Business travel is typically the most lucrative for the leisure and hospitality industry, but the coronavirus pandemic may have changed that forever.
Corporate trips taken by Americans contributed $334 billion to the entire travel industry's $1.1 trillion in revenue last year, according to Bank of America research. That revenue dried up when the pandemic hit.
“Whenever this [pandemic] is over, we will have practiced for more than one year how to interact across very, very big distances. So, we do expect a structural reduction of the business travel market,” Trivago CEO Axel Hefer told Yahoo Finance Live.
Hefer’s comments echo sentiments from business leaders across industries as many major companies re-imagine the future of work.
Microsoft founder and philanthropist Bill Gates predicted in a recent interview that business travel will shrink by 50% and office work will be reduced by a third post-pandemic.
Twitter, Facebook, Slack and Stripe are among the companies that have already told employees they may work remotely forever, though in some cases they’ll take pay cuts. Microsoft is planning to implement a hybrid work model where employees report to the office only half the work week.
Even the most optimistic predictions estimate it will take several years for business travel to return to pre-pandemic levels. According to Bank of America research, corporate travel is unlikely to rebound until 2024.
“We as a business have accepted that you don't need to be in the same room to have a productive meeting,” said Hefer.
But Hefer does see strong demand for domestic leisure travel on his hotel search platform. “The coasts and the mountains for relaxation vacations have picked up very, very quickly.” Hefer said progress on the vaccine front and the proliferation of COVID-19 testing should result in “significant improvement” to leisure travel by the summer of 2021.
United Airlines’ CEO Scott Kirby said on the airline’s third quarter earnings call that he’s watching the occupancy rate of New York City skyscrapers for clues on when corporate travel might bounce back. "When that number starts to go up, I think you're going to see business travel start to rebound because there's a reason to travel."
Alexis Christoforous is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AlexisTVNews.