Future of business travel in doubt as virus upends work life

Future of business travel in doubt as virus upends work life
The days of relaxed business travel may be over as airlines, hotels and convention centers scramble to keep pace with health protocols. (Supplied)
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Updated 12 November 2020

Future of business travel in doubt as virus upends work life

Future of business travel in doubt as virus upends work life
  • Passenger revenue may be down, but many industries are seeking ways to adapt

BEIJING: For the lucrative business travel industry, Brian Contreras represents its worst fears.

A partner account executive at a US tech firm, Contreras was used to traveling frequently for his company. But nine months into the pandemic, he and thousands of others are working from home and dialing into video conferences instead of boarding planes.

Contreras manages his North American accounts from Sacramento, California, and doesn’t expect to travel for work until the middle of next year. Even then, he is not sure how much he will need to travel.

“Maybe it’s just the acceptance of the new normal. I have all of the resources necessary to be on the calls, all of the communicative devices to make sure I can do my job,” he said. “There’s an element of of face-to-face that’s necessary, but I would be OK without it.”

That trend could spell big trouble for hotels, airlines, convention centers and other industries that rely so heavily on business travelers like Contreras.

Work travel represented 21 percent of the $8.9 trillion spent on global travel and tourism in 2019, according to the World Travel and Tourism Council.

Delta Air Lines CEO Ed Bastian recently suggested business travel might settle into a “new normal” that is 10 percent to 20 percent lower than previously.

“I do think corporate travel is going to come back faster than people suspect. I just don’t know if it will be come back to the full volume,” Bastian said. Delta’s business travel revenue is down 85 percent.

Dubai-based MBC Group, which operates 18 television stations, says it’s unlikely employees will travel as often once the pandemic ends because they’ve proven they don’t need to. “We have managed to deliver projects and negotiate deals very successfully, though remotely,” MBC spokesman Mazen Hayek said. MBC has reduced trips by more than 85 percent, Hayek said.

Amazon, which told it employees to stop traveling in March, says it has saved nearly $1 billion in travel expenses so far this year. The online shopping giant, with more than 1.1 million employees, is the second-largest employer in the US.

At Southwest Airlines, CEO Gary Kelly said while overall passenger revenue is down 70 percent, business travel — normally more than one-third of Southwest’s traffic — is off 90 percent.

“I think that’s going to continue for a long time. I’m very confident it will recover and pass 2019 levels, I just don’t know when,” Kelly said.

US hotels relied on business travel for around half their revenue in 2019, or closer to 60 percent in big cities like Washington, according to Cindy Estis Green, the CEO of hospitality data firm Kalibri Labs.

Peter Belobaba, who teaches airline management at MIT, said business travel is down partly because some people are afraid to fly and partly because companies fear liability if employees contract COVID-19 while traveling for work.

Companies have also reined in travel because times are lean. ExxonMobil cut business travel in February because of falling global demand for oil.

Those who want to travel may also be limited by travel restrictions, Belobaba added. Last month, Polestar CEO Thomas Ingenlath observed a mandatory 14-day quarantine in China after flying in from Sweden for the Beijing Auto Show.

Polestar, an electric car brand jointly owned by Sweden’s Volvo and China’s Geely, has tried to limit travel for environmental reasons. But the 14-day quarantine has restricted travel even further, said Kiki Liu, its head of communications.

The cutback in travel has been a boon for teleconferencing services. Zoom said it had 370,200 customer businesses with at least 10 employees at the end of July, more than triple the number it had at the end of April.

But for some workers, teleconferencing can’t replace being there in person.

Rebecca Lindland, an automotive consultant and founder of Rebecca Drives, used to travel 38 weeks each year for test drives and auto shows. This year, she didn’t fly from March until September. Test drives have been cut back to regional events, so attendees don’t have to travel as far.

Lindland misses the downtime air travel gave her, and she’s confident she can return to the skies safely. She wears a mask, and even before the pandemic she always carried Lysol wipes and hand sanitizer.

“I’ve been wiping down my tray tables since 1985,” she said with a laugh.

Sam Clarke, an assistant professor in the college of business at California State University San Marcos, agrees that some in-person events — like trade shows — will still be important in the future. But he believes new kinds of business travel will also emerge.

