For the hotel industry, it’s no longer “business travel as usual” as the pandemic reshaped the patterns and behaviors of corporate travelers. The “new” business travel emphasizes quality of trips rather than quantity, considers sustainability a priority, sees a business trip as an opportunity to enjoy a destination and looks to hotels not just as a place to sleep but as a space to congregate and network.
While the number of business trips remains down roughly 30%, said Zach Demuth, global head of hotels research at JLL, revenue is down only 10% because trips are longer, driven by two factors. One is that travelers are going to a city to visit headquarters and bond with associates. And second is the sustainability factor. At JLL, Demuth said, carbon emissions are on the company’s travel management platform and are a benchmark for determining the number and length of trips.
There appears to be an ongoing trend of fewer, yet longer trips, said Cameron Spence, consulting manager for American Express Global Business Travel (Amex GBT), a travel management company. The boom in virtual conferencing, a byproduct of the pandemic, he said, has led to a reduction in travel for less critical purposes. As a result, when employees are traveling, they tend to be more mindful of the reasoning and make a conscious effort to maximize their time.
In addition to making travel more purposeful, said Spence, “we also see this to be a strategic decision to help deliver a more sustainable travel program.” As companies continue to travel, he said, “we can anticipate this trend of fewer but longer trips to remain a constant, in part due to its reduction of carbon emissions.”
Within the hotel sector, according to Jeannie Milazzo, senior consulting manager for Amex GBT, the return of 2019 level spending is almost certainly going to occur before the return of room nights, a result of the rising cost of stays. With a regained confidence and sense of appreciation for business travel, the company expects upward movement to continue beyond 2024.
FCM, a major TMC, has made a full recovery, with business travel now exceeding pre-pandemic levels, according to Billy McDonough, president, Americas. From the hotel vantage point, Hilton has seen business transient and group demand returning to 2019 levels, with respect to both large and small accounts, according to Frank Passanante, SVP and global head of sales for Hilton. On the group side, Hilton exceeded 2019 peak levels in the third quarter. And small and medium sized businesses (SMBs) represented roughly 85% of Hilton’s business transient guests. With that base established, said Passanante, the company expects continued improvement in business transient and group demand in the coming year, as well as increased interest in international markets.
STANDING ON SHOULDER NIGHTS NO MORE
Shifting behaviors have significantly affected the traditional Tuesday-Thursday business travel pattern, said Demuth. Historically, Thursday and Sunday were the slowest nights because travelers wanted to be home or get home. Now, those nights are much stronger, particularly in business oriented destinations like New York, Chicago and Washington. D. C., as travelers extend trips for leisure purposes or to meet sustainability criteria.
Tammy Routh, SVP of global sales for Marriott International, said the company continues to see guests blending their trip purposes, as evidenced by Sunday and Thursday night bookings, as well as adding days pre- and post-conference, looking for ways to include family and friends before or after a meeting, or simply extending their business travel to include a few days of leisure.
The flexibility provided by hybrid arrangements, said Italo Bustíos, VP of sales and marketing, Caribbean & Latin America, Highgate, has resulted in an increased length of stay for all his properties, including the Westin Lima Hotel & Convention Center, that have business transient as a relevant part of their mix.
Brian Macaluso, Sonesta Hotels’ VP of global sales, reminisces about the yesteryear of business travel. “I remember when Tuesday and Wednesday were peak individual business travel days for travelers and hotels,” he said. “Now, work from anywhere is the new trend and I don’t see it changing any time soon.”
With enervated office occupancies and fewer overall office visits, Macaluso said Sonesta is seeing more trips to meet with what are now-remote team members, prompting the need for smaller meet-up spaces.
Sonesta, said Macaluso, is seeing companies organizing team meetings at a regional level to win back some face-to-face time from time lost during the pandemic. “They’re hosting quarterly small groups that are coming together to maintain culture and relationships that would have been satisfied previously by time spent in the workplace,” he said.
MEETING NEEDS
How does the transformation of business travel impact the hotel product itself? For Demuth, it means getting back to basics. “It blows my mind,” he said, “that you might not always find reliable WiFi in a hotel, which is the number one thing that business travelers demand; not just reliable, but high bandwidth.”
Business travelers, said Demuth, now see hotels as not just places to stay, but venues to congregate within, with teammates or clients. “There is great opportunity for hotels to, for instance, convert ballrooms or even guest rooms into meeting suites and change them back for leisure guests for the weekend,” he said.
There are other opportunities to monetize space. Demuth said his sister works for a technology company that conducts mini-retreats, where employees are brought to a hotel for three or four days. The hotel might have a theater or entertainment venue so the group does not have to leave the building at all. “It becomes an all-encompassing opportunity,” he said.
Marriott, said Routh, is seeing requests for more nontraditional venues, outdoor setups and reimagining creative meeting spaces. An example is Muir, Autograph Collection, an oceanfront property in Halifax, Canada. In addition to meeting spaces with 360-degree water views, the hotel offers a 36-foot private yacht available to rent for a gathering.
Business travelers are on the road to work, but it doesn’t mean they want to sit in their rooms to do it. Increasingly, they are asking about private spaces to work and make calls, but are also apt to work in communal spaces—a way to not isolate and experience the buzz of the hotel. Bustíos said clients are also looking for local experiences and events, so his hotels now offer live music at different outlets, menu tastings and takeovers with chefs and bartenders. “The idea is to provide experiences for corporate travelers who do not want to stay in their rooms once the workday is over,” he said.
Sonesta Work Suites, said Macaluso, is a direct example of how the company is responding to the new needs of business travelers, providing an innovative work private space with three zones (work, relax/connect and creative brainstorming) that emulate what offices were just beginning to offer pre-pandemic.
THE BLEISURE BOOM
As the industry emerged from the pandemic, said Demuth, bleisure meant leisure travelers doing business on the road. Now it means business travelers extended their trips for a couple of days. That used to be a stigma for an employee, he said; now businesses actually encourage it.
More than a third of Gen Z and Millennial business travelers, said Passanante, citing research, say they plan to extend a business trip to enjoy leisure time before or after their work obligations and 24% of global business travelers plan to take a friend or family member with them on a business trip next year.
“Many businesses, said Routh, “are now booking hotels based on family friendly amenities, such as a pool, childcare or kids camp programs and perks to nearby attractions.” For example, Sheraton Orlando Lake Buena Vista, which features more than 31,000 square feet of event space, has offered groups perks, such as complimentary Walt Disney World Resort tickets to groups with room blocks of 50 or more.
Some see potential bumps in this boom. Bleisure is unproven in some markets, said Macaluso, and worries loom that the ramping up of student loan payments (after the pandemic induced moratorium) could prove a drag on younger business traveler demand, a key demographic among bleisure travelers over the past two years.
The new trend, he said, is really work from anywhere, where both remote workers and those who have some flexibility choose to work from a market close to extended family or elderly parents or in a new place they’ve always wanted to explore. It’s not just a few days tacked onto a business trip, Macaluso said, it’s exploring for a few weeks or months after hours and on weekends, while working from that location during business hours.
As to whether the business travel segment will fully recover, Macaluso said that fully is a misnomer. “This is a segment that has changed forever,” he said.
Story contributed by Harvey Chipkin.