Shorter, More Casual Stays Another Trend
Zoom meetings and hybrid workplaces have become part of the corporate vernacular since COVID-19 was declared a global pandemic in 2020, but there remains a need for business travelers to meet in person and groups to have actual face time.
Concerns about a looming recession and COVID variants also don't seem to be going away, but still hoteliers are hoping and planning for some increase in business and group travel in fall. At the same time, booking windows — the time between making a reservation and checking in — remain short.
"While SMERF (Social, Military, Educational, Religious and Fraternal) business seemed to carry on through the pandemic with shorter disruptions, corporate was stopped and is only sporadically coming back. Large corporations relied on virtual meetings and gatherings throughout the pandemic and only recently dipped their toes back into travel," said Mitch Provosty, chief financial officer at RREAF Holdings.
Business is being booked in a short window without any shoulder nights, Provosty noted. Shoulder nights are Thursday and Sunday, book-ending the weekend. Attendees basically arrive for the meeting and leave when it's over. This short booking window is possible because many hotel group calendars have openings for business.
"We are seeing more leads for large corporate group business in the future," he added. "With a shorter booking window, the risk of future economic conditions or new variants emerging that alter group travel plans is much lower."
Despite all the travel disruptions from the pandemic, Provosty said, virtual meetings just can't replace in-person meetings.
"We are learning that face-to-face opportunities develop relationships and corporate culture that virtual meetings cannot develop," he said.
In addition, groups are more cautious on peak night commitments, said Christi Davis, senior vice president, at the Loews Sales Organization, which is part of Loews Hotels & Co.
Hotel occupancy by business travelers is leveling, but rates and leisure demand remain strong. The business mix is changing with strong mid-market and local account performance, while the larger volume corporate accounts still lag behind pre-pandemic levels, she said.
Hoteliers are anticipating business travelers will take fewer trips, but with longer stays, said Christiane Cabot Bini, Hilton's executive director of corporate travel sales. Conscious of corporate budgets, these travelers will be maximizing those times when they are on the road, with an increased stay length of 1.5 days per trip. They also are looking to engage in and adopt tools and innovations that reduce the friction points around their travel experience, she added.
One Hilton property, for example, is already noticing a big rebound to pre-pandemic performance levels.
"We have reached close to 92% of our pre-pandemic 2019 group room occupancy. Our normal group room target, based on our transient market share, is already back. The resort’s group segments have not changed much," said Kevin Rosa, director of sales and marketing at Hilton Sandestin Golf Resort & Spa in Miramar Beach, Florida.
Despite a slight decrease in total attendees, the resort is hosting more groups in a month than it had in the past. For instance, 52 groups have booked for October, but demand is down by 500 rooms overall for the month, Rosa said.
The pandemic has changed the size of groups and how they meet once they are on property, but it has not changed their over-arching objective: To network. Groups also meet to introduce new products, distribute company information and present or redeem awards, Rosa said.
"Our team is a seeing record number of group bookings, but the room nights contracted for each group have become smaller. This is more so felt on the corporate side," he added.
Spencer Whitehead, director of meetings and events at French Lick Resort, said "groups are now jockeying for meeting space as they try to make up for missed years and opportunities for revenue or to gather with colleagues."
Groups at the Indiana property continue to navigate the post-pandemic environments by requesting more space and adjusting programming to allow attendees to participate to their levels of comfort, Whitehead added.
In addition to changes in the length of stays and group guests requesting more space, some hoteliers are noticing a shift in the type of business travelers occupying their properties.
"We are seeing fewer suits and more hoodies, showing a shift in the type of traveler that’s staying for business," said Mitchell Hochberg, president of real estate owner, investor and development firm Lightstone, which has 28 hotels in its portfolio across the U.S.
"Today’s business traveler tends to have different travel patterns, and cares more about the experiences a hotel offers and the vibe of the neighborhood over pure convenience."
Some business guests, other than the "bleisure" guests, are interested n convenience and efficiency above all else as they return to travel with more single-minded focus, he noted. Do-it-yourself amenities such as self check-in and grab-and-go food offerings provide the streamlined experience these corporate travelers need.
"At this point, we haven’t seen any signs of an economy-driven slowdown," Hochberg said. "Across the industry and within our portfolio, there’s been a notable increase in advance bookings, indicating that the hesitant outlook towards future travel we’ve experienced over the past few years has waned. And while there is always the threat of a new variant on the horizon, we don’t see our guests allowing that risk to interrupt their plans."
Kevin McAteer, senior vice president of marketing and sales for Concord Hospitality, said the hotels in the company's management portfolio have reported a steady return of business traveler demand.
For instance, Concord’s Texas hotels marked a 10% increase in business travel mix from the first quarter to the second quarter. That same mix trend is holding true into the third quarter, McAteer said.
Industries that appear to be moving the needle vary from healthcare to consulting and oil and gas. Concord’s Salt Lake City hotels are almost back to pre-pandemic levels, up to 16% of demand coming from business travel.
Travel segments that are thriving include government, transportation and contractor.
"One travel change we have clearly noticed is solo business travel ramping up," he said. "More individuals are traveling to the markets in which they do business, especially to regain or strengthen the trust of loyal customers who they have not seen in-person for some time."
Requests for proposals for smaller meetings — those of 50 people or fewer — have increased at a greater pace than prior to the pandemic. The booking windows continue to be much shorter than in 2019, which could prove to benefit hotels in the third and fourth quarters, McAteer predicted.
"While there are real economic concerns and uncertainty about 2023, we feel stability in the hotel space can be expected," he said. "A deep recession is not inevitable, but, if we do experience one, this time around the hotel industry is in a stronger place to handle it and weather the storm."
Copyright 2022 CoStar Group. All rights reserved. From https://www.costar.com.
By Laura Koss-Feder, HNN contributor.