May 29, 2024
"Betting that we're ever going to go back to exactly where it was is probably not a safe bet," former San Jose Chamber CEO says.

Before the pandemic, Oakland lawyer Bryan Schwartz boarded planes for three to four business trips a month. Now he takes that many work trips in an entire year.

Some events and hearings function better in person, and jury trials need courtrooms. But taking to the skies for a simple, one-hour meeting, formerly commonplace for Schwartz, is no longer on the agenda.

“One of the best silver linings coming out of the whole global nightmare of COVID was just that we have other ways to do business now, and for most of the work that lawyers do, though we never knew it before, we can do it from home or from our desk in the office,” Schwartz said.

Attorney Bryan Schwartz, founder of his law firm, Bryan Schwartz Law, looks out the window of his office in Oakland on Aug. 18, 2023. (Ray Chavez/Bay Area News Group) 

Businesses large and small across the United States have slashed their spending on out-of-town trips. Stanford University economics professor Nicholas Bloom said research he conducted with the Federal Reserve Bank of Atlanta revealed that as of May, business air travel costs were up only 1% over 2019, and given total inflation of 20% over the past four years, “that is a real fall,” Bloom said.

“Firms are cutting out short trips and replacing them with Zoom,” Bloom said.

The most striking effects of the drop in business travel can be seen in the hospitality industry, especially restaurants and hotels. A hotel’s success is generally measured by revenue per room, a calculation based on occupancy and price, and San Francisco has the worst revenue per room in the nation, followed by the San Jose metropolitan area that includes Santa Clara and Sunnyvale, said Abby Raisz, a senior research manager at the Bay Area Council.

Hotel bookings in San Jose are down about 20% from before the pandemic, and restaurants are slightly worse off, Seaver said.

Events at San Jose’s McEnery Convention Center brought in just 190,000 attendees in the past fiscal year, 62% fewer than the half a million that attended the year before the pandemic, according to Visit San Jose, an economic development group. Annual tech conferences that once filled the center “have either ceased to exist or have remained completely virtual as work patterns and priorities have shifted significantly,” said spokeswoman Frances Wong.

The plunge in business events has forced the group to “fill gaps on the convention calendar” by attracting new types of customers, Wong said, including the U.S. Gymnastics Championships, which took place in August in the convention and SAP centers.

Travelers stand at baggage claim in Terminal B of the Norman Y. Mineta San Jose International Airport in San Jose in May 2023. (Nhat V. Meyer/Bay Area News Group) (Nhat V. Meyer/Bay Area News Group)

For air travel, San Jose Mineta International Airport came out last on the list of major U.S. airports for its 22% decline in flights from April 2019 to April 2023, Raisz said. San Francisco International Airport saw a 16% drop, and Oakland’s flights fell 18%. While the data from the U.S. Bureau of Transportation Statistics doesn’t distinguish between business and leisure travel, San Francisco’s airport sees more leisure trips, and it appears the drop at San Jose’s airport was driven significantly by reduced business travel, Raisz said. What share of Oakland’s drop came from reduced business travel is unclear, she added.

Financial advisor Ann Garcia, accustomed to flying into San Jose from her Portland home for conferences, and finding terminals full of tech workers in company-logo clothes, found herself virtually alone in the airport earlier this year. “It’s crazy — it’s so empty,” she said. She thought to herself, “I could go bowling in here.”

Still, business travel appears to be trending slowly upward, Raisz said. “We’re coming from an extreme deficit,” she said. “It’s hard to know how long it’s going to take to get out of the hole.”

Out-of-area startups are helping boost business travel to the Bay Area as founders seek funding from Silicon Valley investors, said Anis Uzzaman, CEO of San Jose venture capital firm Pegasus Tech Ventures. His company early last month brought about 600 entrepreneurs, investors and tech workers — including some 100 from outside the Bay Area — to a regional Startup World Cup competition at the Computer History Museum in Mountain View.

For Uzzaman, face-to-face interactions are key to the way he and his firm do business. “It is back to normal for me and for most of my company,” Uzzaman said, adding that he travels to Asia for a week every month. Getting people to commit to deals worth tens of millions of dollars requires a level of trust that cannot easily be built via video, he said. “If you do not meet a CEO face to face and have that handshake, it’s very difficult to have that commitment,” he said.

Derrick Seaver, who until Thursday served as CEO of the San Jose Chamber of Commerce, believes business travel to the Bay Area will continue rising — to a point. “The COVID years,” he said, “changed things.”

An airplane flies over downtown San Jose, Calif., into the the Mineta San Jose Airport in 2019. (Randy Vazquez / Bay Area News Group) 

To what degree remote work is replacing business travel is “very industry-specific,” Seaver said. Independent consultants and people in the legal and financial services fields are leaning more heavily away from business travel, Seaver said.

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But even within industries, post-pandemic changes to business travel vary. While Oakland lawyer Schwartz vowed to never go back to frequent trips, San Francisco lawyer Malcolm Heinicke has mostly returned to his business travel patterns in an effort to build and maintain in-company relationships, serve clients and mentor staff, he said.

However, courts have found virtues in handling short hearings and administrative matters remotely, and his company can cut clients’ costs through technology instead of travel, Heinicke said. “The pandemic led to some technological change or really technological acceptance that is going to have some impact on travel going forward,” Heinicke said.

Schwartz, too, noted cost savings from reduced travel, and as a married father of two children ages 9 and 15, he said his life has improved considerably. “It’s such a blessing,” he said, “not having to leave my family and have all that exhaustion.”

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