U.S. Corporations Pause Business Travel as Economic Headwinds Trigger a Reassessment

Skift

6 days ago

Corporate America is no longer traveling just because it can. With tariffs and budget pressures mounting, domestic business travel is now being scrutinized trip by trip, and there's no guarantee it will come back in full.
Industry insiders suggest many U.S. corporations are hitting pause on non-essential domestic business trips.
In May, for the fourth consecutive month, U.S. domestic air travel has declined, even as global travel demand continues to rebound. The International Air Transport Association (IATA) attributes the dip to economic uncertainty and reduced government travel.
'There's no one-size-fits-all answer,' said Vik Krishnan, a senior partner at McKinsey who advises firms across the aviation, travel, and aerospace industries.'We're seeing a lot more scrutiny on discretionary travel. The conversation has shifted from 'how much travel' to 'why are we traveling?''
Internal Meetings Versus Sales Calls
That scrutiny is being driven by more than just cost-cutting. Companies are recalibrating what kinds of trips actually are decisive, and which ones can be replaced with a Zoom call.
'Sales-related trips or supplier visits that drive top-line growth or operational efficiency are far less likely to be cut than internal meetings,' Krishnan said. 'It varies by sector, job function, and whether the trip has a direct business impact.'
The big question now is whether this is a temporary dip or the start of a structural reset. Krishnan says it's too early to tell.
'Much of what we're seeing is still tied to broader economic indicators like GDP growth,' he said. 'If economic uncertainty lingers, we may see companies hold back for longer. But if conditions improve, corporate travel could bounce back quickly, especially in sectors where physical presence is still crucial.'
Sectoral Differences in Travel Trends
However, TravelPerk's flight booking data shows a 9% year-over-year increase in U.S. domestic travel among its customers over the past six months, especially in sectors like energy, media, and online entertainment.
But other sectors are less bullish. 'We've seen a small number of companies reduce travel due to the financial climate,' said Stuart Blake, TravelPerk's VP of Revenue for North America.
'These companies are temporarily pivoting to an essential travel-only type policy, allowing them to still do necessary travel for work whilst being cautious with budget spend. Even with the challenges, they know they still need to travel for work to get their job done and are hoping that they can resume normal operations by the end of the year.'
Tech firms in particular are hesitant.
'Many had embraced remote work even before the pandemic,' said McKinsey's Krishnan. 'So fewer in-person meetings haven't been as disruptive. That's made them more comfortable sticking with virtual alternatives.'
Meanwhile, industries with complex global supply chains, such as manufacturing and heavy industry, have returned to travel faster. Their business models often require on-site inspections or supplier visits to keep operations running.
This sets up a nuanced portrait of business travel trends, one in which some industries rebound quickly while others shift to leaner, digital-first operations.
Policy, Tariffs, and Government Impact
Further influencing the outlook are recent U.S. government actions. A poll by the Global Business Travel Association (GBTA) found that nearly one-third of global travel managers expect business travel to decline in 2025, citing new tariffs, cross-border frictions, and scaled-back government travel.
'Productive and essential business travel is threatened in times of economic uncertainty or in an environment of additional barriers and restrictions,' said GBTA CEO Suzanne Neufang. 'This undermines economic prosperity and damages the many sectors that rely on global business travel to survive and thrive.'
However, 44% of global travel managers in the poll responded that recent U.S. government actions would not impact business travel spending and volumes.
Adding to the tension is a looming travel ban reportedly under consideration by the U.S. government. The proposed expansion could target up to 36 countries, many in Africa and the Caribbean, disrupting corporate travel in key sectors like energy, tech, education, and development.
A ban of that scale could impact visa access, stall ongoing projects, and prompt reciprocal restrictions, heightening volatility for multinational businesses.
As Neufang put it, the long-term future of business travel depends not only on corporate belt-tightening, but on whether international mobility remains viable at all.
Whether current cutbacks signal a transient dip or a structural reset remains the industry's big question. As long as economic uncertainty and policy disruption persist, corporate travel faces a new era of heightened selectivity — and volatility.
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