and personalized journey, and an increased emphasis on wellness and sustainability. Airports, for example, are going to have to rethink customer experience in the coming years, but many already understood the importance of improved service and contactless operations. As a traveler or travel manager, you should be on the look out for companies that are investing in the use of analytics and disruptive tech, ones looking to shift to digital and mobile, ones that have environmental considerations, and ones that have expanded well-being service and offerings.
Hotel Metrics Outlook
Going forward, we should expect contactless check-ins to be common-place and standard. Not only check-ins but other facets including luggage handling and other services offered within the hotel, will involve a more digital procedure to ensure guest safety.
As hotels readjust, expect the decrease of hotel prices in the short term. Current predictions point to daily rates for 2021 that are lower than those in 2019.
Hotels will also venture into versatile use of their space for different events not commonly part of a hotel’s conference offerings. As hotels feel the communal impact of COVID-19, more hotels will reach out to their surrounding communities. If this is something of interest to travelers, be on the look-out for expanded community involvement.
Last, there will be a merger of different hotel chains and hotels to cut on costs and boost revenue. This move will allow currently waning hotels to reach different geographies and customers, in addition to increased profitability through expansion.
Car rentals like any other, have not been immune to the business effects of COVID-19. There have been cuts across the workforces of companies such as Avis, Enterprise, and Hertz. It has been harder to offload some aspects as companies have had to sell off inventory cars to meet their functional goals. Many of these companies still have on-going costs relating to renting of spaces, for example, for those prime positions at airports that make their services so easily accessible to the business traveler.
However, car rentals are in the best position to capture the short-term markets given that travelers and companies will feel more comfortable going to the locations that are closer in proximity. Given this aspect, car rental companies find themselves in a very precarious position where they have to tow the line between being able to handle their costs while taking advantage of the short term possibilities that might reduce the cost and increase their revenue. However, with this short-term impact of travel and the advantages that come with it, also comes more competition. For example, ride-sharing company, Uber, has started a new program that caters to short term rentals of cars.
Rail has endured a slight decline in comparison to air. As passenger flights also carried cargo, rail companies took on the extra cargo, leading to a more sustained model of operation when passenger flights decreased.
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