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London-based financial services giant HSBC will permanently cut its corporate travel budget in half and look favorably on requests by as many as 70 percent of its employees to work from home at least some of the time, CEO Noel Quinn told Bloomberg in a 1 September interview. (See “Europe’s Banks Permanently Slash Business Travel,” 4 May 2021.)
The bank has adopted a model with employees sharing desks in central offices, has done away with the executive floor in its London headquarters building, and will cut its office space occupancy by 40 percent as leases expire in coming years, Quinn announced.
“I remember one day sitting at home, I traveled the world in a day, talking to clients in different parts of the world,” he recalled.
“My own view on the return to office is it would be a waste if we didn’t learn from the last 18 months,” he said. HSBC staffers will be required to be in the office two or three days a week, he expects. Face-to-face interactions create “that DNA and that teamwork,” he added.
“I’m really glad to be back in the office, seeing colleagues and having conversations in the corridor or in getting stuff done on the spur of the moment, rather than having to book a video conference or a telephone call,” Quinn said.
About 84 percent of the 45 large businesses Bloomberg surveyed plan to reduce corporate travel budgets by 20 to 40 percent; two-thirds report cutting back both internal and external face-to-face meetings.
TREND FORECAST: As we have noted in articles such as “Travel and Tourism: Crashing” in our 21 July, 2020, issue, business travelers account for a majority of profits for airlines, convention centers, and hotels in business districts.
Any reduction in corporate travel will wreak serious damage not only to airlines, hotel chains, and expo centers, but also to restaurants, shops, airport retailers, and others who cater to business travelers.
The failure of these additional businesses will add to the woes of the commercial real estate industry that we have detailed in past stories, including “Commercial Real Estate Crisis?” (3 Aug 2021) and “Commercial Landlords Scrambling” (27 Apr 2021).
We continue our forecast made in “Bid Farewell to the Business Travel Economy” in our 29 September, 2020, issue: the hospitality and tourism sectors will continue to decline, leading to more bankruptcies, greater consolidations, and less competition.