One year ago, I was flying home from the Business Travel Show in London, having just launched BTN Europe as the latest brand in the BTN Group portfolio. Unfortunately, the person sitting next to me on the flight had a pretty nasty cough. I was annoyed that someone would board a plane in that condition, but even then, the idea that I could be infected with a life-threatening illness did not seriously cross my mind. Covid-19 still felt distant, even though I had traveled in Asia in January and documented the cratering of the Chinese travel industry in early February. 

There were murmurs at BTS that certain large companies were curtailing international business travel. Then, suddenly, major trade shows and large business events began to cancel; governments put limits on indoor gatherings, snuffing out the meetings and events industry almost entirely. Eleven days after I landed in New York from London, the World Health Organization declared Covid-19 an pandemic. 

We all know what happened next, and data from BTN’s Corporate Travel Index has documented the contours of that chaos for the business travel industry in 2020. The data in this issue reflects rolled up 2020 averages; our Corporate Travel Index Calculator online resource offers updated hotel and car rental data quarterly and may prove a critical resource for buyers navigating some turbulent travel recovery in 2021. 

2020’s Slimmed-Down Data Set

The Corporate Travel Index is unique because it doesn’t look at the overall market, but only at bookings made through corporate channels. A few years ago, BTN revised its methodology for collecting this data—greatly expanding its sources from a single large agency to multiple partners. That new methodology came in handy in a year when transaction levels plummeted in some regions and during some quarters to less than 30 percent of a ‘normal’ year. If we couldn’t get data for a particular city from one source, it was likely that another source had some information. In some rare instances, data wasn’t available, and you’ll see that noted in a few places on this year’s charts. Those gaps will be obvious. There are other effects of the slimmed-down data set in 2020 that are less so. 

Increased Volatility

One of those effects is more dramatic rate swings—particularly in hotels—from quarter to quarter. BTN’s online Corporate Travel Index calculator demonstrates this volatility more clearly than the pages of our annual special issue because it breaks the data down by quarter, where these pages roll up annual averages as a reference guide. But when data is more scarce, a few very expensive or incredibly cheap bookings can have an outsized effect on the final rate pegged for the market. In a close study of the raw data, BTN removed obvious outliers to minimize swings in particular markets, but we were careful not to mute what was clearly a lot of volatility happening on the ground in 2020. 

A New Calculus

Also indicated in the slimmer data set was a shift in decision-making during the pandemic. In the first quarter of 2020, when most markets were still experiencing strong business travel volumes at least through February, the CTI data showed bookings across all hotel tiers for which we collect data. In an average year and in this first quarter, it’s not unusual, for example, to see economy hotel rates that come in higher than midscale, which is a sign that hotels are taking advantage of a compressed market for last-minute bookings, and business travelers will trade down even at the higher rate. During the pandemic, the CTI data showed a different shift. Economy hotel bookings became scarce, indicating less compression in the markets we track, but also perhaps an unwillingness on the part of the traveler or their company to take advantage of the lowest rates—even during a time of financial stress. 

We also saw data thinning out at the top end of the hotel spectrum. For several quarters and in several cities around the world, bookings for luxury hotels also took a hit. Corporates, it seems, move toward the middle in times of uncertainty. As business travel begins to recover, however, many buyers have told BTN that price won’t be the deciding factor. Indeed, travel managers at companies like Discovery and Microsoft have said publicly that business trips may get more expensive as companies safeguard the health of travelers and support strong outcomes for necessary trips. I predict, and some of this initial data indicates, luxury hotels won’t necessarily be the choice, but upscale and upper upscale hotels might gain traction in a pandemic environment, especially if they can master elements like contactless room service, remote check-in and keyless entry. 

As companies navigate these new factors into decision-making, new procurement strategies also are taking hold that should allow corporates to take advantage of depressed pricing levels during the pandemic even if they grant travelers latitude to book higher hotel service categories. American Express Global Business Travel EVP global clients and GM for the Americas David Reimer told BTN that dual-rate-load models, with both a fixed corporate rate and a dynamic discount off the market rate for each property, have permeated GBT’s client roster. The model, he said, will persist at least into 2022 as hotels try to regain footing and buyers are unwilling to lock themselves into corporate rates that could be undercut by market conditions. 

