Published

September 13, 2021

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Key Takeaways

  • Business and leisure travelers are indicating a willingness to begin traveling again.
  • The delta variant has slowed growth and created uncertainty around when travel and tourism will return to pre-pandemic levels.
  • Businesses must adjust to the 'new normal' of travel to stay competitive and better serve their employees and customers.

COVID-19 hit the travel industry hard. Business travel, one of the industry’s primary sources of revenue, came to an abrupt halt. On the leisure travel side, vacations and special events were put on hold, damaging the tourism sector as well.

While the travel and tourism industries are slowly starting to recover, the emergence of the Delta variant has slowed growth and created uncertainty around when business and leisure travel will return to pre-pandemic levels. Here’s what businesses need to know to make informed decisions about traveling for their employees and customers amid this changing landscape.

Business travel during COVID-19

After a challenging year and a half, there is cause for optimism in the business travel industry, with companies indicating a willingness to return their employees to the road—or air as the case may be. According to a recent report from The Global Business Travel Association (GBTA), over half of travel buyers and procurement professionals reported that their company’s travel spending increased “somewhat” to “a lot.” Additionally, participants reported a slight increase from the previous month in restarting domestic and international travel for business.

Despite the relative safety of air travel, companies are still being cautious. The survey found that only 40% of companies planned to restart domestic trips within the next one to three months, while a mere 18% of companies planned to restart international trips. Their caution is owed to concerns over the presence of COVID-19 variants. Among survey participants, 78% were “concerned” or “very concerned” about the effects of the delta variant, as well as the possibility of further variants, on the safety of business travel.

The economic impact of pandemic travel restrictions

Amid the pandemic, both domestic and international destinations have placed varying restrictions on travel. In addition to public health concerns, logistical factors like required COVID-19 testing and quarantine periods have significantly reduced where and how often people are traveling. Moreover, many airports and other transportation hubs have been operating with fewer staff, limiting both the efficiency of traveling and options for doing so. The reduction in both business travel and leisure travel cost the airline industry more than $100 billion in lost revenue in 2020, and estimates project a further loss of nearly $50 billion this year.

The loss in air travel has also negatively impacted the tourism sector. Reduced demand for travel has similarly reduced demand for hotels, restaurants and food service, local retail, entertainment, and events. In 2020, international tourism and its related sectors saw a loss of $2.4 trillion due to the effects of the pandemic.

Recovery in travel and tourism will largely depend on global vaccine distribution and the suppression of COVID-19 variants. According to the GBTA survey, approximately 1 in 5 participants reported their company required employees to be vaccinated before traveling domestically. With different countries and even states having their own set of restrictions and vaccination status guidelines, organizations may hold off on business travel until these requirements can be streamlined or more easily understood.

The impact of vaccine inequity on the tourism sector

While most developed countries have seen a successful vaccine rollout, many developing nations are still struggling with limited vaccine access and administration. Depending on the country, vaccination rates range from less than 1% to more than 60%.

As developing countries work to mitigate the spread of COVID-19 without the support of widespread vaccines, they continue to experience greater losses in the tourism sector. This is especially critical, as many less-developed countries are heavily reliant on tourism for jobs and economic growth.

Countries with higher vaccination rates, such as the United States and the United Kingdom, have experienced less severe losses in tourism and are likely to have a more swift recovery. Still, the U.S. tourism industry has taken a hit, with many businesses struggling to find enough workers to keep them open during seasonal tourist peaks.

The long-term outlook for travel and tourism

The “new normal” of a post-pandemic world is expected to have long-term impacts on the travel and tourism industries.

With respect to corporate travel, many businesses have capitalized on new technologies to conduct remote meetings and large-scale conferences. With this, the frequency of business travel is likely to decrease, though it is unlikely to be replaced by virtual meetings altogether.

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On the leisure travel side, people will likely continue to explore their own backyards more frequently than pre-pandemic. The summer of 2020 saw an uptick in road trips across America, with people choosing destinations within driving distance and further away from crowded metropolitan cities.

Travelers will continue to use touch-free technology

Contactless technology has seen a rise in recent years, but it has become more widespread than ever amid the pandemic. According to a survey by the U.S. Travel Association, 41% of global transactions are currently carried out through contact-free means, and 74% of Americans plan to continue using touch-free tech even post-pandemic. Apps that allow for contactless check-ins, direct payments, and even mobile hotel keys are expected to increase in popularity over the next several years.

As countries look toward fiscal and public health recovery, business travel and leisure travel are also beginning to recover. However, it is unlikely that things will return to the way they were before COVID-19. Rather, businesses must adjust to the “new normal” of travel to stay competitive and best support their employees and customers.

Traveling during COVID-19? Review the latest CDC guidance for domestic travel and international travel.