Google’s crackdown on employee travel is another blow to business travel recovery

Google has instructed its senior executives to limit employee travel to only ‘business-critical’ travel, according to a leaked internal email seen by Information. More offsite functions or team socials, and more in-person meetings when a virtual option is available. Going forward, Google executives were told there would be a “high bar” for what is now considered critical.

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Last month, Microsoft asked its employees to reduce business travel and corporate events in a bid to keep costs under control. The Wall Street Journal Reported.

Taken in isolation, these are just stories of companies cutting back on spending in times of inflation. But viewed from a macro perspective, Google’s new policy is emblematic of a travel trend that could pose a longer-term challenge for airlines.

All airline passengers are not created equal. Traditionally, business travelers not only flew more frequently, they paid higher fares, which contributed disproportionately to airline bottom lines.

But business travel hasn’t rebounded from the pandemic as vigorously as leisure travel, remaining up to 35% below 2019 levels, according to some industry estimates.

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On an earnings conference call in late July, Southwest Airlines chief commercial officer Andrew Watterson said while business travel begins to pick up this spring, it’s geared toward small business, government and the economy. education.

“Our biggest companies are the ones that are lagging behind – especially banking, consulting and technology – which used to be among our top travelers are now on the bottom side,” he said, adding that the Southwest’s largest corporate accounts all have employees who travel, but not as much, and not as often.

Last month, a sobering report from the Global Business Travel Association (GBTA) upgraded its forecast for a full recovery in business travel spending until 2026 – not 2024 as previously estimated. – citing a range of reasons, including inflation, energy prices, supply chain challenges, labor shortages and regional developments.

The report found that total global business travel spending reached $697 billion in 2021, just 5.5% above the pandemic low of 2020. The GBTA projects spending in 2022 will reach $933 billion. billion, 34% higher than last year’s levels, but only 65% ​​of pre-pandemic levels.

“Factors impacting many industries around the world are also expected to impact the global business travel recovery in 2025. The expected outcome is that we will come close, but we will only meet and exceed not pre-pandemic levels of 2019 until 2026,” GBTA CEO Suzanne Neufang said.

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