Bye-Bye Business Travelers

The economic crisis has caused an unprecedented drop in business travel. What that means for the warriors who remain on the road.

I don't want to go all Chicken Little on you, but the sky is falling on the business-travel world.

"Our traffic has cratered," a 30-year airline veteran told me late last week. "I've never seen anything like it before. It's brutal."

"Travel has tanked since Labor Day," added the general manager of a luxury hotel in Chicago. "Last year at this time, I was booked fairly solid right up to Christmas. This year, I'm empty. I've got days when I'm at 25 percent [occupancy]."

It's a matter of financial doctrine that travel and entertainment spending is the first to fall when the economy weakens. And T&E has been slumping all year, as corporations reacted to oil prices, low sales, falling profits, and other factors. But the collapse of travel since the markets shuddered in mid-September is unprecedented. With the obvious exception of the months immediately after the 9/11 terrorist attack, travel has never fallen this far or this fast.

Consider this: Since Labor Day, the nation's six network airlines and their commuter affiliates have grounded about 500 aircraft. That means a carrier the size of Northwest Airlines, the nation's fifth largest, has essentially disappeared from the skies. Yet even with that estimated 10 percent cut in nationwide seat capacity, airlines haven't been able to register increases in "load factors," the percentage of available seats sold. In fact, passenger demand has fallen so precipitously that some carriers reported their load factors dropped in September or October.

It's no better for hotels. A respected lodging consulting firm says nationwide hotel occupancy has declined steadily this fall. By the end of October, the number of rooms filled dropped 6.6 percent to 63.1 percent. Revenue per available room, a key gauge of hotel performance, fell 7 percent.

Want some anecdotal evidence to dress up the dreary statistics? A pair of travel magazines folded last month. A major resort in Hawaii served just one breakfast in its dining room on a recent morning. A gate agent at San Francisco International Airport called me last week to report she had just processed a flight to Europe with only two paying business-class passengers. And oh, yeah, the 124-room Goodwin Hotel, a terra cotta icon in downtown Hartford, Connecticut, will close its doors at the end of the year. The owner has offered to lease the property for $1 a year to the union representing the hotel's employees.

The sharp downward turn of travel would be worrisome enough if it were just a matter of quantity. But it's a matter of quality too. The most profitable travelers -- us business types -- are staying home.

As I explained in a recent column, business travelers who take high-priced, premium-class flights and book expensive hotel rooms are the financial glue that holds the system together. As business has spiraled downward in subsequent weeks, more and more companies have put the brakes on their T&E spending. And many of us who are still on the road have been asked to fly less frequently, travel less elegantly, and pinch every available penny. The new frugality has even spawned its own thread at the FlyerTalk.com discussion boards.

"Business travelers are not fools," the corporate travel manager of a major computer firm told me by email last week. "They know that their bonuses, maybe even their jobs, depend on us cutting costs and riding out this bad patch. Some of them have even come to me with ideas for getting T&E costs down. They know this is no joke."

Of course, even such a dark cloud has a proverbial silver lining.

Travel will be easier for those of us who'll still be on the road in the coming months. Airports will be less crowded, security checkpoints will be less frenetic and, miracle of miracles, more and more flights are running on time. Last year I was writing that nationwide on-time performance had slid to schedule-destroying levels. But last month 84 percent of the nation's flights arrived on time, according to FlightStats.com. It's the fifth consecutive month airlines have improved on-time performance.