Fear of Missing Out on Deals to Fuel Spike in Business Travel
(Bloomberg) -- Fear of missing out on a major deal has kicked off a temporary surge in U.S. corporate travel, according to consulting firm Oliver Wyman, boosting a highly profitable market for airlines.
About 76% of respondents to a June survey by the firm said they planned to travel domestically for business over the next three months, and 56% were considering international trips over the same period.
Yet only about 2% of those have booked tickets, with 79% planning to do so within three months -- typical of the so-called close-in purchases that are often made by corporate travelers.
“That’s a really good indicator of pent-up demand, and why we think there’s going to be really a snap-back or bow-wave effect,” Oliver Wyman partner Bruce Spear said in an interview. “The first one who loses the sale because a competitor was in front of the client is going to be in big trouble. It’s that driving force.”
Favorable monetary policy, increased merger and acquisition activity, an economic recovery that’s running “extremely hot” on federal stimulus, and concern that next year could bring changes to capital gains taxes also are fueling pressure on executives to catch up on deal and contract meetings after more than a year of conferring virtually, he said.
“There is a significant need to get back out to defend existing relationships and re-establish connectivity with colleagues,” Spear said. The survey, the firm’s third in a series during the pandemic, involved nearly 5,300 people in nine countries.
Business travel demand will normalize after the short-term spike, he said. Changing corporate travel policies and the effectiveness of teleconferencing demonstrated during coronavirus quarantines may reduce the long-term need for some trips, he said.
Leisure travel has soared over the summer as more Americans were vaccinated against the virus, reaching or approaching pre-pandemic levels. American Airlines Group Inc., United Airlines Holdings Inc. and Delta Air Lines Inc. said on earnings calls that domestic business trips have reached at least 40% of 2019 levels.
©2021 Bloomberg L.P.