Skift Travel News Blog

This is the main event. Of course the Global Business Travel Association has held previous conferences in San Diego before at the city’s waterfront convention center — but never after such a drawn-out downturn.

The association did manage to squeeze its annual convention in last year, in Chicago, but mostly minus the European contingent who were barred from traveling to the U.S.

So it’s back at full pace, with an expected 4,500 delegates here over Aug. 14-17 (down on the usual pre-pandemic 7,000, but this year organizers claim 1,000 buyers.) The mood is mostly optimistic, with delegates surprised at just how little airline and airport disruption there was, and happy to be able to network again; it’s the first time for many people in years.

But again, unlike previous conventions, has there ever been so much uncertainty about what’s ahead? There’ll be some more clarity on Monday, with the association publishing its Annual Global Report & Forecast 2022-2026.

In the meantime, here’s a few questions.

Is This Still a $1.4 Trillion Industry? This was the amount spent globally on business in travel in 2019. That figure is still quoted by travel companies in presentations and still seen as a universally accepted benchmark. But it’s time to update that. The real answer is no one really knows, not just because the pandemic disrupted travel over the past couple of years, but because it’s yet to settle down into measurable patterns, thanks to that hard-to-define mix of business and leisure travel, remote working and “company retreats.” It may take years.

Spending was forecast to have halved to $694 billion in 2020, based on its 2021 release of the Outlook, with slow growth until recovering to above more than $1.4 trillion in 2025.

The fact is it could be way more than $1.4 trillion. We’ll have some more concrete figures when we get our hands on the 2022-2026 forecast, published Rockford Analytics, on Monday. In particular it will be interesting to see the methodology. Which links to the next question…

Is a Recession Coming or Not? This convention brings together suppliers and travel buyers. It’s the ideal setting to test the mood regarding future booking levels. In a recession, marketing and travel tend to get cut the deepest. So how are those forward bookings looking? Are the tech companies, who are already slowing or freezing hiring, cutting back further on travel spend? How are budgets shaping up? Airlines and hotels may be reluctant to share such information, but corporate buyers may have some clues. Of the 1,000 travel buyers in attendance, they’re representing 555 companies, of which 324 are new for this year’s convention.

Will Company Retreats Go Mainstream in 2023? With remote working and vacant offices a fast-growing trend in 2022, will offsites, onsites, retreats and the like make up for any shortfall in traditional business travel. Pampering retreats don’t come cheap for the more global organizations, so offer airlines a valuable source of revenue. The internet is rife with LinkedIn-style guidance on how they should run their retreats, and how often, but hopefully travel managers from the bigger firms like Cisco and PayPal who are gathering over the coming days in San Diego will offer some clarity.

Another quarter, another step in the right direction for IHG Hotels & Resorts, which is “very close” (or 10.5 percent) to global pre-pandemic RevPAR — or revenue per available room, a key industry metric.

But recovery in demand and pricing across its hotels in the Americas has led to group profit more than doubling versus 2021, with profitability now ahead of 2019 for that region, said CEO Keith Barr in a statement Tuesday, as it posted its interim 2022 first-half results.

For its second quarter, Americas RevPAR was up 3.5 percent on the 2019 second quarter.

Europe, the Middle East and Africa saw an “excellent improvement in performance” but Greater China had a “tough period” due to Covid-related travel restrictions.

“We have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains,” Barr said.

IHG, which now operates 6,028 hotels, reported group revenue of $1.794 billion for the six months ended June 2022, which is a 52 percent increase on the $1.179 billion in the 2021 first-half.

Operating profit soared from $138 million in the second half of 2021 to $361 million in this year’s second half, an upswing of 162 percent.

That’s up 2.6 per cent on the comparable period in 2019.

Check back later today for more updates

The Center for Disease Control has retired its Covid-19 Program for Cruise Ships, effective Monday. Under the program, the CDC monitored Covid outbreaks on cruise ships. Under the program’s color-coding system, cruise ships were coded with colors indicating the number of positive Covid-19 tests among the crew who boarded within a 14-day span. 

