How COVID-19 affected business travel and the hospitality industry
Each year, students from the University of Missouri work with students from India on joint…
Each year, students from the University of Missouri work with students from India on joint story projects that link their two countries. This year’s stories deal with how various industries are faring in the wake of the COVID-19 pandemic. The project was overseen by Laura Ungar, an adjunct instructor at the University of Missouri and investigative and enterprise editor at The Courier Journal in Louisville, and journalist Sujoy Dhar, founder of the Indian news agency India Blooms, based in Kolkata, India.
Rod Uphoff remembers his last day of travel before COVID-19 like it was yesterday, even though it’s been well over a year since the start of the pandemic.
In the span of thirteen months, one of the world’s most prominent industries has drastically changed as the pandemic forced employees across the world to work from home, causing an unprecedented decline in business travel.
As of January 2021, business travel declined by 70 percent in just one year, according to the U.S. Travel Association.
Uphoff, a professor at the University of Missouri School of Law, was one of the last business travelers coming back to the United States from his work travels in South Africa.
“I was almost positive I was going to get COVID because I suspected someone on my flight had the virus when I was coming back,” Uphoff said.
“Fortunately we’ve survived up until this point but it was a pretty harrowing experience because no one was wearing masks at the time or social distancing.”
Uphoff traveled to South Africa nearly every year before the pandemic. Now, he teaches his international students over Zoom.
Companies around the globe spent more than $1.29 trillion on business travel in 2019, according to consumer data company Statista. That number declined to $504 billion in 2020.
With more employees forced to work at home to prevent the spread of the virus, Zoom meetings and Microsoft Teams took the place of flying across the globe for a single business deal.
Mary Stegmaier is another frequent business traveler. As the vice provost for international programs at the University of Missouri, Stegmaier coordinates international relations for study abroad and international programs at MU.
Working from home in Missouri, Stegmaier explained the benefits and drawbacks of the new lifestyle.
“In some ways, teleconferences can be very efficient because you get the work done without jet lag or high travel expenses and it can be more productive,” Stegmaier said.
“However it’s been very challenging to develop new relationships. There’s little to no networking going on anymore because it’s hard to form a new relationship over a screen.”
Hotels and Lodging
As the number of business travelers declined in 2020, hotels once full of employees now face a significant decrease in capacity and demand.
As pandemic-related restrictions kicked in, hotel and lodging companies saw the number of guests plummet.
In 2020, domestic leisure travel was 76 percent of what it was in 2019, and domestic business travel was just 40 percent, according to U.S. Travel Association tourism economics data.
Brian Hall, the immediate past president of the Hospitality Sales and Marketing Agency International Missouri Chapter, said most of corporate America is working at home, and therefore companies cannot send employees elsewhere.
The Capitol Plaza Hotel in Jefferson City is one hotel feeling the pinch.
General Manager Brandon Boyer estimated that before COVID-19, government, business association and general business travelers made up about 80 percent of the group-based hotel’s guests.
Boyer said the Capitol Plaza was consistently at about 60 percent or 70 percent capacity at all times before the pandemic hit.
“Those numbers went down to the single digits overnight,” Boyer said.
With the extreme loss of clientele and the new regulations preventing the hotel from offering its full range of services, the Capitol Plaza lost more than 90 percent of its staff.
“It was devastating,” he said. “I mean, we just took a huge hit. And there’s nothing to compare it to.”
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As domestic leisure travel is amping up, Boyer said the Plaza Hotel faces the opposite problem: understaffing.
“We can’t get people in the door fast enough to get the services up and running,” he said.
Boyer said the number of business travelers staying at the Capitol Plaza is increasing at a slower rate than that of leisure travel, but it’s still picking up day by day.
Indian scenario
Amid the ongoing chaos of 2020-2021, the hotels of India have suffered drastically, too.
Revenue declined more than 80 percent compared to the pre-pandemic level. Recovery was difficult, though it had begun during the last months of 2020.
However, with a devastating second surge of COVID-19, hotels are again preparing themselves for the 2021 slump or worse.
Ranju Alex, a Lifetime Achievement Award winner in Hospitality, is a manager of 36 hotels for Marriott International.
“It has been harrowing,” she said. “Jobs have been lost, people are working on salary cuts and owners are not getting the marked profits.”
Grand Fortune Hotel affiliate Riya Shah said the COVID-19 impact is ‘drastic’. Riya Shah explained how temperature checks are maintained, the entire hotel is sanitized and a doctor is on call.
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Madan Prasad Bezbaruah, secretary general of the Hotel Association of India, said the ferocious surge in coronavirus cases in the second wave has crushed the hospitality business.
“The occupancy levels have further plummeted to single digits — except for quarantine-related business. States that were reporting improvement in the number of bookings on the back of business and leisure travel are now bearing the brunt of re-imposition of restriction,” he said.
