Google’s Crackdown On Employee Trips Is Another Blow To Business Travel Recovery

Google has told its senior managers to limit employee travel only to “business critical” trips, according to a leaked internal email seen by The Information. No more team off-sites or social functions, and no more in-person meetings when a virtual option is available. Moving forward, Google’s executives were told, there will be a “high bar” for what is now deemed critical.

Last month, Microsoft asked employees to cut back on business travel and company events in an effort to keep costs under control, The Wall Street Journal reported.

Taken on their own, these are simply tales of corporations trimming expenses during inflationary times. But viewed through a macro lens, Google’s new policy is emblematic of a travel trend that could pose a longer-term challenge to airlines.

All airline passengers are not created equal. Traditionally, business travelers not only flew more frequently but they paid higher fares, making an outsized contribution to airlines’ bottom lines.

But business travel hasn’t rebounded from the pandemic as robustly as leisure travel has, remaining as much as 35% below 2019 levels, according to some industry estimates.

On an earnings call in late July, Southwest Airlines’ chief commercial officer, Andrew Watterson, said that while business travel began picking up this spring, it skewed toward smaller businesses, government and education.

“Our largest corporates are the ones that are lagging — particularly banking, consulting and technology — who previously were among our top-tier travelers now are on the lower side,” he said, adding that Southwest’s biggest corporate accounts all have employees traveling, but not as many, and not as often.

Last month, a sobering report from the Global Business Travel Association (GBTA) bumped back its projections for a full recovery of business travel spending to 2026 — not 2024 as previously estimated — citing a raft of reasons including inflation, energy prices, supply chain challenges, labor shortages and regional developments.

The report found that total spending on global business travel reached $697 billion in 2021, just 5.5% above the pandemic-low of 2020. The GBTA predicts spending in 2022 to reach $933 billion, 34% above last year’s levels but only 65% of pre-pandemic levels.

“The factors impacting many industries around the world are also anticipated to impact global business travel recovery into 2025. The forecasted result is we’ll get close, but we won’t reach and exceed 2019’s pre-pandemic levels until 2026,” said Suzanne Neufang, CEO of the GBTA.

Leave a Reply

Your email address will not be published.

Previous post You Don’t Have To Be German To Appreciate A Tasty Kölsch
Next post How Kelly Wearstler Transformed The Downtown L.A. Proper Hotel Into A Design Destination