Lockdowns have taught employees how to adapt to different work environments, he said, so hotels, airlines and even cruise ships should beef up their connectivity and cater to business travelers.

Late last month, Marriott introduced flexible options aimed at business travelers, including one-day stays with an evening check-out.

Clarke also expects some companies will flip their travel. Instead of letting a few executives travel a lot, he said, companies could let most employees work from home and fly them all back to their headquarters once a year.

Some businesses are already changing the way their work is done. Cynthia Kay and Co., a media production company based in Grand Rapids, Michigan, used to send its seven employees around the country to make videos for clients like Siemens.

When travel came to a halt in March, the company invested in proprietary software and sent iPads and other equipment to clients so it could coach them through their own video shoots, President Cynthia Kay said.

As a result, the company’s sales are down only 15-20 percent even though its travel spending has plunged 75 percent.

Still, Kay and her staff were eager to get back on the road once they felt they could do that safely. Kay began traveling again last month.


Tencent ordered to end exclusive music contracts

Tencent ordered to end exclusive music contracts
Updated 34 min 43 sec ago

Tencent ordered to end exclusive music contracts

Tencent ordered to end exclusive music contracts
  • Chinese regulators step up enforcement of anti-monopoly laws

BEIJING: Internet giant Tencent was ordered by regulators to end exclusive contracts with music copyright holders, adding to increased enforcement of anti-monopoly and other rules as Beijing tightens control over online industries.

Tencent controls more than 80 percent of “exclusive music library resources” following its 2016 acquisition of China Music Group, the State Administration for Market Regulation said on Saturday. It said that gives Tencent the ability to get better terms than competitors receive or to limit the ability of rivals to enter the market.

Tencent Holdings Ltd., best known abroad for its WeChat messaging service, has a sprawling business empire that includes games, music and video. It is among the world’s 10 most valuable publicly traded companies, with a stock market value of $680 billion.

In order to “restore market competition,” Tencent must end exclusive music copyright contracts within 30 days, the market regulator said in a statement. The company is barred from requiring providers to give better terms than competitors receive.

Tencent promised on its social media account to “conscientiously abide by the decision.”

Regulators are stepping up enforcement of anti-monopoly, data security, financial and other rules against Tencent, e-commerce giant Alibaba Group and other companies that dominate entertainment, retail and other industries.

The enforcement has hurt the stock market value of some companies. Shares in ride-hailing service Didi Global Inc., which made its US stock market debut last month, are down 21 percent after regulators announced a probe of its “network security” and ordered the company to overhaul handling of customer data.

Regulators have publicly warned major companies not to use their market dominance to keep out new competitors.

Tencent was blocked by regulators on July 10 from combining its game platforms Douyu and Huya on the grounds that might reduce competition.

On Wednesday, the Chinese internet regulator reprimanded Tencent, Alibaba, microblog platform Sina Weibo and e-commerce service Xiaohongshu for allowing sexually suggestive stickers or short videos of children to be distributed on their services.


Stronger, faster recovery forecast for global insurance sector

Stronger, faster recovery forecast for global insurance sector
Updated 38 min 58 sec ago

Stronger, faster recovery forecast for global insurance sector

Stronger, faster recovery forecast for global insurance sector
  • Global commercial insurance prices rose 18 percent in the first quarter of 2021 from a year earlier

NEW YORK: The global insurance industry is poised to recover more quickly and forcefully from the coronavirus disease (COVID-19) pandemic than it did after the 2008 financial crisis, despite such obstacles as low interest rates and inflation risk, insurer Swiss Re AG’s chief Americas economist said on Friday.

Unlike the prior crisis, the pandemic did not weaken insurers' overall capitalization or financial strength, which allows companies to write new coverage and increase revenue, economist Thomas Holzheu told Reuters.

Writing new policies was more difficult in 2009 and 2010 when insurers were reeling from capital losses, slow economic growth and depleted incomes of companies and individuals.

In contrast, businesses and individuals now have more money from government stimulus and support programs, and are more conscious of the need to buy protection against risks, he added.

“We see a much stronger, more resilient demand for insurance — last year, this year, and we expect for the next few years — compared with the financial crisis, when the industry was a part of the financial markets issues,” he said.

