America’s huge travel industry, rocked by the COVID-19 crisis, is now bracing for a second round of hits as businesses worried about inflation cut travel costs, whacking hotels, airlines, and convention centers.
More than two-thirds of America’s businesses who put staff on the road plan to cut travel spending to below pre-coronavirus levels, according to a sweeping new report provided to Secrets.
However, many executives feel that cutting travel will end up hurting their business. But the threat of greater inflation, beyond Wednesday’s federal report that it is the highest in 41 years, appears to be a bigger concern, according to the U.S. Travel Association, J.D. Power, and Tourism Economics.
While there has been a surge in personal and vacation travel, business travel (which some consider the bread and butter of the industry) has been slower to recover to pre-pandemic levels. The report found that some want to trade Zoom calls for face-to-face meetings.
In their quarterly “Business Travel Tracker,” half of large-company CEOs said cutting near-term travel will result in long-term losses. But it’s a quandary made difficult by continued cost-cutting to match inflation and corporate policies pushing alternatives to travel for noneconomic reasons, such as cutting emissions.
“There are headwinds on the horizon that threaten growth,” said USTA in a statement shared with Secrets.
The group warned: “In the coming quarters, companies will make travel decisions in a business environment that is adjusting to increased interest rates and high inflation, as well as labor shortages and supply chain challenges. Elevated risks of recession are anticipated to result in some caution among corporate decision-makers, which would stifle business travel spending by some companies. Additionally, with more businesses setting aggressive goals to reduce their carbon footprint, companies may choose to reduce business travel to achieve net zero emissions.”
There is, however, a role that the federal government can play in helping the beleaguered industry, said USTA.
It is calling for several actions to help, including restoring the entertainment business expense deduction and an extension of full expensing for business meals. It is also encouraging the United States to do more to woo large international conferences to U.S. cities.
