Business travel: up in the air

The business trip boondoggle is often the only thing that keeps corporate drones sane. A dull conference or meeting is a small price to pay to escape the cubicle, and to trade an irritable spouse and screaming children for a quiet hotel room.

It is well known that when times get tough that full-fare plane ticket and downtown accommodation is the first thing that the misers in accounting like to cut. A more interesting question is whether companies cut travel expenses in response to bearish financial markets, even if a broad economic slowdown has not arrived?

Shares of US hotels and airlines indicate that Corporate America is about to be grounded. American Airlines, UnitedContinental and Delta are on average down 16 per cent this year. For hotel chains Hyatt, Marriott, and Hilton the average decline in 14 per cent. As businesses that depend on keeping planes or hotels as close to full as possible, their earnings are extremely sensitive to small shifts in demand. During its earnings call UAL noted that business to and from energy hub Houston had already slowed in late 2015.

Against this, falling oil prices have been a boon to airline profits and possibly flyers. The US Department of Transportation reported this week that for Q2 2015 (the latest data available) the average round-trip airfare of $372 was the cheapest since 2010.

The US hotel groups will begin reporting their earnings next week and their comments are hotly anticipated. A recent survey from UBS provides further room for optimism, finding a majority of corporate travel buyers happy to boost travel spend this year, by 2 per cent on average.

Trips can be cancelled quickly. If economic confidence keeps fading, expect lots more empty rooms and spare seats. Workers may be disappointed but, if it preserves your paycheck, being stuck in the office may not be so bad.

Email the Lex team at lex@ft.com