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COVID-19: Global Businesses Hampered as Top Companies Bans Business Trips
In the act to keep employees safe and healthy, Amazon and other big companies bans business trips though they’ve dealt a gut punch to a travel industry already reeling from the virus outbreak.
The cancellations and travel restrictions are a major blow to business travel, which makes up around 26% of the total travel spending, or around $1.5 trillion per year, according to the Global Business Travel Association. The association estimates the virus is costing the business travel industry $47 billion per month. In a recent poll of 400 member companies, the group found that 95% have suspended business trips to China, 45% have cut trips to Japan and South Korea and 23% have cancelled trips to Europe.
The Seattle-based online retail giant has told its nearly 800,000 workers to postpone any non-essential travel within the United States or around the globe. Swiss food giant Nestle told its 291,000 employees worldwide to limit domestic business travel and halt international travel until March 15. French cosmetics maker L’Oréal, which employs 86,000 people, issued a similar ban until March 31.
Other companies, like Twitter have told their employees worldwide to work from home. Google gave that directive to its staff of 8,000 at its European headquarters in Dublin on Tuesday. Major business like the Geneva International Motor Show and the Mobile World Congress in Barcelona, have also been cancelled.
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On Tuesday, Facebook confirmed it will no longer attend the South by Southwest conference in Austin, Texas, which is scheduled to begin March 13. And the 189-nation International Monetary Fund and its sister lending organization, the World Bank, announced they will replace their regular spring meetings in Washington — scheduled for mid-April — with a “virtual format.”
Michael Dunne, the CEO of ZoZo Go, an automotive consulting company that specializes in the Chinese market, normally travels from California to Asia every six weeks. But right now, he’s not planning to cross the Pacific until June.
“With everything at a standstill, I do not feel a sense of missing the action, but there is no better catalyst for business than meeting people in person.” Dunne said.
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The president of Brooklyn Brewery, Robin Ottaway cancelled his trip to Seoul and Tokyo last week. He has indefinitely suspended all travel to Asia and also just canceled a trip to Copenhagen that was scheduled for March.
“I wasn’t worried about getting sick. I’m a healthy 46-year-old man with no pre-existing conditions; my only worry was getting stuck in Asia or quarantined after returning to the U.S. And I’d hate to be a spreader of the virus.” Ottaway said.
“It’s a big deal,” said Henry Harteveldt, a travel industry analyst in San Francisco who estimates that airlines get 55% of their revenue from business travelers, since they’re more likely to sit in pricier business or first-class seats. On a long-haul flight to Europe or Asia, a business-class traveler can be five times more profitable than someone in coach,” Harteveldt said.
Figures from the Airlines Reporting Corp. indicate that airline ticket sales fell about 9% during one week in late February, compared with a year earlier. Hotels are also worried about declines in business travel. In the U.S. alone, hotel bookings for business travel were expected to reach $46.8 billion this year.
According to Phocuswright, a travel research firm, through Feb. 22, San Francisco saw an 11% decline in hotel occupancy, according to STR, a hotel data company. AT&T, Verizon and IBM were among the companies that pulled out of the city’s RSA cybersecurity conference, which began Feb. 24.
Luke Sorter, owner of Pavel’s Yogurt spent last weekend agonizing over whether his company should attend Natural Products Expo West, a major industry gathering in Anaheim, California. “Backing out of industry events can be a tough call for businesses” He said.
Sorter spent nearly $20,000 on conference fees and travel expenses, but then rumors began circulating that nearly all the major retailers he was hoping to pitch were pulling out.
“This was going to be our big push to make some sales and open up some new accounts, and we were really disappointed because all of the major buying groups had pulled out of the show,” said Sorter, whose San Leandro, California-based company pulls in about $1.2 million to $1.5 million in revenue per year.
On Tuesday, Expo West announced it would be postponed until a later date.
“I was relieved because it just didn’t seem safe to put 50, 60, 70,000 people in a building together and the whole show is predicated on sharing and sampling food and handshakes, and person-to-person interaction,” Sorter said.
Some experts say it’s smart for companies to curtail travel before things get worse. Worldwide, 92,000 people have been sickened by the virus and 3,100 have died.
“If you knowingly put your employees in harm’s way during travel, you can be held responsible for their injury or their death,” said Kevin Mitchell, chairman of the Business Travel Coalition, which advocates for corporations and governments that hire travel management companies.
