The economic tumult in recent weeks that has roiled the U.S.
stock market, triggered some reconsideration of economic and corporate revenue
forecasts and shaken the confidence of some consumers and small businesses may
be beginning to have another effect: a reevaluation and possible slowdown of
corporate travel demand. 

That’s according to some travel management company
executives, consultants and analysts who have recently spoken to BTN about the
impact of the economic policies of the Trump administration. It should be noted
that the suggestion of slowing demand isn’t unanimously shared; some indicated they’ve
not seen anything of the sort. 

But some signals are beginning to emerge. One TMC shared
with BTN that after the first few months of 2025, in which business travel
volume ran about 10 percentage points ahead of last year, that figure in the
past two weeks shifted to a nine-point drop. That followed the March 11 downgrades
to first-quarter revenue projections by four major U.S. airlines, some
citing softening corporate demand as one factor.

“I think they’re starting to tighten the belt one notch
at a time,” said Partnership Travel Consulting founder and CEO Andrew
Menkes of corporates. “We’re starting to see some cutbacks. I’ve had some
people say we can’t attend a meeting unless it’s internally hosted and produces
revenue.

According to AmTrav president and founder Craig Fichtelberg,
“The economic uncertainty in the financial markets is
definitely making it difficult for customers to commit to firm travel
budgets for 2025. Corporate demand currently does not have a clear direction,
and may not, as the uncertainty could exist for a while.”

Others, though, said they’ve not seen evidence of any
corporate travel pullback. Festive Road CEO Caroline Strachan said, “we
have not seen any reduction or planned reduction in T&E activity across our
broad and multi-sector client base,” while Brandon Strauss, partner and co-founder of travel consultancy KesselRun Corporate Travel
Solutions, said
“if anything, people are doubling down right now. Perhaps, getting travel
in now in anticipation of a cutback but that’s just speculation.”

Other sources speaking on anonymity painted a nuanced
picture with little consistency in terms of how corporates were approaching the
market, guided by their individual views on the economy. Those with pessimistic
economic outlooks may be pumping brakes on some travel.

That reflects a state of affairs described by Delta Air
Lines CEO Ed Bastian on March 11 at the J.P. Morgan Industrials Conference in
New York. 

“We talked to all of our corporate customers, and
everyone is ready to go,” Bastian said.
“But in the face of the amount of macro uncertainty that’s out there, I
think people are cautious. They’re pulling back a little bit on travel, not in
an organized manner, but just kind of waiting to see what’s going to transpire,
whether it’s trade and tariff challenges or macroeconomic policy changes or
just a little bit of the unsettledness of the market that we all see.”

Shaping the Landscape

Several, but not all, of the factors at play in setting the
overall economic environment being assessed by corporates relate to actions
taken by President Donald Trump’s administration and subsequent reactions from
the market and other stakeholders. From the administration’s application and
revocation of tariffs to its moves to curtail government travel and spending to
its relationships with neighboring allies, the first months of Trump’s second
term have proven hectic. Sources identified several drivers of the current
demand landscape for corporate travel, not necessarily in order of importance.

• The reaction of the stock market, economists and
corporate and consumer to Trump’s moves and economic conditions. The
S&P 500 index by mid-March had lost nearly 10 percent of its value from its
February peak, though it’s recovered some since. The board members and bank
presidents of U.S. Federal Reserve last week lowered their median projection
for full-year 2025 U.S. gross domestic product to a 1.7 percent increase year
over year, down from a projected 2.1 percent increase in December. (U.S. GDP in
2024 increased 2.5 percent year over year.). Several investment banks,
including JPMorgan,
Goldman Sachs and Morgan Stanley have reduced 2025 GDP forecasts as well.
And the Federal Reserve Bank of Atlanta’s GDPNow tool projects a 1.8
percent GDP decline for the first quarter.

Conditions appear to be affecting consumer confidence. The
Conference Board’s Consumer Confidence Index for March dropped 7.2
points from the prior month, and its future-looking Expectations Index
dropped to its lowest level in 12 years. The first-quarter Small Business
Index, a measure of small business confidence published by MetLife and the U.S.
Chamber of Commerce, dropped to 62.3 from 69.1, returning to levels before
Trump’s election.

