Skift Take

The recent hurricanes are expected to have mostly short-term impacts on business travel and economic forecasts, but they exposed serious weaknesses in companies’ preparations for disruption caused by extreme weather.

So far, 2017 has brought devastating hurricanes, floods, widespread wildfires, and extremely high temperatures — all of which have forced the cancellation of thousands of flights.

For business travelers in affected areas, that has meant more uncertainty, last-minute changes, and even sudden evacuations. For employers, this year has exposed the weakness in some emergency preparations and the need to think more strategically about the impact of extreme weather on travel plans.

And as the planet continues to warm, scientists say climate change is likely to lead to more frequent or more intense bouts of extreme weather. Rather than being an outlier, 2017 could be a hint of what’s to come.

A year like this should make corporate travel decision-makers start to think about business travel in new ways, said Andrew Winston, a strategic advisor to businesses and author of books such as “The Big Pivot” and “Green to Gold.”

Companies need to plan for increased threats to the coasts, whether employees live in those regions full-time or travel there for business, Winston said. Businesses also need to update evacuate plans, assess how storms could affect communications, and train employees to react appropriately in dangerous situations. In more cases, trips may need to be rerouted or canceled entirely when extreme weather moves into an area.

“No scientist in the world is saying that hurricanes, droughts, and floods are new because of climate change,” Winston said. “The point is that they’re getting more severe and harder to predict and, in some ways, harder to imagine because they keep breaking records. Companies have to get better at managing these risks and preparing to be more resilient.”

Calculating the Toll of Hurricanes

The 2017 Atlantic hurricane season has been the most active in about a decade, with 15 named tropical storms as of Oct. 11.

It is rare to have two category 5 hurricanes, like Irma and Maria, strike the Caribbean in such a short time.

The hectic storm season may cause a short-term downturn to the U.S. economy. The recent hurricanes contributed to a loss of 33,000 U.S. jobs in September, the first monthly decline in seven years. The repair costs to Texas and Louisiana from Hurricane Harvey are estimated to be $70 billion to $180 billion, according to economists’ forecasts. After Harvey and Irma, Goldman Sachs cut its forecast for third-quarter GDP to 2% from 2.8%, noting that Irma affected more than 6% of the U.S. population. But the U.S. Federal Reserve said any impacts are likely to be short-lived, and in September it slightly increased its economic outlook for the full year.

For nearly two weeks around hurricane Harvey, oil and gas companies with production in the Gulf of Mexico scrambled to change travel bookings, as they activated emergency plans and evacuated crews from offshore rigs, according to Wings Travel Management, which specializes in energy-related travel.

By Aug. 31, six days after Harvey made landfall, 102 energy platforms had been evacuated, according to the U.S. Bureau of Safety and Environmental Enforcement. By Sept. 4, production had largely returned to normal. But Tropical Storm Nate arrived about a month later and caused new upheaval in the region. As of Oct. 9, workers remained evacuated from 142 platforms, the federal agency said.

Allianz said it received more than 16,000 travel-insurance claims and 435,000 calls to its call center related to hurricanes Harvey, Irma, and Maria. While the company doesn’t specify how many of those claims are related to business travel, a spokeswoman said Allianz believes many claims regarding Harvey, in particular, were made by business travelers forced to cancel trips.

A Long Road for Puerto Rico

In Puerto Rico, meanwhile, it could be years before travel and economic conditions recover. Long-term rebuilding costs could be $40 billion to $80 billion, and only about 25 percent of the island is expected to regain power by November. Even before the hurricane, the U.S. territory was in court proceedings to restructure $73 billion in public debt. Businesses that evacuated employees to the mainland may have to set up long-term offices elsewhere, and some are likely to permanently relocate.

Corporate travel to Puerto Rico has essentially halted. Looking a few months out, businesses may believe they can support the island economically by sending volunteers or scheduling travel there. But until infrastructure is in better shape, those extra people can be more of a burden.

“Everyone wants to support Puerto Rico and the other islands, but we have to make sure we don’t do humanitarian tourism to see the devastation,” said Matthew Bradley, regional security director of the Americas for International SOS, a medical and travel security assistance firm that works with corporate travel clients. “With the number of people who are homeless, or who need food and water, you don’t want to be a business traveler using up those resources.”

Preparing for Next Time

Because the Caribbean had been relatively quiet for so long, businesses had become complacent in planning for travelers who might be affected. The quick succession of storms revealed the cost of inaction.

Bradley said his company’s office in Philadelphia has been receiving about 500 calls a day since Hurricane Harvey, up from about 350 calls on a typical day. His company has helped businesses bring supplies to Puerto Rico after Maria and is still getting requests to evacuate employees from the island. In some cases, businesses are asking for help in relocating whole sections of their business to Florida so that their employees can continue to work.

“This is probably the No. 1 regret of every security director that had employees in the islands during Irma and Maria, that they wish they had made the decision to evacuate sooner,” Bradley said. “The thing that always surprises me is the number of business or leisure travelers who are still there after the hurricane hits and want to be evacuated.” Some businesses, he added, don’t even have a clear understanding of how many employees are in an affected location or how to quickly contact them.

Airports close 24 to 48 hours before a hurricane makes landfall as wind speeds increase, Bradley said. Once the hurricane passes, it can be several days or more before an airport reopens for commercial flights. Runways and terminals may be damaged, and airports without working lights can operate only during daytime. Immediately after Hurricane Irma, International SOS had to send helicopters to evacuate business travelers from some islands such as Tortola, St. Croix, and Antigua.

Air Partner, an aviation services company that provides jet charters and air freight, also has been helping large companies get their employees out of islands hit by Irma and Maria. In some cases, Air Partner provided smaller aircraft to move businesses’ financial documents to safer locations.

In the wake of the storms, companies worldwide are suddenly inquiring about hurricane preparedness, said Simon Moore, Air Partner’s senior vice president of commercial jets for the U.S. “It’s refocused people’s thoughts on this,” he said. “People tend to wait until it’s happened and then say, ‘We don’t want this to happen next time.’” This year’s Atlantic hurricane season won’t end until Nov. 30.

As part of their planning for extreme weather, businesses might also consider how they are positioned to help, Winston added. “Companies have tremendous logistical abilities and resources,” he said. “Do you have a facility, office building, warehouse, or store where people can shelter? Is there something you can do for your community and society during these extreme times? That’s the upside.”


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Tags: corporate travel, hurricanes, travel insurance

Photo credit: One of Air Partner's cargo jets is shown as it is being loaded with supplies. The company was enlisted to help some employers get their workers off islands hit by recent storms. Air Partner

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