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Like most companies, Amazon ordered employees to avoid non-essential travel earlier this year. The net result — so far — has been nearly $1 billion saved in corporate travel, internal travel, and travel expenses.
Brian Olsavsky, Amazon’s chief financial officer, revealed the savings during the company’s third-quarter earnings call on Thursday.
Overall, that quarter saw sales grow 37 percent compared to the same period last year. However, while the $1 billion is a staggering amount, Olsavsky said it was simply offsetting “productivity drags” caused by the pandemic, with operations hindered by aspects like social distancing. The company expects to incur a hit of $4 billion of Covid-related costs in its fourth quarter.
The Knock-On Effect
Amazon is among the first major technology players to quantify the savings from its travel ban.
The travel industry is clearly being dealt a blow by the loss of business trips, but could anyone have pictured an amount on this scale? Other international giants, such as Google and Salesforce, have taken measures such as extending their work-from-home policies, resulting in closed offices and even fewer business trips.
At Skift Global Forum, Microsoft’s global director of travel, said company travel was down 95 percent. “The inherent way we do business is changed forever,” Eric Bailey said. Twitter’s senior manager of global travel, Judy Emma, meanwhile said she expected travel to resume by the middle of next year.
Combined, how many billions of dollars have been taken out of the industry so far this year? In August, Skift calculated that even with a reduction in corporate travel of one-third next year, one major hotel brand could find itself with a gap of $12 billion in terms of room revenue.
Olsavsky said travel will resume at a later date — “maybe not to the same levels as the past, but they will be…. they won’t be as artificially low as this year.” But the $1 billion figure he cited paints a bleak picture of the damage that’s likely to be done for this year, and probably only scratches the surface.