On Thursday morning, the CEO of United Airlines made a comment to investors that sent shudders to anyone hoping for a relatively quick return to normal.
“We are social creatures, and I think business demand is going to come back,” J. Scott Kirby said, according to a transcript on the financial services site Sentieo.
Sounds optimistic enough. But …
“I don’t think it’s coming back immediately,” Kirby said. “I think demand sort of starts to recover in earnest the end of next year, beginning in 2022, and business demand getting back to normal is, I would guess, 2024.”
To be sure, Kirby is talking about a specific type of demand—business travel, on which airlines like United depend for their revenues.
Business travel has taken a massive hit this year, for obvious reasons, and it is reasonable to expect that it would be among the last sectors that would recover following the pandemic.
Consumers are working from home a lot more often than they once did—nearly 25% of U.S. employees are currently doing so, according to the most recent federal data. If people are working from home there are fewer people in offices to receive sales visits or other calls.
Events, of course, are virtually non-existent. They were the first to go when the quarantine began in March. They will be the last to return once states fully reopen their economies, whenever that will be.
But it could also be expected that businesses will only slowly return their workforces to the travel circuit.
For one thing, people have grown comfortable working from home. More companies are extending their internal work-from-home orders well into next year. Some are even giving their workers the option to do so permanently.
Many business have also cut expenses in recent months. Those expenses could be slower to return, which also means less business travel.
And the economy remains weak, with high unemployment. That also hurts business travel. “At the end of the day, you’ve got to have a healthy economy to drive business travel, to drive business meetings, drive investment, drive consumer spend, ties into unemployment,” Kathleen Oberg, CFO of Marriott International, told investors in September, according to Sentieo.
While fast-food chains have recovered and casual dining concepts are seeing people return, a lot of higher-end restaurants depend heavily on business travelers, as do concepts located in airports and hotels. According to the National Restaurant Association, some 25% of restaurant spending, including 30% of fine-dining spending, is directly related to travel and tourism.
A long recovery in that business could mean a long recovery for those restaurants.