Coronavirus disrupts the corporate travel industry
The global travel industry will face disruptions for next 3-4 months, according to Beroe Inc, a procurement intelligence firm
The impact of the COVID-19 outbreak has been significant on corporate travel, causing the postponement and cancellation of incentive travel programs, while the meetings & events industry has come to a halt, with events being either cancelled or postponed and companies trying to meet their business objectives by conducting virtual meetings.
The global travel industry will face disruptions for next 3-4 months, according to Beroe Inc, a procurement intelligence firm. The recovery pace is expected to be faster for domestic travel (two to three quarters), and slower for the long-haul and international travel (over six quarters).
International passenger traffic is forecasted to decrease by 40 to 80 percent in 2020, with estimations of 1/3 of the total passenger fleet being grounded across the world, especially in regions where the virus has already spread rapidly in Western Europe, Asia-Pacific, China, and North America. Hotel bookings and reservations are increasing in countries like Argentina (60 percent), Brazil (45 percent), Czech Republic (65 percent), Japan (28 percent), Mexico (33 percent), and Oman (67 percent). The APAC hotel industry is the most affected which has a strong presence of both individual and chain of hotels.
The demand for air travel has been affected globally as a result of COVID-19, with more cancellations on hotel bookings causing hotel prices to go down due to less demand. Based on the current scenario, Air fares may go down, as oil prices have declined sharply, due to reduced demand for jet fuel. Car rental companies have witnessed a decrease in revenue by 80 percent and the Decline in business rentals is expected to continue for a short-term owing to an increase in work from home.
Corporate travel industry and all of its segments are affected by COVID-19. Factors such as capacity reduction, trip cancellations and border closures are contributing to the industry impact. Increase in Virtual events is observed but the challenges of high quality transmission, bandwidth and attention span of attendees prevail. Larger upscale hotels, which tend to hold conventions, were severely hit and in 2020, the hotel supply market is expected to reduce by 2 percent post COVID. If the pandemic persists for a longer duration, the employment effect will be adverse.
- According to the latest estimates (May 2020), passenger seat capacity could drop from the above baseline by 32 percent to 59 percent (international by 38 percent to 71 percent and domestic by 28 percent to 51 percent).
- Top global and regional car rental companies have stopped and cancelled the vehicle orderings to maintain financial stability, this is expected to reduce the rental car supply.
- Global hotels can focus more on ensuring domestic market exposure to encounter internal travel restrictions.
- Venues will be severely affected as there will be more cancellations and lesser lead booking time, and venues will also have to mandate check-ups for safety of the attendees
- Due to stagnation of the industry, consolidation of supplier base is expected and SMEs might go out of business.
- After the pandemic is over, the effect on Cost Per Attendee depends on whether or not Vaccination is successfully developed for COVID-19, as it will directly influence the willingness of attendees to travel.
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