Sources suggested these types of figures in a vacuum aren’t
likely to prompt widescale corporate travel cutbacks, and some executives might
see opportunity, but corporates who view the economic landscape pessimistically
could pursue cuts. 

“Corporate travel is the number one pinata for a CFO,”
Menkes said. “It’s easy to reach, easy to hit. … I would say that once it
started to make the Wall Street Journal or [be reflected in] the stock market,
it’s like trying to get ahead of a tsunami.”

• Trump’s executive order regarding government travel and
the reductions enacted by the Department of Government Efficiency. All
sources agreed that federal government travel has been curtailed in Trump’s second
term after the president issued an executive
order that directed
federal government agencies to bar “non-essential” travel, such
as trips for conference attendance, and freeze credit cards for 30 days. This
was issued to empower the Department of Government Efficiency, the new
organization spearheaded by Elon Musk, to reduce federal spending. DOGE’s
actions have been abrupt, dramatic and controversial and have included
thousands of layoffs along with canceled leases and plans for building sales. 

Sources indicated business travel activity at federal
agencies, as such, has been curtailed as employees wait to see where DOGE
swings next and how their operations and employment will be affected. This also
affects corporate contractors of the federal government and businesses that
otherwise interact with government employees. BTN stablemate The
Beat noted the Department of Defense has barred civilian employees from
taking “non-essential” trips, froze their travel credit cards and
directed them to cancel travel plans. 

United Airlines CEO Scott Kirby at the J.P. Morgan conference
acknowledged the cutback in government demand. ” Government is 2 percent
of our business,” he said. “Government-adjacent, all the other
consultants and contracts that go along with that, are probably another 2
percent to 3 percent. That’s running down about 50 percent right now, so a
pretty material impact in the short term.”

• Some international relations have soured in Trump’s
second term.Several
countries in Europe have issued new guidelines for citizens planning travel
to the U.S., noting in particular the administration’s requirement that the
gender cited on visa applications must match that assigned at birth. Meanwhile,
the detention
of some tourists to the U.S. has drawn wide attention overseas.

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Additionally, the Trump administration has placed tariffs (and
in some cases revoked, if temporarily) on goods from Canada and Mexico. This
move has angered many citizens of both neighbors, particularly amid Trump’s
repeated suggestion that Canada join the U.S. as a state, triggering calls for boycotts
of travel to the United States.

Hotel analytics firm STR in a March 21 research note said a decrease in
cross-border demand from Canada and Mexico “became more pronounced”
during the week of March 9 after less steep declines the prior two weeks. STR
said that among U.S. hotels within 50 miles of the Canadian border, demand
dropped 4.8 percent year over year during that week. It dropped 3 percent among
U.S. hotels within 50 miles of the Mexican border, according to STR.

The company cautioned that “we are not attributing
these decreases in demand solely to any U.S. policy changes. Some border towns
are seeing increases in demand due to the deployment of officers and troops.”

Sources suggested that concern among corporate travelers
about visiting the U.S., along with concern by American travelers about how
they’ll be received overseas, could allow corporates to kill two birds with one
stone by limiting that international travel, reducing costs while assuaging
their concerns. 

• Recent safety incidents have caused concern among air
travelers. Several high-profile airline safety incidents, including the
fatal Jan. 29 collision between a U.S. Army helicopter and an American Airlines
jet landing at Reagan Washington National Airport, the Feb. 17 crash-landing of
a Delta Connection jet in Toronto, and a Feb. 25 near-miss between a private
jet and a Southwest Airlines plane at Midway International Airport in Chicago,
among others, have shaken some travelers, executives have said, enough to
affect demand. 

After the American collision, “we saw a pretty
immediate stall in both corporate travel and bookings—not that they stopped,
but the growth rates that we had been on stalled considerably,” Delta’s
Bastian said at the J.P. Morgan conference. “And consumer confidence,
certainly in air travel, started to wane a little bit as questions of safety
came.”

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