The lucrative business travel market, which sees suited and booted executives fly between London, New York, Frankfurt and beyond and bolsters bottom lines at airlines and hotels globally, will never fully recover from Covid.
That’s the verdict from Booking.com CEO Glenn Fogel, whose company has grown to be the biggest travel firm in the world, with a market cap of $90bn.
“I’m not sure business travel will ever get back to what it was pre-pandemic.. it may forever be a smaller share of the total travel pie… in terms of bookings and value.
The travel boss puts that down to the “Zoomification” of business meetings culture and companies continuing to get deals done throughout lockdowns.
“Think about all the business that used to be done with by getting on planes, flying three, four hours for one day and flying back. Think of the costs.
“Every CFO in the world is looking at this costs line, thinking ‘hmmm do you really need to do that trip, you could still just keep using Zoom and it’s just as good?’
The Booking.com boss doesn’t think business class seats will be ripped out of planes any time soon, but that the effect of Zoom, MS Teams and their ilk will be permanent and large enough for hotel chains and legacy carriers such as British Airways, American Airlines, KLM-Air France and Lufthansa to sit up and take notice.
“There will still be a use for business travel but not at the same share that we’ve seen, and that changes the economics for legacy carriers and hotels in particular.
“For the legacy carriers who make so much money on first class and business class, that revenue’s going to be reduced for a long time.
“For the four-and-five-star hotels who make a lot of their money out of the business traveller spending on the mini-bar, that’ll affect their profitablity for a long, long time,” Fogel argued.
Booking, which even as the globally largest player in the travel market, is primarily focussed on beach holiday, family vacation and city break travel and sees the prolonged business travel market downturn as an opportunity.
“We’re better off when we’re more valuable to our supplier partners [hotels, airline booking sites, car rental firms etc] when they need us more. So if all of a sudden, you’re not getting as many corporate travellers booking direct, so now you’ll need us to help you get leisure traveller bookings”.
The travel boss was far more bullish about the global travel market recovery overall and encouraged particularly by the UK’s vaccine rollout and the correlation it had to forward travel bookings.
However, like every other travel industry player Fogel doesn’t pull punches on how badly the industry had hurt, calling travel and leisure “the worst hit” from the global pandemic.
Booking Holdings, which along with the eponymous online travel supermarket also owns rentalcars.com, Kayak and OpenTable, makes most of its revenues off commission.
Last week it reported a net loss for the first quarter of 2021 of $55m, an improvement on the near-$700m loss for the same quarter last year as the pandemic effectively shut down global travel.
‘Not done yet’
However, another travel chief executive has said the prediction of Fogel and others of a major hit to business travel continuing after the Covid-19 pandemic fades is overhyped.
The boss of London City Airport Robert Sinclair said today that it is “easy to sound the death knell of business travel in the midst of a crisis”.
But he told PA the London Docklands airport is “confident” demand will return.
Business travel made up around half of London City’s passengers pre-pandemic, but total traveller numbers are down around 95 per cent..
Sinclair said: “While Zoom and Teams have definitely been very helpful in terms of allowing businesses to make do and function, I’m not as convinced that, going forward, it’s going to be the optimal platform for businesses to thrive.
“The fundamentals of human interaction, the desirability of actually being in front of people… will warrant continuation of business travel.”