Count the corporate traveller as one more casualty of the COVID-19 pandemic.
As vacationers return to the skies for holidays and family visits, business trippers are flying less and Zooming more, and they are visiting multiple cities in one trip. They might stretch their corporate jaunts to include a couple days of sightseeing, sometimes with family along. They are spending less on hotels, rental cars and premium seats in the roomier cabins of aircraft.
Over all, corporate travel is not what it used to be. And it might never come all the way back, experts say.
“There is no doubt the market for classic corporate business travel has declined,” says John Grant, an analyst at aviation consultancy OAG.
The pandemic was a “great reset” for the air travel industry, Mr. Grant said.
“During the pandemic, many companies cut their travel budgets dramatically and, with increasing use of video technology, actually saw that their profitability improved, and they continued with that,” he said. “It seems that there’s a lot more people who are working from home and are much more time effective than they were from travelling.
“That’s not just in the North American market. We’re seeing that European market and in Asia, particularly,” Mr. Grant added.
For business travel to conventions and trade shows, the recovery to prepandemic spending will be delayed until 2025 or 2026, according to a report from Destination Canada, the federal Crown corporation that promotes tourism. The rebound in tourist arrivals and spending is expected to happen more quickly – by 2024, the report said.
The weak Canadian dollar makes Canada a more affordable destination for foreigners. However, a wobbly economy and high inflation could dampen the rebound.
Susie Grynol, head of the Hotel Association of Canada, said the rebound in business travel will lag leisure because Canada was closed owing to COVID-19 longer than many countries. This meant any group planning a convention, trade show or large meeting – usually done two to five years ahead of time – planned to hold it somewhere else.
“A lot of those big international customers just went elsewhere,” Ms. Grynol said. “It’s going to take us a while to recover that ground.”
At the Vancouver Convention Centre this year, the number of events has rebounded sharply to 413, although still down from 478 in 2019.
The number of U.S. and international attendees is down anywhere from 5 per cent to 20 per cent from prepandemic levels, said Claire Smith, the centre’s vice-president of sales.
She also points to a rise in late registrations for events. “They’re making the decision to attend often at the very last minute,” Ms. Smith said, speculating that tighter travel budgets could be to blame.
OAG’s Mr. Grant figures some of the corporate travel market is gone for good, and other industry leaders agree.
Deborah Flint, chief executive officer of the Greater Toronto Airports Authority, which operates Toronto Pearson International Airport, believes 20 per cent of the corporate travel market will not return. For Canada’s largest airport, this means it is losing some solo, seasoned travellers, but seeing more families and groups on vacations.
OAG’s Mr. Grant says it is hard to pinpoint the rebound in business travel, but he has heard from airline executive that sales in the segment are still 25 per cent to 30 per cent lower than prepandemic times.
Other factors behind the shortfall include tighter corporate budgets, a corporate push to reduce greenhouse gas emissions and extended stints working abroad. Several countries, including Dominican Republic, have begun issuing year-long work visas to attract people who want to combine remote work with a tropical stay.
WestJet spokeswoman Julia Kaiser said corporate travel is steadily resuming for the Calgary-based airline – with one key difference.
“A major shift WestJet is seeing is in the length of the typical business trip,” Ms. Kaiser said. “Prepandemic, it was common to see a significant amount of day trips, whereas now WestJet is seeing our business travel guests take longer trips.”
Experts say blended travel is driving the longer trips. People are extending business trips into the weekend to sightsee or lie on the beach.
Tony Capuano, CEO of hotel chain Marriott International, said the blended travel trend is boosting room bookings between Thursday and Sunday, days on which the business traveller has traditionally checked out and gone home. “That’s great news for our business,” Mr. Capuano said on a recent conference call with stock analysts.
This blend of business and pleasure is driving up bookings of rental cars, as customers extend their stays. “A customer who would rent on Tuesday, Wednesday [and] Thursday would actually stay … for the weekend to take in a show or an event,” Joseph Ferraro, CEO of car rental company Avis Budget Group Inc., told analysts recently.