What Trump's Presidency Could Mean for Corporate Travel

For several months, the nation has collectively been holding its breath. Wednesday, in light of the news that Donald Trump had been elected the 45th president of the United States, some breathed sighs of relief while others began to hyperventilate.

There are many uncertainties around a Trump presidency's impact on the nation and the wider world, but let's get into what it could mean for corporate travel.

Typically, U.S. corporate travel tracks closely with GDP growth. U.S. domestic business travel already has been slumping for most of 2015 and 2016, with tepid rises in GDP the culprit most oft-cited by industry leaders. On Wednesday, Bank of America head of U.S. economics Michelle Meyer said in a press call that, following the market volatility seen between Tuesday night and Wednesday afternoon, BoA is shaving 0.5 percentage points off its expected GDP growth for the first half of 2017. That alone could indicate some continued weakness for corporate travel.

"The medium-term outlook gets more complicated," Meyer said. "On the one hand, President-elect Trump is advocating across-the-board tax cuts, which could be quite significant—tax cuts both to income levels and corporate tax cuts. That presumably would add to GDP growth in the medium term, especially if it's accompanied by fiscal spending and infrastructure spending, for example."

In recent earnings calls, multiple CEOs said the election was leading to a holding pattern among corporate customers. "There's just a great deal of broad uncertainty," Hilton Worldwide CEO Christopher Nassetta said on Oct. 26. "Companies and CEOs, when they have a little more certainty, do want to start to make decisions again to start investing and hiring and traveling and doing all the things they need to do to drive the growth in their business."

The problem is that the uncertainty doesn't go away with a Trump presidency. "The good news is that there is no more gridlock," said Savita Subramanian, head of U.S. equity and quantitative strategy for BoA. "The bad news is we just don't know what's in store for the U.S. … A lack of clarity around Trump's policies, from feasibility to prioritization, will likely weigh on sentiment of investors, as well as corporations."

Some early industries to watch for changes are healthcare and pharmaceuticals. Following the news of Trump's victory, healthcare stocks fell while those of drug companies rose. The driving force is Trump's promise to overturn the Affordable Care Act. "Trump's candidacy raised more questions about his healthcare proposals than it provided answers," stated a PricewaterhouseCoopers report. "Experts estimate that [a repeal-and-replace move] could substantially increase the number of uninsured, reduce revenues to the healthcare sector and potentially drive up the federal deficit."

The Airline Industry

It's entirely possible the travel industry could find a friend in Trump. After all, he's built part of his career in it through Trump Hotels, and he even had a brief foray into the airline industry with Trump Shuttle between 1989 and 1992.

"I congratulate President-elect Trump on behalf of the U.S. travel and tourism community and am confident that he will be a valuable ally in advancing some of our industry's key priorities," said U.S. Travel Association president and CEO Roger Dow.

According to the platform published on Trump's campaign website, he intends to work with Congress "to modernize our airports and air traffic control systems, end long wait times and reform the FAA and TSA while also ensuring that American travelers are safe from terrorism and other threats."

"During the campaign, President-elect Trump pledged to spend $1 trillion in transportation infrastructure investment over 10 years, and it is important that this investment is realized and that the money is spent wisely," GBTA executive director and COO Michael McCormick told BTN. "Additionally, it is incumbent for Congress to tackle issues like passing an FAA Reauthorization Bill that accelerates NextGen, creates long-term funding stability and addresses the many concerns related to passenger screening and security."

Industry trade organization Airlines for America president and CEO Nicholas Calio looks forward to working with the president-elect's transition team to modernize infrastructure and U.S. air traffic control. "Our ability to create more jobs and help fuel economic growth is possible only if we’re operating within a National Airspace [System] infrastructure that is designed for the future," Calio said. "We want to see a reliable ATC funding model—funded by the system users, not political gamesmanship—so that we can plan for the long-term capital improvements the system needs to grow." 

Yet, Trump's presidency could have broader global implications for the airline industry. A Centre for Aviation analysis suggested Trump's isolationist rhetoric may threaten the forward, albeit slow, progress of U.S. air carriers toward Open Skies agreements with China and similarly threaten U.S. carriers' growth in Chinese markets.

The Partnership for Open & Fair Skies appears to think Trump will prove to be a sympathetic ear, however, when it comes to protecting Open Skies against competition from Gulf carriers. "We look forward to briefing President-elect Donald Trump and his new administration on the massive, unfair subsidies that the UAE and Qatar give to their state-owned Gulf carriers," said chief spokesperson Jill Zuckman. "The Gulf carrier subsidies threaten the jobs of 300,000 U.S. aviation workers and the American aviation industry as a whole, and we are optimistic that the Trump administration will stand up to the UAE and Qatar, enforce our trade agreements and fight for American jobs."

However, Trump's pledge on his campaign website to "suspend the issuance of visas to any place where adequate screening cannot occur" and to "ensure that a biometric entry-exit visa-tracking system is fully implemented at all land, air and sea ports" could stymie air traffic into the U.S. and even go against his promise to end long wait times.

Despite volatility in the broader market on Tuesday and Wednesday, airline stocks remained stable.

Impact on the Hotel Industry

Trump's status as a hotelier will no doubt give him special insight into the challenges facing the industry. However, some of his positions could be hard to reconcile with the realities of the hospitality business.

Trump has made immigration a keystone of his presidential platform, stating on his campaign website: "All immigration laws will be enforced. We will triple the number of ICE agents. Anyone who enters the U.S. illegally is subject to deportation. That is what it means to have laws and to have a country." Yet, at one point in the campaign, Trump was accused of using undocumented workers to renovate his new hotel in Washington, D.C., a claim he denied. Additionally, the hospitality industry has a tradition of employing foreign-born workers, both documented and undocumented, and that can conflict with populist rhetoric.

Trump's hard line on China also could be tricky, as Chinese firms invested a record-breaking $168 billion in the United States during the first half of 2016. A number of those transactions came in the hospitality industry. Most recently, HNA Group acquired a 25 percent stake in Hilton Worldwide, following up on its purchase of Carlson Hotels.

"Hospitality is a bipartisan industry that powers the economy, supporting 8 million jobs around the country," American Hotel & Lodging Association president Katherine Lugar said. "We congratulate President-elect Donald Trump and look forward to working with him, as well as government officials and members of Congress on both sides of the aisle, to advocate for policies that boost the economy, support entrepreneurship and business growth and promote travel and tourism across the United States."

Hotel stocks remained stable on Wednesday. A report by STR analyst Carter Wilson for Hotel News Now suggests there's no clear evidence that presidential elections alter the economic cycles of hotels.

Additional reporting by JoAnn Deluna