Business travel has been scaling back as the delta variant rips through the United States, a concerning sign for the country’s economic recovery.
A survey conducted last month by Morning Consult on behalf of the American Hotel & Lodging Association found that 67% of business travelers are likely to take fewer trips, 60% are expected to postpone travel plans, and more than half are likely to cancel existing travel plans with no intent to reschedule.
While some experts believe the peak of the delta variant, which officials say is much more infectious than the first iteration of COVID-19, is on the horizon, new infections, hospitalizations, and deaths are still up from two weeks ago. At its trough in July, average daily infections were just above 10,000 nationwide. Now, infections are averaging about 160,000 per day, and deaths are up 93%.
US ON TRACK TO RECORD 100,000 MORE COVID-19 DEATHS BY DEC. 1, FORECASTERS WARN
A monthly survey from the Global Business Travel Association found that 40% of companies that had stopped U.S. business travel intended to start it back up in the next three months, a figure that is down 36% from the month before.
The decline of business travel, which has already begun and could accelerate, will harm several related industries. When people travel for business, they spend money on airlines, restaurants, and hotels — the industries that took the biggest hit during the pandemic and the ones that helped drag the economy into a two-month recession that the country is continuing to dig itself out of. For example, business travel accounts for more than half of hotel revenue.
The delta variant is already taking a toll on the airline industry.
Last month, Southwest Airlines announced that it estimates its August revenue would be down 15% to 20% after previously estimating it would be down 12% to 17%. It also predicted that in the third quarter, its operating revenue would be down 15% to 20% compared to before the pandemic in 2019.
“The company has recently experienced a deceleration in close-in bookings and an increase in close-in trip cancellations in August 2021, which are believed to be driven by the recent rise in COVID-19 cases associated with the delta variant,” the airline said in a filing with the Securities and Exchange Commission.
Frontier Airlines also anticipates breaking even or posting a slight loss of net income in the third quarter because of the reduction in travel resulting from the newest strain of the coronavirus.
There are also fears that, even as the pandemic subsides, the business travel of the past might not ever return in the same way. A Bloomberg survey of 45 large businesses released Tuesday found that 84% are planning to spend less money on travel after the pandemic, which has brought virtual conferencing technology to the fore.
“We don’t think business travel will ever return to 2019 levels,” said Will Hawkley, the global head of travel and leisure at KPMG LLP. “Corporates are looking at their bottom-line, their environmental commitments, the demand from employees for more flexible working and thinking: Why do I have to bring that back?”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The hesitancy for business travel is reflected in consumer sentiment, which in August plunged to the lowest level in a decade, according to researchers at the University of Michigan. Sentiment dropped precipitously from July, with the sentiment index number falling from 81.2 to 70.3. The decline is the third-sharpest drop after April 2020 (it declined 19.4%) and during the 2008 recession, when it fell 18.1% in October of that year.
The Conference Board’s monitor of consumer confidence has also seen a worse-than-anticipated decline, with this week’s most recent gauge falling to the lowest level in six months, marching back the gains that have been made since COVID-19 vaccines became readily available to all who want them.