Bio bubbles, a concept originated to combat COVID-19, are areas isolated from the outside world. The Marriott chain of hotels have made bio bubbles to help guests feel safe, said Ranju Alex.
According to Alex, international business travel is completely over while airline crews, the sports and entertainment industry are helping in business growth.
According to Manav Chandak, marketing director and CEO of Panchavati Group of Hotels, “nothing is going on and we haven’t seen a single corporate meeting in the first six months after the pandemic was declared.”
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Air Travel
Along with hotels, the air travel industry saw a decline in travelers, especially business travelers, as COVID-19 spread.
In January and February of 2020, the St. Louis Lambert International Airport saw an increase in the number of travelers from 2019.
Rhonda Hamm- Niebruegge, the airport director, said that those early numbers were looking good.
Then in March of 2020, the airport’s air traffic summary reports there were 630,423 total passengers, a 53.3 percent decrease from March of 2019’s 1,351,083 total passengers.
The percentage decrease in the total number of passengers from 2019 to 2020 in each month following March was greater than 60 percent. Hamm-Niebruegge said other airports across America were seeing similar declines.
Following suggestions from federal, state and local health officials, St. Louis Lambert International Airport added hand sanitizing stations and socially-distanced floor markers.
The relationships between the airports and the airlines were instrumental in continuing to provide travelers with flights. Hamm-Niebruegge said that communication about changing health suggestions and different local policies, like social distancing and capacity changes, kept both the airport and the airlines clear on how to continue flights safely and efficiently.
2021 has already been looking like a better year for traveling, and with more people receiving the COVID-19 vaccine, airports are seeing more travelers in the U.S.
Brian Hall, the chief marketing officer at Explore STL and immediate past president of the Missouri chapter of Hospitality Sales Marketing Association International, said that leisure travelers made up a bulk of those traveling through the pandemic and early in 2021.
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Even with a slower return to the usual levels of business travel, this year is looking hopeful for those in the hospitality and travel industries. Lambert International has seen an uptick in people coming through its TSA lines, with a peak of 76,419 travelers coming through TSA from March 21 through March 27.
Hamm-Niebruegge said that March 2021 was a strong month because of spring break.
Lambert International has even seen new destinations added and new airlines come in as of late. Spirit Airlines, for instance, will begin flights on May 27.
In India, the pandemic affected the sale of business class seats amid a hike in ticket prices and increased security measures.
Shiran Kretser Silva, area manager for Kolkata of SriLankan Airlines, said “with the closure of business and countries restricting entry, there was no travel taking place.”
According to Silva, the big challenge for airlines is that fixed costs are the same while almost zero revenue is earned.
“Managing day-to-day operations became a task. Most of the contracts were renegotiated, the staff had to sacrifice part of their salary to stay afloat, aircraft leases were renegotiated,” he said.
According to Rahul G. Doshi, outbound head of Classic Holidays, a travel company based in Mumbai, the travel agents suffered, too.
“Realizing the dues from the airlines is a big challenge that we are facing now. Money pumped in to buy seats at a lower fare in airlines is stuck and agents are running short of liquid cash,” Doshi said.
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What to Expect Moving Forward
The outlook for the coming years is looking better for U.S. hotel, lodging and air travel businesses as COVID-19 vaccination rates increase and restrictions loosen up.
The U.S. Travel Association Tourism Economics data predicts domestic leisure travel will be at 2019 levels by 2022, and domestic business travel will be almost at 2019 levels by 2024. The Tourism Economics data expects international travel to come close to 2019 levels in 2022.
Nearly nine out of every 10 Americans currently have travel plans in the next six months, the highest percentage since March 2020, according to market research conducted by Longwoods International.
While there has been discussion about some form of a vaccine passport, it’s not certain that they will be used for domestic travel in the U.S. There are already various guidelines for coming to and leaving other countries, which in some cases includes receiving a negative COVID-19 test result.
For international travel, Hall said people will probably have to show proof of vaccination since infection rates and policies regarding COVID-19 vary by country.
Hamm-Niebruegge said it is too early to tell if vaccine passports will be a traveling necessity.
Business travel’s return to pre-pandemic levels will also rely on how businesses decide to move forward and whether employees will return to in-person work full time, working entirely remotely or a combination of the two.
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Business traveler Mary Stegmaier said: “I think it will end up being some kind of hybrid because there are so many companies reducing space and having employees working from home.”
Hamm-Niebruegge said that going into May, Lambert International will see about 85 percent of the usual flight activity from 2019. By June and July of this year, she said that flight activity will be pretty much back to normal.
The future looks brighter for the industries, but COVID-19 is not gone. That’s especially apparent in India, where infections and deaths continue to rise.
“Health officials can’t say it’s over yet, because it’s not,” Hall said. “They don’t know for certain.”
