Amazon saves $1bn by slashing business travel costs during pandemic

Amazon has announced it saved US$1 billion by slashing its business travel costs during the pandemic casting fresh doubt on the length of time it will take the sector to recover to pre-Covid levels.

Many companies that heavily utilised corporate travel will be in no rush to resume pre-pandemic levels in order to save on costs and effectively streamline in the short-to-medium-term, says analytics company GlobalData.

“Without the COVID-19 pandemic, the vast majority of companies would have not realised the amount of capital that could be saved from stopping business travel,” said Ralph Hollister, Travel & Tourism Analyst at GlobalData.

“When considered alongside the fact that video conferencing technology has served as a valid substitute for face-to-face meetings, recovering businesses are not being given many incentives to pick back up where they left off.”

According to a GlobalData poll, more than half (52%) of business owners and executives would not send their employees to attend an overseas MICE event in the next 12 months.

“The reluctance from business owners and executives will be a mix of wanting to save costs following the financial burden caused by the pandemic, and wanting to maintain organisational commitment from employees – workers will likely appreciate the company they work for if it shows that it cares about employee welfare,” said Hollister.

A reduction in airline flights typically carrying business passengers also helps companies meet sustainability goals, which are becoming increasingly important, says Hollister.

“The CFO of Amazon noted that internal travel expenses will likely resume but may not rise to the same level that they reached in the past,” he said.

“This mindset may be emulated by many multi-national companies. When companies and their employees are prepared to return to international business trips, demand will be likely return in phases. Small meetings and essential business operations will return first, while large-scale exhibitions and international trade fairs will be likely to be the last to return.”