Continued from page 40


a global pandemic. There will be a decision on whether to appeal.” One lesson he can draw, he


said: “The crisis has demonstrated pandemic insurance can’t be provided by the insurance market alone. The global nature of the risks is too huge. If it is to be available, it needs support from government.” He added: “We’re in regular


dialogue with government and regulators about the challenges businesses face. “We identified quickly there


would be an impact on businesses’ ability to trade with one another with confidence, so we negotiated with government on a £10 billion trade credit insurance scheme with a government backstop that is helping thousands of businesses trade in a confident way.” A second lesson is “open


communication is vital”, he said, insisting: “Sometimes people don’t like the message, but it needs to be communicated. The insurance industry came in for a lot of criticism, in particular on business interruption, but it was important to be clear at the outset so that businesses and consumers could make judgments.” He said: “What we’ve


done quite well is recognise the concerns people have and respond to them. So if you work from home, for example, you don’t need to tell your insurer. “We continue to work through


the implications for travel and business insurance, and the market will continue to adapt.”


‘Business travel may still be down even by 2024’


International business travel will remain 65% down on 2019 next year, according to investment bank Credit Suisse. It warns the corporate travel


market may only recover to 80%-90% of its 2019 level by 2024. In a report on the sector at the end


of September, Credit Suisse suggests availability of a vaccine “at critical scale on a global basis” will stimulate a recovery and “should see recovery gain more momentum” in 2022. But it argues: “It is unlikely corpo- rate travel budgets will be fully rein-


Budget carriers are forecast to benefit as network airlines cut capacity


stated. [We] see a 60%-70% recovery on 2019 as reasonable [for 2022].” Beyond 2022, Credit Suisse


says: “We expect corporate travel to resume growth in line with GDP once the global economy normalises and corporate travel policy and budget adjustments are implemented.” However, it suggests demand


will remain lower even after a rollout of a vaccine, arguing: “We expect corporate travel from largely-vaccinated regions to poorly- vaccinated regions to remain limited.” Credit Suisse also predicts “a


highly fragmented recovery of corporate travel” partly due to increased working from home. The bank’s report notes that


in September “only 40% in Britain were back to their desks” and “not all returners [were] working from the office full time. We expect 50% of employees back in the office in 2021, meaning a recovery in corporate travel only in 2022. “We see the return to work as


critical for the outlook for business travel as the rationale for discretionary business travel is dependent on parties being in the office for a physical meeting to take place.” Credit Suisse suggests upscale


hotels will be most affected by the downturn as corporate travellers provide 60% of luxury hotel demand. It forecasts budget carriers


Ryanair and Wizz Air will benefit at the expense of network carriers such as Lufthansa as business travel contributes more than 50% of such airlines’ revenue.


Trend for working from home tipped to slow recovery


Corporate travel faces a lengthy downturn from the Covid crisis due not only to government travel restrictions but also to working from home. UBS analyst Jarrod Castle told


October 14, 2020 (09.00-17.00) Brought to you virtually


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the Institute of Travel Management (ITM): “The crisis will take several years to get through. A rise in GDP next year may not mean travel is out of the woods. After the financial


crisis [in 2008] it took five years for airports to recover lost traffic.” Addressing an ITM virtual


conference, Castle said: “Between the G20 countries, 96% of routes have travel restrictions.” The G20 group comprises


the EU and 19 countries with the largest economies. Castle noted: “Europe started


to open up in the summer with around 40% of intra-Europe traffic. Now it is 36%. It is one step forward and two steps back. This is very different to the financial crisis.” But he added: “We also have


this working-from-home trend. Survey results show this continuing


An online meeting


to grow – at least 55% in a recent UBS survey said they want to work at least one day from home post- Covid and 40% said three days. “Are you going to be able to


access the people you want to see if they continue to work from home?”


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