Welcome back, road warriors: Business travel returns
Airlines and hotels say work trips are rebounding to near prepandemic levels—”they’re hungry to meet in person.”
Thought you were done traveling for work? Think again.
Videoconferencing hasn’t made in-person meetings obsolete. Scattered workforces have in some cases resulted in more trips, not fewer. Companies are sending employees back on the road again, driving business travel closer to prepandemic levels.
Michael Wieder, co-founder and president of Lalo, a baby products company, recently returned from a weeklong trip to Hong Kong and neighboring cities in southern China, meeting with manufacturers and others. He noticed many hotels were full of American businesspeople. “You saw big teams of people traveling back," he said.
Wieder has more travel planned soon to cities such as Toronto and Las Vegas, with another trip to Asia likely in the next two months. Some of the travel is spurred by customers who want to meet in person again or attend trade events or speak at conferences, where in-person attendance is once again the norm.
Many companies got by without business travel during the Covid-19 pandemic, and some industry observers predicted they would permanently adapt. While vacationers flocked back to airports in recent years, big corporations were more reticent, facing the logistical challenges of remote work and economic uncertainty that cut into travel budgets. Airlines and hotels say that is changing. The banks, tech companies and consultants who are among the travel industry’s most lucrative customers are hitting the road again.
Airlines reported big increases in revenues from corporate accounts in the first quarter, with Delta and United both reporting a 14% bump from a year ago. Alaska Air said corporate travel sales rose 22% in the first quarter, back to prepandemic levels, led by tech companies and professional services firms. United said it has had nine of its top 10 corporate booking days in its history this year.
Southwest Airlines, which has pushed to capture more business travel, said revenue from the segment jumped 25% from a year ago in the first quarter, roughly back to 2019 levels.
Road warriors aren’t necessarily back to their grueling travel schedules, said David Harvey, Southwest’s chief sales officer. But more people are getting together for new types of trips.
“You may have moved to a secondary or tertiary city, and you may have been in more of an administrative or back office role, so you didn’t really travel at all. But now you have the provision to go see your boss or see your team or do kind of a small to midsize meeting," he said. The airline said it saw a record number of individuals traveling for business during the quarter.
Hilton Worldwide Holdings Chief Executive Chris Nassetta said the resilient economy and strong employment have helped shore up business travel. Demand from small and medium-size companies is already above 2019 levels, he said during an April 24 earnings call, and large corporate customers aren’t fully back yet, but getting there.
“That’s what we’re hearing from our big corporate customers is they’re traveling more," Nassetta said.
Some companies say travel is a worthwhile investment. Fastenal, a Winona, Minn.-based industrial distributor, said earlier this month that its sales travel rose nearly 20% in the first quarter of the year as it has made an effort to engage with customers, laying the groundwork for growth during a period of soft demand.
“I don’t know that I regret that, to be honest, because I think that that is related to the improvements we’re having in our contract business, the improvements we’re having in our signings," Fastenal Chief Financial Officer Holden Lewis said during a quarterly conference call.
While the volume of bookings through U.S.-based corporate travel agencies remains nearly 20% below 2019 levels, according to Airlines Reporting Corp., which processes agency air ticket sales, there are signs that the bounceback is gaining steam. Spending on business travel worldwide is expected to surpass 2019 levels by the end of this year, according to the Global Business Travel Association’s most recent projection in August—earlier than the mid-2026 recovery the trade group previously predicted.
Some 40% of 135 global corporate travel managers surveyed by Morgan Stanley last fall said they had already returned to pre-Covid travel levels, up from 25% a year earlier.
Commercial centers such as New York and San Francisco that had been travel laggards are once again standouts, said Melius Research analyst Conor Cunningham.
“This demise of corporate travel is overstated," he said. “It’s very clear things are starting to turn."
Some business travelers have simply had enough of virtual meetings.
“This year, I feel like our stomachs are kind of growling a little bit and they’re hungry to meet in person," said Elissa Sangster, CEO of the nonprofit Forté Foundation, which focuses on women’s advancement through access to education. She has been advising staffers who work with the organization’s partners to be mindful of travel expenses but to get on the road again.
“People are ready to show up and be present and engage," she said.
Kevin Davis, CEO of the Americas for the hotels and hospitality arm of real estate giant Jones Lang LaSalle, said he mostly encourages his team to take in-person meetings whenever feasible. When pitching clients, he finds the meetings to be more effective face-to-face and the conversation livelier, with greater opportunities to build relationships.
“I always say the last 15 or 20 minutes of in-person meeting or lunch are frequently the most valuable because that’s where the conversation has the opportunity to flow organically," said Davis, whose business travel has taken him to London, Los Angeles and North Carolina in recent weeks. “And you really pick up interesting information that you likely would not have gotten had you been on a Zoom call."
Travel managers say finding enough space in hotels for corporate groups can be a challenge, something Marriott International encountered when it tried to find space for an analyst meeting last fall.
CEO Anthony Capuano told attendees who gathered in Miami Beach for the meeting that the company would have normally held the event in New York for their convenience.
“This is not a joke," Capuano said. “We couldn’t get any space in any of our hotels."
Write to Alison Sider at alison.sider@wsj.com and Chip Cutter at chip.cutter@wsj.com
