The financial world is ready to finally step away from the desk after two years of blurred life and work.
With booster shots in arms and business travel perking up, summer vacation approvals have been the hot ticket from Wall Street to Silicon Valley.
Increasingly, though, it also feels like summer 2022 could be a first-and-last getaway before a U.S. recession hits, with the Federal Reserve dramatically raising interest rates, and stocks
SPX,
and bonds posting a historically bad first-half.
“It’s been hard to get away for a really long time,” said Joanna Wald, head of research for U.S. small- and midcap equities at Schroders, a global investment manger. “If feels like the entire last year-and-a-half has been like that.”
While Wald’s twice traveled from New York to London, Schroders
SHNWF,
headquarters, since the pandemic, it’s a coming trip to Colorado that will be her first vacation in a long time. “Those trips were really complicated, but worth it for sure,” she said.
“This summer I’m staying in the U.S.,” she said of a looming vacation. “I will check in, but I am hopeful this will be a real break.”
Empty offices, fuller hotels
Big and small investment firms significantly cut back on business travel during the pandemic, and many have kept plans flexible around requiring staff to fully return to office buildings.
Office buildings still sat more than half empty in the first week of July, according to the latest Kastle Systems’ 10-city tracker, which pegged average occupancy rate at a mere 43.8%.
The rise of flexible work arrangements has been a gloomy sign for many big-city office building landlords, but for hotels there may been some silver linings.
“Because the office plans are so all over the map, that gives people a lot of flexibility,” said Jan Freitag, national director for hospitality market analytics at the CoStar Group.
“Work from home. Work from hotels. It’s now so much more possible with Zoom or Teams,” he said, of the ubiquity of video meetings instead of in-person chats.
While business travel has yet to recover from prepandemic levels, group-room bookings at higher-end hotels in May rose to 7.5 million, Freitag said, compared with a peak of 8.5 million in May 2019.
“I think that’s encouraging,” he said. “The question is are things going to come to a halt.”
Moving past ‘poison’
Wall Street may be bruised and battered, but it has been a whole other level of upheaval that for some highflying technology companies meant going from unprofitable ideas to unicorns to layoffs in a quick cycle.
“The peak was March 2022,” said Eugene Zhang, founding partner and CEO of early-stage venture-capital firm TSVC in Silicon Valley. “Too much money flowed into it and distorted a lot of things,” he said via video chat.
“There was so much poison. The thinking was so bad,” he said. “I would summarize it now as a much, much healthier environment.”
Zhang’s TSVC has specialized in investments in tech-focused startups, including Zoom
ZM,
Carta and others. While he doesn’t plan to take off during the summer months, he has a first vacation in two years with family booked for Spain in September.
“Right now we are in this transition or unknown period,” he said, pointing to interest rates shooting higher and surging prices eating into people’s spending capabilities. “The economy will definitely suffer,” he said. “Take a vacation, but everybody needs to face a new reality.”
Alternate reality
For Boston-based portfolio manager Jack Janasiewicz this summer also will be the first big one since the pandemic from a vacation and business standpoint.
The lead portfolio strategist at Natixis Investment Managers Solutions, like Zhang, spoke of a transition period. With many clients still working a hybrid model, it often means the option of a video chat, a somewhat awkward meeting in a client’s kitchen or going to a coffee shop.
“That’s certainly a shift this year versus prepandemic,” he said, of the old days of meeting people mostly in their offices.
His view is that inflation might still be contained without the U.S. economy turning into a wreck, even though “recession odds are increasing.”
When the next one does hit, however, the financial world may be better equipped than in past, with travel and entertainments budgets already slashed but spending on technology dramatically stepped up.
Wald at Schroders talked about her firm’s adoption of PROTO, a hologram technology that makes it feel like colleagues are in the same room with you, but also produces a lighter environmental footprint than constant air travel.
“I was surprised on how realistic it feels,” she said, recalling that when Schroders CEO Peter Harrison recently used the technology for a virtual meeting in New York, a visiting client reflexively reached out to shake his hand, and then stopped himself.
Read: The U.S. won’t officially be in recession if GDP shrinks again — and here’s why