“While cruising poses some risk of COVID-19 transmission, CDC will continue to publish guidance to help cruise ships continue to provide a safer and healthier environment for crew, passengers, and communities going forward,” the agency said on its website.

Travelers can contact the cruise line directly about outbreaks occurring aboard their ship.

Earlier this year, the CDC removed its Covid-19 notice against cruise travel.

SITA, a global technology provider for the aviation industry, has raised $400 million in so-called green financing.

As Skift described in its 2022 Megatrends report, green financing is an emerging trend where investments are made in companies that support or provide planet-friendly practices or products.

Four new banks have now signed up to support SITA with a sustainability-linked revolving credit facility, which has a minimum three-year term, the company said on Thursday.

The new funds will be directly linked to pre-agreed environmental key performance indicators and yearly targets, with a bonus (or penalty charge) on the interest margin depending on SITA’s performance. Performance against the targets will be externally audited.

The cash will go towards supporting the company’s general business needs, “such as developing new solutions and strategies to alleviate the air transport industry’s challenges of today and in the future,” it said in the statement.

SITA said it had ramped up its emission reduction efforts in recent years, achieving carbon neutral status under The CarbonNeutral Protocol in 2021. More recently it announced its commitment to setting science-based targets via the Science Based Targets initiative (SBTi) to join other leading companies to combat climate change aligned to net-zero and the 1.5C scenario of the Paris Agreement.

SITA’s five existing banking partners also participated in the raise.

“Sustainability is high on our agenda and we are deeply committed to ensuring a sustainable future for all, including for our employees, customers, and partners,” said Nicolas Husson, SITA’s chief financial officer. “We are delighted to secure financing that is directly linked to the performance of our sustainability ambitions.”

Speaking at Skift’s Sustainable Tourism Summit at the end of June, Intrepid’s chairman revealed that the tour operator recently received a large investment from a family-owned private equity firm because of its sustainability stance.

Saudi Arabia is also aiming to prop up its Red Sea tourism project with an up to $2.7 billion loan in green financing.

During the pandemic, SITA’s CEO said the tech provider had weathered the storm. but the private company will undoubtedly have been impacted by poor performances from its airports and airline customers as the pandemic continued to hammer travel.

“We contained our fall in revenue to -27% for the year, at $1.34 billion, compared to the previous year’s $1.8 billion,” said Barbara Dalibard in her 2020 report. “In reacting quickly to the crisis, we decreased our cost base in 2020 by 18 percent versus prior year, while reducing external support by 50 percent.”

It also achieved $300 million in cost reductions.

SITA was formerly known as Société Internationale de Télécommunications Aéronautiques, and was founded by 11 airlines more than a decade ago. The company’s board includes executives from several airlines.

The National Health Commission of China has slashed the quarantine time for inbound travellers by half.

International arrivals will now only need to spend seven days in a centralized quarantine facility, and then monitor their health at home for three days, down from seven previously.

Relaxing its stringent zero-Covid policy has already spurred travel industry share prices, in particular airline stocks. China’s measures over the past year resulted in international flights running at just 2 percent of pre-pandemic levels, according to reports.

The share price of Delta Air Lines, United Airlines and American Airlines’ rose by almost 2.5 percent in early trading on Tuesday.

The restrictions have long deterred cross-border travel, and frustrated millions of Chinese citizens living outside of their country. Widespread restrictions also prompted major hotel companies to tread cautiously regarding future development in the country.

Multi-modal transportation platform Omio has raised $80 million, with plans to expand via new partnerships, acquisitions and further growth into the U.S. after Europe-wide expansion.

Omio launched in North America in 2020, but was then hit by the pandemic. However revenue has recovered to more than double pre-pandemic levels, and according to reports founder and CEO Naren Shaam said the U.S. market had “bounced back.”

The Berlin-based travel app, which integrates more than 1,000 transportation providers across trains, buses, ferries, cars, airport transfers as well as flights, may also be able to tap into increased demand for sustainable travel (it claims that one in four customers change their bookings from flights to trains), as well as travel’s holy grail of the connected trip.

