President Donald Trump’s 90-day “pause” on some tariffs that would have gone into effect Wednesday sent Wall Street into euphoria territory, regaining much of last week’s losses. The S&P 500 spiked more than 9 percent. The Dow Jones Industrial Average ended the day up 2,962 points or more than 7 percent to close at 40,608. Travel stocks, hammered at the end of last week, surged on the news.
United Airlines was up more than 26 percent. Delta Air Lines was up more than 23 percent. American Airlines, Southwest Airline and JetBlue were up 11 percent, 15 percent and 19 percent, respectively. U.S. hotel giant Marriott International rose more than 10 percent today. Hilton Worldwide and Hyatt Hotels Corp. followed at more than 8 percent and 14 percent respectively. American Express Global Business Travel—the only publicly traded travel management company in the U.S.—was trading up nearly 7 percent today. Online travel agencies Booking.com at nearly 11 percent and Expedia at more than 14 percent were even better, with their leisure travel focus.
Buyers: Uncertainty for Corporate Travel
Whether that means anything for corporate travel remains to be seen. Of buyers from about 18 BTN Corporate Travel 100 companies on a call Wednesday morning—prior to the declared tariff pause—about one-third reported impacts from tariff-induced market convulsions already reaching into managed travel programs.
At the conservative end, travel program leaders said they were pulling traditional levers to manage demand during uncertainty:
• Companies are focusing travel dollars on revenue-generating travel. Where travel approval processes are currently in play, some companies are doubling down on trip justification. Sales and customer-facing travel continues mostly unhindered, but some are pushing back on travel for internal meetings and collaboration. Overall, companies generally are leaving it to business leaders to assess those justifications. None of the companies on the call reported putting new travel approval processes in place.
• Meetings spend is in the crossfire. Some companies are intervening before meeting contracts are signed. Currently contracted meetings and incentive programs are largely moving ahead to avoid attrition and cancelation penalties. However, companies reported postponing additional meeting and event commitments until the economy shows signs of stabilizing.
• Virtual meetings have become an easier lever to pull. As companies are now accustomed to diverting travel to virtual mediums, travel leaders reported this as much easier to accomplish, with better systems than prior to the Covid-19 pandemic and virtually every employee now accustomed to such alternatives.
Two travel managers, however, reported more severe pullback—both cited economic factors that pre-dated tariffs that led to the moves. However, one said the market whiplash triggered senior executives to give specific guidance that all travel that was booked but not yet executed would require new approvals and should be business-critical, otherwise canceled. Another company that holds numerous government contracts also has skinnied its travel spend by approximately 20 percent, reflecting the spending pullback from government.
On the other side, a slightly smaller number of companies reported business-as-usual travel for the time being, but cited concerns about costs rising in the wake of levies placed all across their partner supply chains. Particularly those who manage fleets forecast a painful and costly road ahead as vehicle manufacturers became a specific target of Trump’s trade reconfiguration.
While Trump’s sudden tariff relief juiced Wall Street, the implications of how quickly and dramatically markets will react to such edicts may not work to assuage the outlook for corporate executives, including those heading up travel companies.
Delta CEO Ed Bastian on Wednesday in the company’s first-quarter earnings call cited “broad economic uncertainty around global trade” as a precipitating factor in corporate and leisure travel pullback. On the corporate side, the carrier saw “about a 10-point velocity rate change” from year-over-year business travel demand levels “at the beginning of the year to where we are now, which is flat.”
This assessment was just hours before Trump announced the pause on tariff implementation. Bastian declined in the earnings call to offer specific go-forward performance projections, citing “the broad macro uncertainty.”
Buyer Outlook
That jibes with a recent BTN flash survey that showed about equal percentages of companies saying negative economic indicators had significantly impacted their travel activities versus those who said there had been little to no impact.
When one buyer suggested an overall demand slowdown or economic downturn might soften suppliers’ mindset toward corporate travel negotiations, few other buyers believed it would. “Suppliers—particularly airlines—will respond with some capacity cuts, not discounts for corporate travel. It’s not the same as the pandemic, when extending discounts was almost a no-risk situation because no one was traveling. This time, we all still need to travel.”
