More Bad Omens for Business Travel, As WEF Axes Tropical Davos and Mobile World Congress Suffers Wave of Cancellations

The cancellation of the World Economic Forum’s Singapore meeting and the gathering exodus of participants from the World Mobile Congress in Barcelona do not bode well for the near-term future of business travel.

When even Davos man, with all his material advantages, connections and privileges, doesn’t feel safe enough to gather with large numbers of his own kind, it’s probably safe to assume that a return to some semblance of a normality — even of the new variety — is a long way off for business travel. The event’s organizer, the World Economic Forum, has attracted notoriety over the past year for its modest plan to “reset” just about everything that exists on planet Earth, mainly for the benefit of its own corporate sponsors. But for now, as Covid rages across Asia, it’s unable to even hold a summer version of its annual conference in Singapore.

“Regretfully, the tragic circumstances unfolding across geographies, an uncertain travel outlook, differing speeds of vaccination rollout and the uncertainty around new variants combine to make it impossible to realise a global meeting with business, government and civil society leaders from all over the world at the scale which was planned,” the organization said in a statement. 

The event, whose theme was slated to be “The Great Reset”, had already been rescheduled twice and had been moved to Singapore from its traditional location of Davos, Switzerland. But Singapore is suffering another outbreak of Covid-19, which has forced the local government to close schools and postpone a long-anticipated air travel bubble with Hong Kong that was supposed to begin on May 26. Like Davos, the scheme has faced multiple delays from its initial launch date in November 2020. As a result, two of Asia’s biggest business remain cut off from each other for the foreseeable future.

Global Tech Giants Pull Out of Mobile World Congress, Again

In Europe, the organizer of the Mobile World Congress, the GSMA, insists that the show must go on even as many participants pull out. Scheduled for late June, the world’s biggest mobile trade fair has lost so many key exhibitors in recent weeks, including Samsung, Lenovo, Ericsson, Sony, Google, IBM, Nokia, Qualcomm and Oracle, that it’s now being dubbed the “zombie show”. Without these exhibitors, there’s not much of an exhibition. With a month and a half still to go, there’s time for more companies to drop out. 

The MWC has been an annual event in Barcelona since 2006. It is a key showcase for global tech giants and telcos. In 2019 it drew 110,000 attendees from almost 200 countries. That sprawling global reach, once considered a major attraction, makes the event a perfect melting pot for transmission of COVID-19. Last year’s event, scheduled to take place at the end of February, was one of the first big conferences to get cancelled as industry stalwarts pulled out at the last minute.

This year’s event features a much lower capacity (40,000 people) as well as safety measures such as mandatory PCR testing (every 72 hours), temperature controls and mandatory mask wearing. The GSMA has been positioning MWC as something of a hybrid event. But with so many exhibitors dropping out because of concerns over covid, it’s not clear what the in-person dimension will look like.

If the event is cancelled a second time, the world’s biggest tech firms and start-ups will miss out on another chance to showcase their latest products to their biggest customers on the largest stage. But that is nothing compared to the economic pain that awaits for companies in the travel and tourism sector.

Airlines and travel agents will lose out on yet more flights, tours, and other travel services. It could also be the final nail for some hotels and hostels in Barcelona. Many have been closed for the past 14 months. But they are still having to pay fixed costs such as rent and taxes while generating zero income. For those that stayed open after March 2020, revenues collapsed by roughly half for the remainder of the year.

In a normal year — which we’ve not had for a while — the MWC generates 14,000 temporary jobs and around half a billion euros, much of which ends up in the pockets of local taxi drivers, owners of bars, restaurants and hotels, prostitutes and their pimps and madams, Airbnb hosts, and the thousands of professional pickpockets that converge on the city for the four-day event.

That money has all dried up. And now businesses in the city just want some sign that international tourism will soon resume. Even a pale imitation of the normal event is better than nothing, says Pol, who owns two small hostels that have been closed since March 2020:

“Even if it goes ahead with just a third of the normal number of attendees, it might give a chance for the city to begin to get back on its feet. For us, it might mean being able to finally fill four or five of our beds. Right now, that’s about as much as we can hope for.”

No Recovery In Sight for Business Travel

As vaccination take-up increases across Europe and North America, leisure travel is beginning to pick up. To take advantage, countries like Spain, Italy and Portugal are quickly reopening their borders and reversing Covid-19 restrictions. For these countries tourism represents a huge chunk of the economy. And last year was a complete wipe-out, leaving thousands of businesses on the brink. In Spain tourist arrivals by air, land, and sea collapsed by 77% from 2019, according to the National Statistics Institute (INE).   

But there is no recovery in sight for business travel. And it’s business travel that is the most lucrative source of income for airlines, essentially subsidizing leisure travel’s lower fares. Airlines have already cut capacity drastically on business-travel routes.

Business conventions, conferences and other junkets were also huge money makers in the pre-pandemic era. In Germany and the UK they generated $123 billion and $92 billion respectively in 2017. That money has now run dry.

It is impossible to know how much of this activity will recover in the long term. In the short term the signs are not encouraging. Companies have discovered that it’s perfectly possible to service most existing clients remotely. And they are saving huge sums of money in the process. What’s more, many seasoned business travellers don’t exactly miss life on the road, or up in the sky.

“For a lot of people, frequent business travel has become more of a burden than a perk,” said Scott Cohen, a professor at the University of Surrey in England who studies business travel. 

Almost half of the executives surveyed by healthcare provider Bupa Global said they believed they had better mental health from travelling less. At least one in four intend to cease all time spent away from home for work this year. Obviously, some business travelers can’t wait to get back in the saddle. But the longer the pandemic remains a threat, the more businesses will be forced to seek alternatives. 

Continue reading on Naked Capitalism

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s