Earlier this year Omio helped build a new international website for the UK’s London North Eastern Railway, to make train travel easier to book for overseas customers. The rail company counts 10 countries as its global market, including China, Japan, Spain, South Korea and Italy. The new search and booking engine lets customers in those countries purchase tickets in their own language and currency.

In March it added a partnership with CheckMyBus, a global intercity bus search engine, while it also has collaborations in place with Kayak, Huawei and Portugal’s state-owned railway company.

Omio’s Series E funding came from new investors Lazard Asset Management and Stack Capital Group. Existing investors NEA, Temasek and funds managed by Goldman Sachs Asset Management also contributed.

In 2020 Omio raised $100 million to fund the purchase of other travel companies, after buying Australia-based Rome2Rio in 2019.

Thailand will end its requirement for pre-travel “Thailand Pass” registration for foreigners on July 1, its embassy has said. Proof of travel insurance, of at least $10,000 coverage for medical treatments,  will also no longer be mandatory.

However, they will still need to show proof of vaccination or a Covid-19 negative test result.

The tourism-reliant country has suffered over the past few years, and is taking a range of measures to kickstart its economy.

These include delisting cannabis as a narcotic drug, which while designed to boost medical and health purposes will also encourage more backpackers to its hedonistic beaches. It’s also extending the service hours of bars and pubs, according to reports.

The relaxation follows a similar lifting of rules that began June 1 for Thai nationals, who since that date are no longer required to register using the Thailand Pass. In May, the country lifted the requirement for vaccinated tourists to take a Covid-19 test before their arrival.

Other destinations including New Zealand and Egypt are also easing their requirements for foreign visitors.

Despite the euphoria around the return of international business travel, a data analytics firm has predicted a gloomier outlook.

GlobalData has said it is unlikely to recover until at least 2026.

It’s singled out the complexity of business travel, which it said still faces several added layers of complexity that affect consumer behaviour, purchase decisions, and general operations.

“Despite some encouraging signs of revival for the overall travel industry in 2022, the business travel sector is witnessing a slower-than-expected recovery, particularly regarding international travel,” it reported.

Those challenges will persist over the next four years, it said, adding that another prominent disruption was the rising cost of living fuelled by the ongoing energy crisis, due to “low energy reserves due to the pandemic and the current geopolitical situation between Russia and Ukraine.”

These increased energy costs are putting further pressure on businesses that are seeing operational overheads soar, with the result that business travel is no longer a priority for companies, it claimed.

Its Tourism Demands and Flows Database also found that international business travel fell by 78.4 percent in 2020, before falling a further 7.9 percent in 2021.

Norwegian Cruise Line Holdings Ltd has reported a net loss of $1 billion for the first quarter of this year, as the Omicron variant hit sailings.

The Russia-Ukraine conflict also resulted in the cancellation or modification of 60 sailings, which included all voyages with calls to ports in Russia.

However, the result is an improvement on the same quarter in 2021, when it racked up losses of $1.4 billion. Revenue also increased to $521.9 million, compared to $3.1 million in 2021, as cruise voyages restarted.

Total cruise operating expense increased 266.1 percent in the 2022 first quarter, compared to 2021, due to the resumption of sailings but also higher payroll, fuel, and “direct variable costs of fully operating ships.” Inflation also affected food, fuel and logistics costs.

While as of May 7 its entire fleet was back up and running, it was operating at just 48 percent capacity in the first three months of 2022.

“Last week we reached the biggest milestone yet in our Great Cruise Comeback as Norwegian Spirit, the last ship in our fleet to resume sailing, welcomed guests on board in Papeete, Tahiti,” said Frank Del Rio, president and CEO. “The herculean effort to restart our fleet would not have been possible without the incredible fortitude of the entire Norwegian team and the unwavering support of our key partners and stakeholders around the world.”

Looking ahead, its advance ticket sales balance increased $418 million in the quarter to $2.2 billion as of March 31, 2022. This includes $0.6 billion of future cruise credits, or 27 percent of the total deposit balance.

Gross advance ticket sales were $1.1 billion during the quarter, the highest level since the start of the pandemic.

The cruise line has removed all calls to ports in Russia from its itineraries in 2023.