Overall, said Reimer, this could drive significant rate reductions for corporate booked hotels. It also puts an interesting new wrinkle in what BTN’s Corporate Travel Index is actually tracking. What is a booked, corporate rate these days? It’s an interesting question and one that the industry is clearly working to answer. 

Car Rental Consistency in a Sea of Change

Transaction data for car rental was clearly down in 2020, but it didn’t fall as low as hotel data. Still, there were gaps. Rates did not swing as dramatically quarter to quarter for car rental bookings in 2020 as they did for hotels. As a result, we see much less rate volatility in year-over-year comparisons as well. That’s not to say car rental suppliers had it easy last year. They didn’t. One must only listen briefly to their earnings reports to understand the depths of the toll taken by the pandemic on this sector. But corporate contracts already locking in low rates may have muted additional discounting, and we do know that much of the business travel undertaken in 2020 was done by car, with significantly longer rental periods as result. The scope of the Corporate Travel Index does not cover the latter, but travel managers should consider more demand for car rental when planning travel recovery budgets. 

Vaccine-Driven Recovery Scenario

The Global Business Travel Association projects it will be 2025 before total business travel volumes return to pre-Covid levels and, according to the International Air Transport Association, January 2021 was worse than December 2020 for air travel. When travel does return, however, it will be a changed industry in terms of the share of volume per market. Some of that dynamic may be driven by current health protocols and vaccine distribution. 

The first vaccines available require special handling that many countries and local communities cannot support logistically. The Pfizer and Moderna vaccines, which were the first to roll out in the United States and Europe, are difficult to distribute globally. The U.K. has been praised for its swift and effective rollout and has included the AstraZeneca vaccine among its emergency approved jabs. AZ has also been approved for the European Union, but there have been issues with messaging around that option, which have resulted in poor uptake. Johnson & Johnson, with a more traditional vaccine that requires a single dose and has a longer shelf life, has just been approved in the U.S. The EU has also begun to review Russia’s Sputnik vaccine. 

Immunity achievements in one or two regions cannot be sustained without immunity thresholds met everywhere. Recent, more contagious variants emerging in the U.K., South Africa and the U.S. have shown us that. We are, literally, all in this together in terms of exiting this health crisis, but there may be geopolitical and economic rewards for those who can get us there faster.  

China’s robust response to the Covid-19 virus and the recovery of domestic travel levels in that market is positioning the region to return to business—and, thus, business travel—more rapidly than other regions. According to the South China Post, the country also has also prioritized an international vaccine diplomacy strategy that could put power behind China’s influence in international business and geopolitical alignments. The Associated Press reports that China has pledged vaccines to 45 countries, 25 of which have begun inoculations and 11 more have taken delivery. There are questions surrounding both the efficacy of China’s vaccine and what China may want in return for the doses, but the healthcare crisis seems to be muting those concerns among recipient countries—receiving anywhere from 50,000 to 600,000 jabs to distribute locally. A spokesperson for the Chinese People’s Political Consultative Conference has called suspicion of China’s vaccine distribution “extremely narrow-minded.”

Regardless of power motives, it is reasonable to predict at least one outcome for travel industry recovery and in-person business exchange: Travel corridors are likely to develop among nations and regions that share vaccine standards, immunization thresholds and baseline Covid-19 infection rates. 

Recent reports have indicated Europe and the United States will eventually have enough Pfizer, Moderna, J&J and AZ vaccines to share with low- and middle-income countries. But the deliveries may be far behind their Chinese competitors. On the other hand, there is pressure on the Chinese government to slow down its exports as it has billions of arms to jab at home. And anyone can tell you, outbound Chinese travelers are central to a global business travel recovery—and all travel recovery. 

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