Swiss Re’s view aligns with other bullish signs. Global commercial insurance prices, for example, rose 18 percent in the first quarter of 2021 from a year earlier, on average, insurance broker Marsh McLennan Cos Inc. said in May. Rates have risen since late 2017.

Swiss Re said it expects annual growth for all premiums, not just commercial, to reach 3.3 percent this year and 3.9 percent in 2022, after falling just 1.3 percent last year. That compares with a 3.7 percent decline in 2008, during the financial crisis, and a slower rebound of 0.5 percent and 2.1 percent in 2009 and 2010, respectively.

Sector bellwether Travelers Companies Inc. on Tuesday beat second-quarter Wall Street estimates by more than $1 a share.

Other large US insurers are due to report results over the next two weeks.


G20 split on climate goals as China, India push back on coal phaseout

G20 split on climate goals as China, India push back on coal phaseout
Updated 24 July 2021

G20 split on climate goals as China, India push back on coal phaseout

G20 split on climate goals as China, India push back on coal phaseout
  • Coal phaseout 2025 deadline too soon for some nations
  • Some wanted more aggressive global warming target than Paris 2015

NAPLES: Energy and environment ministers from the Group of 20 rich nations have failed to agree on the wording of key climate change commitments in their final communique after China and India refused to give way on two key points.

One of these was phasing out coal power, which most countries wanted to achieve by 2025 but some said would be impossible for them.

The other concerned the wording surrounding a 1.5-2 degree Celsius limit on global temperature increases that was set by the 2015 Paris Agreement.

Average global temperatures have already risen by more than 1 degree compared to the pre-industrial baseline used by scientists and are on track to exceed the 1.5-2 degree ceiling.

“Some countries wanted to go faster than what was agreed in Paris and to aim to cap temperatures at 1.5 degrees within a decade, but others, with more carbon-based economies, said let’s just stick to what was agreed in Paris,” said Italy’s Ecological Transition Minister Roberto Cingolani.

The G20 meeting was seen as a decisive step ahead of United Nations climate talks, known as COP 26, which take place in 100 days’ time in Glasgow in November.

Italy holds the rotating presidency of the G20, and Cingolani, as chairman of the two-day gathering, said negotiations with China, Russia and India had proved especially tough.

The G20 nations, which includes Saudi Arabia, collectively account for some 80 percent of the world’s gross domestic product and some 60 percent of the planet’s population.

At the Naples talks, the United States, the European Union, Japan and Canada made clear they “firmly intend to go faster than the Paris agreement by the (end of) the decade, and below 1.5 degrees,” Cingolani said.

Cingolani said the G20 had made no new financial commitments, but added that Italy would increase its own climate financing for underdeveloped countries.

The urgency of climate action has been brought home this month by deadly floods in Europe, fires in the United States and sweltering temperatures in Siberia, but countries remain at odds over how to pay for costly policies to reduce global warming.

Despite the two points of disagreement, Cingolani said the G20 had put together a 58-point communique and that all the countries agreed that decarbonization was a necessary goal.

All G20 members agreed to at least meet the Paris goals.

US President Joe Biden’s climate envoy, John Kerry, participated in the Naples talks. Earlier in the week, Kerry called on China to join the United States in urgently cutting greenhouse gases.

The majority of the countries at the conference also backed a goal of moving faster to reduce the use of coal, the Italian minister said, without naming all of the nations.

But during the talks, China, as well as Russia and India, were “more prudent” in embracing more ambitious goals, Cingolani said.

“For those countries, it means putting into question an economic model,” he said.

Exactly what commitment nations, including those which heavily pollute, are willing to make toward fighting climate change will be also on display at UN climate conference taking place in Scotland in November.

The national leaders of the G20 countries will have the opportunity to thrash out the sticking points that emerged in Naples when they meet in Rome at the end of October.


