Peer pressure may also play a part: once one company gets back to face-to-face meetings, their competitors may not want to hold back. Regional and domestic business travel will likely rebound first some companies and sectors will want to resume in-person sales and customer meetings as soon as they safely can. After the 2008–09 financial crisis, for example, international business travel took five years to recover, compared with two years for international leisure travel. History shows that, after a recession, business travel takes longer than leisure travel to bounce back. Video calls and collaboration tools that enable remote working, for example, could replace some onsite meetings and conferences. During and after the pandemic, though, there is a question about business travel: Exactly when is it necessary? The answer is almost certain to be not as much as before. It also brings in a disproportionate share of profits-70 percent of revenues globally for high-end hotels, for example. In 2018, business-travel spending reached $1.4 trillion, which was more than 20 percent of the total spending in the hospitality and travel sector. Level seen prior to the pandemic, and high-end domestic travel is actually ahead of it.īy definition, leisure travel is discretionary. 3Īnniek Bao, “Travel rebounds over China’s national day holiday,” Caixin Global, October 9, 2020, Monica Buchanan Pitrelli, “More than 600 million people traveled in China during ‘Golden Week’,” CNBC, October 9, 2020, Guang Chen, Will Enger, Steve Saxon, and Jackey Yu, “ What can other countries learn from China’s travel recovery path?,” October 2020.īecause of confidence in the country’s health and safety measures, domestic travel is almost back to the In China as a whole, hotel occupancy and the number of travelers on domestic flights were more than 90 percent of their 2019 levels at the end of August, and over the October Golden Week holiday, more than 600 million Chinese hit the road, around 80 percent of last year’s figure. But it was a different normal: domestic travel was surging, but international travel was still depressed given pandemic-related border restrictions and concerns about health and safety. The CEO of one major travel company told us that, beginning in the third quarter of 2020, business was “pretty much back to normal” when referring to growth. People who travel for pleasure will want to get back to doing so. Leisure travel bounces back but business travel lags
The point is that spending will only recover as fast as the rate at which people feel confident about becoming mobile again-and those attitudes differ markedly by country. New lockdowns and, critically, the rollout of COVID-19 vaccines have and will affect those numbers. Only around a third had resumed out-of-home activities, compared with 81 percent of consumers in China, 49 percent in France-and just 18 percent in Mexico. “ Survey: US consumer sentiment during the coronavirus crisis,” December 2020. In late September, for example, the US consumers surveyed were more optimistic than before but still cautious, reporting that they planned to buy holiday gifts for fewer people and keep an eye on discretionary spending. How fast and deep confidence will recover is an open question. Jamie Smyth, “Australia’s economy powers out of COVID-19 recession,” Financial Times, December 1, 2020, ft.com. With the pandemic largely contained in that country, household spending fueled a faster-than-expected 3.3 percent growth rate in the third quarter of 2020, and spending on goods and services rose 7.9 percent. Except for international air travel, Chinese consumers have begun to act and spend largely as they did in precrisis times. While manufacturing in China came back first, by September, so had consumer spending. On Singles Day, November 11, the country’s two largest online retailers racked up record sales.
China’s consumers are relieved-and spending accordingly. The first country to be hit by the COVID-19 pandemic, it was also the first to emerge from it. China was an exception-it has an older population but is conspicuously optimistic.īut China’s profile proves a larger point. McKinsey’s most recent consumer survey, published in late October, found that countries with older demographics, such as France, Italy, and Japan, are less optimistic than are those with younger populations, such as India and Indonesia.
That isn’t to say that consumers will act uniformly.
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