In Case You Missed It ... August 2020
Uber to California: We’re bugging out!
Is Uber leaving the nest of its Northern California roost? Their efforts to fight against the landmark Assembly Bill 5 (AB5), which passed in 2019 and strengthened the worker classification test, have failed. California Superior Court Judge Ethan Schulman wasn’t persuaded that that the ridesharing service was “just a technology app” when he ruled earlier this month that they must consider drivers as employees by August 20—along with all the obligations that come with it. Uber’s media blitz immediately followed. Just after the ruling, Uber’s Director of Strategic Operational Initiatives Brad Rosenthal claimed that they would have to temporarily shut down in the state in order to “dramatically restructure its entire business model,” a move that was seconded by CEO Dara Khosrowshahi on MSNBC. (Lyft CEO John Zimmer said that the company would suspend service in the state as well.)
Khosrowshahi is still hopeful that Proposition 22 will be the salve for all parties, a measure on the California ballot this November where voters can decide if app-based transportation and delivery drivers should be subject to new classification rules—a “best of all worlds solution,” he said in a New York Times op-ed. The text of Proposition 22 can be read here: https://bit.ly/2CHxfpl.
“More important than what I think is what drivers think: In public surveys over the last decade, the vast majority of drivers have said they don’t want to be employees because of how much they value flexibility. A recent survey commissioned by Uber (cadriversurvey.com) and other companies found that two out of three app drivers would stop driving if their flexibility was compromised,” he wrote in the op-ed.
But can Uber afford to abandon the Golden State? According to Uber’s financial records from last year, about a quarter of their revenue came from just five metropolitan areas alone, two of which are in California (Los Angeles and San Francisco). And with revenue down across the board as the company also contends with the pandemic and a steep decline in ridership, it’s anyone’s guess if this will help or hurt them. One thing’s for certain: 2020 has been a most unpredictable year already, so nothing should surprise us as the TNC drama continues.
Sources: Uber, New York Times, San Francisco Chronicle
State of Business Travel?
Are we starting to see some light at the end of the tunnel? One poll certainly shows some small rays of hope, at least for domestic business travel.
The Global Business Travel Association (GBTA) has been polling its members around the world since the early days of the pandemic (starting in February) for a real-time snapshot of what’s happening in corporate travel. COVID’s impact hit the U.S. in mid-March, which is reflected in its polling. Answering the question of how the coronavirus impacting business travel domestically, only 2 percent reported that it affected most or all trips in February; just three weeks later, that number in the March 17-20 poll jumped to whopping 83 percent. That figure peaked at 93 percent in mid-April and has been trending downward ever since to its most recent 74 percent (August 5-9 poll).
It’s no surprise that personal protective equipment (PPE) is going to boost confidence in travel for the foreseeable future. According to the survey, 31 percent of companies plan to provide PPE to travelers; 20 percent will require travelers to provide their own. Nearly all companies (94 percent) will require mandatory PPE during travel.
Other important takeaways from the August 5-9 survey:
Europe vs. North America: “In Europe the outlook remains more positive, 70 percent of GBTA members in Europe expect domestic business travel to return in the next two to three months compared to just 26 percent in North America.”
Booking travel: “Three in four respondents (74 percent) report that their company has started to formulate a travel recovery plan. Tighter booking channels are a trend, with 66 percent of respondents stating they are less likely to allow travelers to book directly with suppliers and 65 percent are less likely to allow travelers to book with an online travel agency than before the pandemic.”
View the full poll results here: https://bit.ly/34e6V1b.
Harvard Study: Business Travel Improves World’s GDP
Are you all sick of Zoom as much as we are? Sure, being able to “meet” with friends and colleagues around the world has been an essential lifeline for most businesses, and these platforms definitely have their benefits—as we’ve experienced during this pandemic. So why not just abandon expensive and time-consuming travel and do everything online with the nearly-free tools whose usage has skyrocketed over the past several months? Harvard’ll tell ya why (this is kind of heady stuff, but we’ll try to decipher as clearly as possible). Hint: It’s not for the airline miles or the interesting cuisine.
Researchers at The Growth Lab, part of the Center for International Development at Harvard University, were handed a golden opportunity to better understand what would happen if business travel stopped, because, well, it came to a screeching halt (yes, this is a real question they have been pondering for a while). What they found definitively was that business travel actually causes economic growth for both the host country and the traveler’s country of origin, and that can’t be accomplished just by sharing data or online meetings. Researchers attribute this to the movement of knowhow, which encompasses knowledge, experience, and problem-solving. According to the study: “Knowhow only exists in brains and moves very slowly from brain to brain through years of experience. So, moving knowhow quickly involves moving brains” to far-flung destinations around the globe.
For example, with travel restricted from the U.S. to numerous countries, researchers found that the GDP of Canada, Mexico, Haiti, Jamaica, El Salvador, and others will be impacted in the long run. You can play around with the data yourself here: https://bit.ly/2EavzFn. The next time your corporate clients quibble over price, share this study that literally shows that travel increases the GDP for everyone.
Source: Center for International Development at Harvard University
Pandemic Claims Travel Organization ACTE
The Association of Corporate Travel Executives (ACTE), an organization founded in 1988 for the global corporate travel community, filed for Chapter 7 bankruptcy and ceased operations, according to an announcement from the ACTE Board on its website on July 7. ACTE cited its back-to-back canceled events, where it derived the majority of its revenue, as the impetus for its decision. Last summer, the association was forced to cancel its August Asia conference in Macau due to security concerns for its attendees and vendors after the continued protests plagued Hong Kong. This year, ACTE’s New York Global Summit, scheduled for April, was also canceled after the unfortunate timing with the pandemic.
Legislation to Watch
Another package similar to the CARES Act—passed back in March and gave us the Paycheck Protection Program (PPP), enhanced unemployment, and boosted Economic Injury Disaster Loan (EIDLs) funding—was expected in July, but both the House and Senate left for recess before coming to agreement in early August. Among the biggest sticking points are cost and a liability shield to protect businesses from lawsuits due to COVID.
Here’s what’s still on the table as of press time (contact your representatives!):
- Senate Republicans are now floating a scaled-back alternative to their $1 trillion HEALS Act being dubbed a “skinny” stimulus as of 8/19, which could offer businesses a second dip of PPP funding as well as continue additional unemployment benefits (now reduced to $300 over the original $600) through December, but another $1200 stimulus check would be eliminated. This is in stark contrast to what House Democrats want with their Heroes Act (H.R.6800), a $3 trillion bill that passed the House in May. GOP leaders have noted that they want to keep spending to $1 trillion.
- Coronavirus Economic Relief for Transportation Services Act (H.R.7642 and S.4150): These bills, proposed in both the House and Senate, would authorize the Department of Treasury to provide $10 billion in grants and loans to the motorcoach industry. Both have bipartisan support, but could use additional co-sponsors.
- Sustaining Tourism Enterprises During the COVID–19 Pandemic (STEP) Act (S.4299): The bill would authorize $10 billion in grants to tourism and event entities impacted by the pandemic, which would include states, nonprofits, and private businesses. The bill could indirectly benefit the industry. The full text of the bill is available here: https://bit.ly/3gabqMF.
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