In some cases, workers themselves are demanding a halt to travel. The pilots’ union at American Airlines sued last month to make the airline stop flying to China. American agreed to suspend flights to mainland China but initially tried to keep serving Hong Kong. Pilots wouldn’t do it. “When pilots began reporting nervousness about going to Milan and flights were less full, American suspended that service much more quickly”, said Dennis Tajer, a spokesman for the union.
In some cases, companies are also asking employees to cancel meetings with outside visitors to cut down on the risk of transmission. In a memo sent to Ford Motor Co.’s nearly 200,000 employees Tuesday, Ford CEO Jim Hackett asked employees to meet with suppliers and others by phone or virtually. Ford also said only the most critical travel will be approved for employees through March 27.
In Nigeria, it’s a reverse scenario; the members of the House of Assembly suspended work for themselves while the employees in the National Assembly attend to visitors in their absence. What a country we find ourselves in where the leaders care less of the employee’s welfare- putting their selfish interest first before anything else. Though the global businesses are losing sales, I applaud their wise decision on the temporary ban for business trips. This shows the rare virtue of empathy in their leadership style.
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CBN Sells Polaris Bank To SCIL
The Central Bank of Nigeria (CBN) has announced the completion of the sale of shares in Polaris Bank to Strategic Capital Investment Limited (SCIL), a new core investor.
In a statement signed by its Director, Corporate Communications Department, Osita Nwanisobi, the CBN said that SCIL has paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and has accepted the terms of the agreement, including the full repayment of the sum of N1.305 trillion, being the value of the bonds, which as part of its intervention, in 2018, to revoke the licence of the former Skye Bank Plc. and establish Polaris Bank to assume its assets and certain liabilities, the banking industry regulator injected into Polaris through the Asset Management Corporation of Nigeria (AMCON) and is to be repaid over a 25-year period.
The statement reads: “The Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) are pleased to announce the completion of a Share Purchase Agreement (SPA) for the acquisition of 100% of the equity in Polaris Bank by Strategic Capital Investment Limited (‘SCIL’).
“Polaris has been operating as a bridge bank since 2018 when the Central Bank of Nigeria intervened to revoke the licence of the former Skye Bank Plc. and established Polaris Bank to assume its assets and certain liabilities. As part of the CBN intervention, consideration bonds with a face value of N898 billion (future value of N1.305 trillion) was injected into the bridge bank through AMCON, to be repaid over a 25-year period.
“These actions were taken to prevent the imminent collapse of the bank, enable its stabilisation and recovery, protect depositors’ fund, prevent job losses and preserve systemic financial stability. SCIL has paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and has accepted the terms of the agreement which include the full repayment of the sum of N1.305 trillion, being the consideration bonds injected.
“The CBN thus received an immediate return for the value it has created in Polaris Bank during the stabilisation period, as well as ensuring that all funds originally provided to support the intervention are recovered. The sale was coordinated by a Divestment Committee comprising representatives of the CBN and AMCON, and advised by legal and financial consultants. The Committee conducted a sale process by ‘private treaty’, as provided in Section 34(5) of the AMCON Act to avoid negative speculations, retain value and preserve financial system stability.
“In the process, parties who had formally expressed an interest in acquiring Polaris Bank, subsequent to the CBN intervention in 2018, were invited to submit financial and technical proposals. Invitations to submit proposals were sent to 25 pre-qualified interested parties, out of which three parties eventually submitted final purchase proposals following technical evaluation. All submissions were subject to a rigorous transaction process from which SCIL emerged as the preferred bidder having presented the most comprehensive technical/financial purchase proposal as well as the highest rated growth plans for Polaris Bank.”
The CBN Governor, Mr. Godwin Emefiele, was quoted in the statement as saying that: “This sale marks the completion of a landmark intervention in a strategic institution in the Nigerian banking sector by the CBN and AMCON. We commend the outgoing board and management for their vital role since the bridge bank was established; in stabilising the Bank’s operations, its balance sheet and implementing strong governance structures to address the issues that led to the intervention.
“This process has provided the CBN with an unprecedented opportunity to recover its intervention funds in full and promote financial stability and inclusive growth. We wish SCIL well as they implement growth plans to build the bank from the strong foundations that have been established.”
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