Food commodities in Egypt ‘will not be affected by increase in fuel prices’

Food commodities in Egypt ‘will not be affected by increase in fuel prices’
Updated 24 July 2021

Food commodities in Egypt ‘will not be affected by increase in fuel prices’

Food commodities in Egypt ‘will not be affected by increase in fuel prices’
  • Head of Consumer Protection Authority warns that its inspectors would deal with those who raised any prices

CAIRO: The president of the Cairo Chamber of Commerce, Ibrahim Al-Arabi, said on Saturday that the increase in fuel prices will not affect the price of bread and other food commodities, nor the flow of goods.
Al-Arabi said the decision of the Fuel Automatic Pricing Committee, which is concerned with following up and implementing the mechanisms of applying automatic pricing for petroleum products every quarter, recommended adjusting the selling price of the three types of gasoline products, starting Friday morning, raising prices by 25 piasters ($0.016), with the price of a liter of 80 octane gasoline rising to 6.75 Egyptian pounds ($0.43). The price of 92 octane gasoline is now 8 pounds per liter and high-quality 95 octane gasoline is 9 pounds.
The committee’s decision was based on the extreme fluctuation in global prices, mainly because of the economic effects of the coronavirus disease pandemic and production cuts.
Ayman Hossam El-Din, head of the Consumer Protection Authority, warned that its inspectors would deal with those who raised any prices, whether for foodstuffs or transportation costs.


Lebanon signs deal to sell Iraqi fuel in move to ease crisis

Lebanon signs deal to sell Iraqi fuel in move to ease crisis
Updated 24 July 2021

Lebanon signs deal to sell Iraqi fuel in move to ease crisis

Lebanon signs deal to sell Iraqi fuel in move to ease crisis
  • The swap is valued at between $300-400 million
  • Lebanon to offer Iraq unspecified services in exchange

BEIRUT: Lebanon signed a deal Saturday to broker Iraqi fuel sales in hopes of alleviating a crippling financial and energy crisis in the small Mediterranean country, Lebanese and Iraqi media reported.
The deal allows Beirut to resell 1 million tons of heavy fuel oil from Iraq — fuel that Lebanon cannot use in its own power plants — to companies who would then provide useable fuel to Lebanon over the next year.
Lebanon would offer Iraq services in exchange, Energy Minister Raymond GHajjar said, without offering details. Local media said Iraq would benefit from Lebanese health services and agriculture consultancy.
The swap, which GHajjar estimates is valued at between $300-400 million, could offer a brief respite to Lebanon’s worsening power cuts and bring funds to its cash-strapped government. But a structural power solution, in a sector steeped in corruption and political interference, is far from sight.
Blackouts have been a fixture in Lebanon since the end of its 15-year civil war in 1990, and the small country relies on imported fuel. But the problem has intensified as the government grapples with unprecedented financial problems, and considers lifting fuel subsidies.
“The Iraqi state agreed to open an account in Lebanon’s Central Bank in exchange for this fuel. This account is managed by the Iraqi Finance Ministry through which it buys services inside Lebanon... in Lebanese pounds,” GHajjar said. Then Lebanon resells the fuel in exchange for fuel it can use in its plants.
“We hope other Arab countries follow suit and give us this opportunity because it is really a golden opportunity for us,” GHajjar said at Beirut International Airport upon his return from Baghdad.
A statement from Iraq’s Prime Minister’s office said the 1 million barrels of fuel oil would be offered to Lebanon in exchange for services and products, although neither side immediately mentioned what these were.
Lebanon’s state electricity company has most recently been providing no more than four hours of power a day, leaving private generator operators as the main providers. Diesel supplies have dwindled, and long queues stretch outside gas stations each day.
Government officials have also complained of widespread smuggling to neighboring Syria, which is also facing an economic crisis following a decade of war.
Lebanon defaulted on its foreign debt last year and struggled to pay suppliers. The Central Bank has been limiting credit to purchases of basic supplies, including fuel and medicine.
The energy crisis has reached unprecedented levels in Lebanon. Generator operators warned Friday they would have to turn off their engines as diesel shortages have worsened and prices on the black market have reached exorbitant levels.
Hospitals are rationing their consumption, shutting off air conditioning in waiting areas, while bakeries in some parts of Lebanon have stopped their ovens altogether. Supermarkets have warned that the power shortages threaten their merchandise and endanger food safety.
The UN children’s agency, UNICEF, has warned that most water pumping will gradually cease across the country in the next four to six weeks, putting more than four million people, including one million refugees, in immediate risk of losing access to safe water.