November 17, 2021

Hotel Executives Expect Business Travel To 'Roar Back' in 2022

Leisure Continues at Consistent Levels

As business transient and group travel continues to tick up in the U.S., hotel industry executives are contemplating the trajectory of that return while continuing to make room for a revitalized leisure travel segment.

The third quarter was a bright spot for most major public hotel companies as business travelers hit the road in higher numbers and some groups returned to hotels, though dampened in part by the delta variant of COVID-19.

Company CEOs and other top executives addressed the current and forthcoming waves of business transient and group travel at the recent NYU International Hospitality Industry Investment Conference.

“Business travel is going to shock us all to the upside in 2022,” said Marriott International CEO Tony Capuano. “It will roar back in a way that will defy some really dour prognostications.”

Marriott President Stephanie Linnartz agreed, sharing how Marriott was surprised by how quickly group business rebounded in 2021.

“We all thought business travel would come back before group, but group is coming back faster,” she said. Looking ahead to group business booked for 2022, Linnartz said “new [group] business is better than it was in 2019 and the rate is higher.”

While forward-looking group business forecasts are rosy for most major hotel companies, variables like new spikes in COVID-19 cases, white-collar employees still working from home and labor-related issues in major group-focused cities remain a concern. But executives said they’re encouraged by the opening of U.S. borders to inbound international travelers and the continued reopening of large hotels in major group-business cities like New York City and San Francisco.

Business Transient Demands

The consistent return of business transient travel — typically indicated by midweek hotel bookings — is highly dependent on demand types, speakers said.

For Choice Hotels International, which has a large portfolio in economy to midscale hotels and extended-stay hotels, third quarter business travel was back to 2019 levels, said President and CEO Patrick Pacious.

“It’s logistics people, construction people, people helping with hurricane relief,” he said, also citing the U.S. infrastructure bill that President Biden signed into law on Monday, which “will be a good 10-year investment to drive that type of business traveler.”

Executives said business transient travelers are on the road around the world. Accor CEO Sébastien Bazin said that as vaccination rates grow across Europe, domestic business travelers there are out in force.

And Elie Maalouf, CEO of the Americas for IHG Hotels and Resorts, characterized the current wave of business travelers in a similar way: “It’s the bankers from New York, LA and London,” he said. “But the heart of America are pharmaceutical workers, agriculture workers, energy workers and manufacturing. There’s a lot of construction booms going on, and there are people who can’t deliver their work on Zoom.”

However, offices that remain closed continue to put a damper on more widespread business transient travel.

Mike Deitemeyer, president and CEO of third-party management company Aimbridge Hospitality, reinforced that while many smaller or regional companies are driving business travel demand currently, “it’s some of the larger corporations doing traditional business travel that have been the biggest issue,” since many of them still remain in work-from-home status, with restrictions on business travel.

With January 2022 office opening dates on the horizon for many major companies, the expectation that business travel will pick up is high.

“You’ll see a step-change in business travel by next year,” said Hilton CEO and President Chris Nassetta. “Offices are finally opening.”

Don’t Say Goodbye to Leisure Yet

While the leisure travel boom U.S. hoteliers saw over the summer months may be unprecedented, executives said they’re confident in Americans’ newfound obsession with leisure travel.

“It’s important to remember that leisure is four times the size of business travel and it was growing faster even before the pandemic,” Linnartz said. “Thanksgiving and Christmas are pacing to be much better than Labor Day, which said a lot. We’re pacing triple-digit growth for the holidays this year and that’s all leisure.”

Bleisure, or the mixing of business and leisure trips, also is bridging the gap for some hotels literally and figuratively, as traditional midweek business trips bleed into the weekends.

“We’re seeing bookings for seven or more nights grow, and the value of this bleisure travel is about balancing the load across weeks or months,” Maalouf said. “We’ll find solutions by bringing back some of the people who still aren’t traveling, and balancing the load of demand across the week and the month.”

Nassetta remains highly optimistic about the consistency of leisure travel.

“2022 is going to be a boom time,” he said. “Leisure will continue to be quite strong. Weekends are raging [for Hilton] even after kids went back to school. We will surprise ourselves.”

Copyright 2021 CoStar Group. All rights reserved. From By Stephanie Ricca, Hotel News Now.

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