When will business travel recover?

Professional meetings and events (PMEs)—ranging from large user group and sales conferences to incentive trips, pharma meetings, and a host of other formats—declined by 76% last year, a $97 billion loss in spending, according to U.S. Travel Association. As of mid-June, only 35% of U.S. Businesses are currently engaging in business-related travel.

Because of this, airlines are feeling the hit. Around 40% of one flight’s revenue stems from the business-class section, even though it makes up only a minor portion of the seats. In addition, long-haul, international business travel is currently stagnant because of complex government restrictions. Those seats simply aren’t being sold; however, regional and domestic is returning steadily.

Once vaccines became available, leisure trips began outpacing business, a situation that generally occurs after recessions, and McKinsey & Co. Looked at various business travel segments and summarized critical in-person meetings (managers in manufacturing companies with a wide distribution of factories and plants and field-operation workers) continue at pre-pandemic levels. In contrast, others that easily adapted to videoconferencing are obviously recovering at a slower pace. As the report states, “The bulk of business travel (60% of business-travel expenditure in 2019)—which will likely drive the rebound of corporate travel—will be fueled by “the FOMO segment”: those traveling to cultivate important client relationships,” the report states.

Unbridled, an events company whose capabilities span event production to travel coordination, planned more than 400 in-person events before COVID-19. “Virtual events were not even on our radar, as our customers had little to no appetite for them,” says Tim Woodring, partner and chief solutions officer. Unbridled used virtual only as an extension of an event at which the company produced broadcast streams for remote attendees. “Now we produce over 30 virtual events a month ranging from complex broadcast design events streamed to tens of thousands to smaller 200 to 500 internal events that employ robust networking, gamification, and audience response technology.”

The pandemic was a watershed moment for Unbridled, serving as the rallying cry for the most innovative year in its history. In 2020, the company added more clients than any prior year and new depth in its ability to be purpose-driven, which includes blending business with pleasure. “Accordingly, our clients’ interest in going to Sunbelt locations that offer more leisure-inspired options for business events has dramatically risen in terms of importance,” says Woodring, who uses hotel spaces for almost all in-person events.

Balboa Bay Resort in Newport Beach, Calif., for one, is experiencing a rapid return of business bookings. “We are seeing a rise of smaller, intimate meetings for team building and providing more meaningful interactions among companies, rather than larger conferences,” says Kamia Kinchlow, the director of sales. The hotel’s best quarter for corporate business was Q3 2019, with 459 room nights and $138,000 in revenue. The property is poised to surpass that this year in Q3 with $128,000 already on the books. 

 “Fortunately, we have the ideal setting for smaller meetings with opportunities to enjoy activities like getting out on a boat on the Newport Harbor while gathering with colleagues,” she says. For instance, one company is bringing 15 team members for a three-hour meeting and dinner on a boat. 

In Chicago, conventions were significantly impacted, with 187 events canceled at McCormick Place, the nation’s largest convention center, resulting in a projected loss of $1.6 billion and a ripple effect of layoffs in leisure and hospitality. This city is recouping, but for Ambassador Chicago, located near the Magnificent Mile, business travel accounts for only 2% of bookings compared with 18% in 2019. To gain back this segment, the hotel is taking a more personalized approach to business opportunities with its “Small Meetings, Greater Connections” efforts by transforming suites from “bedroom to boardroom” and utilizing its screening room to meld streaming with live.

Similarly, the JW Marriott Los Angeles L.A. Live—in the heart of downtown Los Angeles and close to the city’s conventions venue and Staples Center—was able to tap into nontraditional business segments, such as sports teams and entertainment, which helped. However, the percentage of business guests dropped from 60% to 20% because of COVID. “We have made great strides in the area of virtual and hybrid meetings, but they simply cannot achieve the same impact of gathering together and meeting face-to-face,” says Javier Cano, the area general manager in Los Angeles for Marriott International. “Our group pace for 2023 and beyond suggests that group may start to stabilize to pre-pandemic levels.”

Business travel is recovering, yes, but also shifting. For Unbridled, the outlook for the coming months is not straightforward. Many events platform companies have claimed that “hybrid events are the future,” but Unbridled clients have not echoed this sentiment. “Instead, we see the future of events to be in flux with a blurring of lines between digital and physical,” says Woodring. Also, as projections for COVID variants and future pandemics remain uncertain, risk management is becoming increasingly important.

“Because of this ongoing risk,” he says, “we see clients continuing to provide options for attendees in terms of how they attend and a variety in the types of events produced to include virtual events as a utility mainstay.”