April 22, 2024

TMCs predict pandemic’s impact on prices

By Bev Fearis, published 7/05/20

When the coronavirus pandemic passes and business travel resumes, what will be the impact on prices, both in the short term and further down the line? We asked five corporate travel management experts for their views.

Sonia Michaels, Head of Business Travel Services, The Advantage Travel Partnership

The road to restarting business travel will be slow and staggered. We see domestic travel returning before overseas, with access to countries coming back at different times due to governments’ varying coronavirus plans.

Buyers will place a greater focus on the health and safety of their employees and will only return when they are confident with the hygiene and social distancing measures put in place by suppliers.

Whilst consumers will be price driven, we believe corporates will long term be duty of care driven, which means that they may accept higher prices from suppliers once the initial phase of re-opening and deals have passed as they will want to ensure travellers are looked after. Sustainability of business travel was important to buyers before COVID-19 and this will continue in the short, mid, and long term as well. Coronavirus may have exponentially increased the pace of buyers’ sustainable decisions and so how travellers get to a destination and how they live once there will impact overall supplier decisions long term and the price they are willing to pay to achieve duty of care.


David Bishop, Commercial Director, Gray Dawes Group

Fundamentally, once the health pandemic eases, the financial crash will follow. So, although COVID-19 is unprecedented we can learn from the last economic crash in 2008.

For hotels, the financial crisis in the autumn of 2008 pretty much halted the hotel real estate market. Once hotel performance bottomed out in late 2009, hotel investors jumped in and by late 2010 and 2011, prices went above pre-recession levels.

So, my prediction is that hotel rates will drop by 25% in 2020, 15% in 2021, and 5% in 2022 and then a recovery is expected in 2024 with rates up by 2%.

Some of these price drops will be masked by hotels in other ways as they try to stimulate demand by delivering value adds. So we expect to see a mixture of Buy X nights, get Y Free, or hotels offering discounted or free food and beverage, and hotel passes where corporates could buy 30 rooms to be used over a period with a discount applied up front.

Airlines are much harder to predict given the stimulus packages available (for example Air France has received €7bn in Government support, UK airlines are still lobbying), the varying health of airlines pre-COVID-19 (Virgin was £5bn in debt and hadn’t turned a profit in seven years) and the markets they operate (US and Chinese airlines service a large domestic market which is expected to recover quicker than the international trips).

It also depends on the availability of a vaccine or if there’s a second wave of the virus.

Again, using the 2008 crash as an example, it is forecast that fares are to decrease by an average of 35% globally in 2020 and early 2021 but by the summer of 2021 they are expected to rise to between minus 10% and plus 10%, depending on the availability of a vaccine as demand grows with several events and conferences and pent-up holiday demand.

I predict we’ll see a 35-40% drop in flights over the next 12 months as airlines consolidate, cease to exist or reduce inventory, causing a retirement of 2000 planes which will affect airport and manufacture revenues.

Gatwick for example has lost 50% of its slots with BA and Virgin pulling out. We will wait see whether Vueling or Easyjet take up the remainder.


Bex Deadman, Managing Director, Blue Cube Travel

My thoughts are that initially you will see limited availability due to airlines, hotels and other suppliers being able to prepare themselves for the new norm.

For this reason pricing will be higher than it was prior to the crisis. However, as time goes on and more travel suppliers follow what others are doing, there will be more choice and it’s likely suppliers will compete commercially again on price.

However, one of the reasons that travel pricing had reached some of the lows it had in recent times is the fierce competition within the market. It is likely that some players will not recover fully from this, perhaps offering less capacity, meaning less choice for consumers which could eventually stabilise and regulate pricing.

The travel industry is often criticised for promoting travel and experience at the detriment of our planet and own health. COVID-19 has forced the world to stop and work in a different way. It will take a while for people to feel comfortable to travel again, let alone a company understand the complicated restrictions that different countries are likely to adopt on the short-term.

We expect our clients to begin traveling again with any earnest in 2021. Expect to see a small amount of travel this year as borders re-open, but this will be subject to availability and the price point. It will be interesting to see how suppliers will increase pricing to mitigate against losses without driving clients to seek alternative suppliers or perhaps not travelling at all.

I would like to see consideration given to the type of trip a corporate traveller undertakes. I’d like to see less short (zero-two days) direct trips and more time given to planning more complicated multi-centre itineraries, so that when a person travels for their company the ROI is maximised, but impact to their own well-being and our planet’s sustainability is reduced.

It would be good to get to a place where we have people doing fewer trips but in doing so have a higher level of comfort and standard – this of course comes at a higher cost, but if you are reducing your volume, you can increase the quality.


Noah Meyerson, Managing Director, Traveltrust

I believe that pricing for all forms of business travel will likely drop significantly over the very short term in order to entice people to travel again, which will mean margins for travel agencies will drop significantly as well.

However once planes and hotels are closer to capacity, suppliers may very well push up prices significantly to cover new costs associated with social distancing and other health measures. Hopefully, after a year or so, or after a vaccine is successfully implemented (whichever comes first), suppliers will start being able to return to pre-COVID 19 business practices, and pricing will slowly return to what it was before.


Melanie Quinn, Head of Sales and Customer Relations, Clyde Travel Management

It is to be expected that there will be a slow return of commercial flying, with domestic travel returning first, as we have seen in China.

It is anticipated that we will see 20% of capacity returning in the first instance, gradually creeping up to 50% later in the year, subject to border controls and government lockdown policies being relaxed. Social distancing is not possible on aircraft and add to that the recycling of air on board during flight, passenger confidence will be low.

We know that certain sectors will return earlier. Those related to key worker industries such as medical and movement of goods internationally will be the first, then subsequent sectors as permitted by government, to return to some sort of business as usual.

With reduced capacity we anticipate in the short term we will see less travel, but at higher average air ticket prices. Hotels, conversely, we believe will have lower prices to encourage both business and leisure travellers to book.

It is to be expected that there will be a slow return of commercial flying, with domestic travel returning first, as we have seen in China.

Confidence in supply will be paramount, hygiene processes and guarantees will be sought to give comfort to companies and travellers that all possible precautions have been taken to protect individuals. Companies will be prescriptive about requirements for the first to travel, for sure.

Medium term, as confidence builds, we should see prices flattening, but I do not anticipate it will be to the levels we enjoyed in 2019 for some time.

The global market had over capacity, driving prices down to affordability for all. The crisis will undoubtedly prompt airlines cut previous ‘loss leader’ routes.

High levels of corporate traffic requirements, such as Heathrow-New York JFK, will drive those routes that are retained.

Long term, business travel will survive, as it has every crisis before this. However, it will be a very different landscape. Several airlines and travel companies are at risk of extinction. This could force consolidation and ultimately a reduction in choice for the customer.