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Business Courier:  Time to Board at CVG

Regional businesses ramp up post-pandemic travel, but a return to 2019 levels remains an uncertainty

 

Cincinnati Business Courier / Chris Wetterich / July 2, 2021

It’s the big question for airports, airlines, hotels, the hospitality industry and businesses across the country, the one that will determine when — or if — the travel industry gets back to pre-pandemic levels.

When will companies send their employees back in to the air to meet with customers, talk with colleagues, drive sales and attend conferences?

The Business Courier asked five of Cincinnati’s largest companies about their plans and talked with airport officials, airline executives and industry experts. Locally, companies said they are bringing employees back to the office this summer and fall, with loosened travel restrictions either occurring concurrently or set to happen in the subsequent weeks and months.

But there’s still anxiety, uncertainty and debate, particularly about whether business travel will ever return to 2019 levels. Several sources noted Microsoft co-founder Bill Gates’ prediction last year that half of all corporate travel will disappear in the post-coronavirus world, but adding they disagree that it will be that high.

 

‘Looking into a crystal ball’

Today, business travel for Delta Air Lines, CVG’s largest corporate carrier, is at 30% of its previous activity.


“Every week, it gets stronger and stronger,” said Delta CEO Ed Bastian at the Bernstein Strategic Decisions Conference in June. “From the many CEOs and business leaders I talked to, people are … ready to go and they are starting to move.”

Southwest Airlines expects a jump in business travel after Labor Day.

“Everybody’s kind of looking into the crystal ball,” said Dave Harvey, Southwest Airlines’ vice president for corporate sales. “We’re kind of in the 10 to 20% (not returning) in the intermediate term. So much of business travel you can correlate to GDP. Recent economic indicators look bullish. We saw it after 9/11. We saw it after the financial crisis. It takes another year or two on the business side.”

The University of Cincinnati’s Economics Center has been surveying local businesses, and, the preliminarily results indicate companies are ready when the time is right.

“We found that while business-related travel came to a near full stop during 2020, businesses are looking to continue to increase their travels in 2021 and should be back at, or exceeding, pre-pandemic travel volume in 2022,” said Julie Heath, executive director and Alpaugh Family Chair in economics.

CVG believes it will get 80% of its passenger volumes back this summer, but most of that activity will be leisure customers. Corporate demand is increasing, with CVG projecting a gradual recovery. “In line with industry analysts, pre-pandemic corporate and international travel demand will likely fully recover by 2023 or 2024,” said CVG CEO Candace McGraw.


But there may be differences between big and large companies, said Doug Moormann, vice president for Development Strategies, a Cincinnati government affairs firm.

Moormann has long paid attention to the region’s air service options for his clients. Frequently, smaller companies visit larger ones to try to earn their business. And large-cap companies are still bringing workers back to the office.

“It’ll depend on the big guys. When they put people back in the air it will kind of give everybody else permission to do so,” Moormann said. “There’s nobody to go visit yet. That will put them on the road because they’ll have people to meet with.”

In some markets, Harvey said small- and medium-sized companies were some of Southwest’s more frequent business travelers during the pandemic because they had fewer top-down policies on travel.

 

Slow to bounce back

Stacie Schmahl, vice president at AAA Corporate Travel, a booking agent for small- and mid-sized companies in Cincinnati as well as nationally, said some of the company’s largest clients are not yet traveling.

“They have more employees and probably more global standards they have to meet. Even though the U.S. has a good vaccination rate … other countries aren’t quite in the same place,” she said.


Business travel also varies by sector. Manufacturing and logistics companies, classified as essential, have had to travel throughout the pandemic because of the need to service equipment. Health care employees were bound by a similar obligation. But banking, consulting and insurance businesses stayed grounded.

While there has been much talk about continuing the use of virtual communication, Schmahl was skeptical. “As soon as your competitor shows up to something important in person, and you dial it in on video conference and your competitor wins that customer, you’ll be putting your people on planes pretty quickly,” she said.

Instead, employers are unlikely to send 20 employees to the same conference when five would do, Schmahl said. And the days of flying round trip in one day for a two-hour meeting could be over.

AAA has also found that employees themselves are eager to hit the road. “They’re telling me that as soon as my company allows me to go, I’m going to go,” Schmahl said.

In general, up to a quarter of corporate travel budgets go toward internal company meetings, according to AAA. Companies that embrace a remote work environment may spend on this type of travel — the need to get employees together quarterly to maintain and build culture, for example.

“They maybe only traveled once or twice a year but maybe now a company is saving on real estate but they don’t want to lose the culture,” Southwest’s Harvey said. “They’re going to say, ‘I still need you to come back to headquarters once per quarter.’ Now those folks are traveling four times a year instead of two.”

The top demand for business destinations from CVG so far are Chicago, New York, Atlanta, Dallas and Washington, D.C. Service to those markets has been restored, although not at the same levels.

“As carriers adjust their networks and schedules for the remainder of 2021 and going into 2022, CVG is confident of our strong position to serve leisure and corporate demand with a robust mix of airlines and continued low fares,” McGraw said.

None of the companies the Courier spoke with expressed concerns about CVG’s ability to bounce back, even as the fate of some second-tier nonstop flights to places like Connecticut or St. Louis remains unknown.

“CVG is a fantastic airport and services business travelers in this region very well,” said Michelle Goret, Cintas’ vice president of corporate affairs. “There are many carriers at CVG that service areas of the country we generally travel to, and we will generally book the most direct route to our destination, regardless of carrier.”

FULL STORY HERE (subscription-based)