Despite the positive news surrounding drugmaker Pfizer and Moderna’s COVID-19 vaccine development, along with encouraging results from Oxford-AstraZeneca’s vaccine, readers should realize that vaccines may not revert today’s chaotic world to pre-covid times.
For instance, Microsoft co-founder Bill Gates warned Tuesday at the New York Times’ Dealbook conference that the virus pandemic will fundamentally reshape business travel and the office experience forever.
Gates said, “my prediction would be that over 50% of business travel and over 30% of days in the office will go away.”
He added, “We will go to the office somewhat, we’ll do some business travel, but dramatically less.”
What Gates suggests is that structural change, such as video conferencing and remote working, will fundamentally change how corporations conduct business. These changes will have negative impacts on the travel industry and commercial real estate.
Given some of the structural changes in play – it’s becoming clear that a vaccine will not be the saving grace as pitched by Wall Street and the Trump administration. The freight train of structural change has left the station as a new economic order is being laid down for the decade ahead and will produce permanent declines for specific industries.
The air travel industry will be one of those to experience a slump that could last for years. Business travel, the backbone of air travel demand, as Gates explains above, will be halved.
For more clarity on this topic, the U.S. Travel Association (USTA) projects travel spending will decline by more than $500 billion in 2020 and may not recover back to pre-covid levels until 2024.
USTA said the dramatic decline in travel spending reflects the plunge in business travel. The group said the travel industry has lost 40%, or 3.5 million jobs, and warned more than one million jobs could be lost if additional government bailouts aren’t seen by year-end.
The pessimistic forecast comes as vaccine headlines have generated buzz on Wall Street of an imminent economic recovery. Still, as we highlighted above, no matter what vaccines are commercialized and distributed, there are structural changes underway that will forever reshape how the economy functions.
The development of vaccines is the old “chase the carrot” trick used by the government and Wall Street to remind people how these wonder drugs could take us back to pre-covid days. Just like a carrot was tied to a stick in front of a wagon’s mule to make them step forward and walk ahead … the mule was never able to reach the carrot.
Plain and simple – reverting to pre-covid days could be an unreachable goal.