The recent rebound in leisure travel has set records as pandemic-weary travelers return in droves.
Even as daily room rates hit a record $159 national average in July, up 17.5% from the comparable period in 2019, according to STR data, travelers don’t seem to mind.
Hotel occupancy in July was 69.9%, just 5.4% below the 2019 level. At the same time, research shows that business travel is lagging. A recent study from the Global Business Travel Association suggests that while there has been incremental improvement, the category is not set for complete recovery until 2026.
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The upshot of the pandemic disruption remains unclear. How and where business is conducted in the new environment is being hashed out by companies large and small as they look at the implications of everything from corporate culture to carbon footprint. One thing is certain: There is no going back to the “before times.” Many businesses have gone completely remote, essentially eliminating office space while increasing the need for frequent in-person collaboration sessions to maintain corporate culture-a need that savvy hoteliers are tuning into.
Smaller Companies and Blended Travel Lead Recovery
Small and medium-size businesses (SMBs) are leading the recovery in business travel amid the radical shifts in work behavior. With fewer stakeholders and more nimble structures, they can more easily pivot around policy.
Larger corporations, many of which are publicly traded, must contend with myriad stakeholders when instituting wholesale changes to their travel policies: employees, customers, vendors, and increasingly, regulatory entities tied to environmental, social and governance, or ESG.
As they wrestle with plans to accommodate a more flexible work model, concern about the impact frequent travel will have on the environment is rising. Through July, some 3,000 companies had publicly committed to net-zero emissions by 2050. Many SMBs are unlikely to have such broad-scale policy challenges, allowing for more flexibility when rolling out new travel policies.
Meanwhile, the shift to remote and hybrid work has given rise to an entirely new travel category known as “bleisure” that combines leisure and business, as work travel is extended to the weekend. As travel on the traditional business travel days of Monday to Thursday lags, blended travel has helped to boost occupancy on Sundays and Thursdays, with demand on these “shoulder days” reaching 97% of 2019 levels in the second quarter of 2022, according to CoStar and STR data. The new “bleisure” traveler is looking for more value-added amenities such as ample desk space, contiguous wi-fi to take meetings at the pool or bar, and concierge-assisted access to nearby entertainment.
Accommodating New Travelers
The rise of “bleisure” is also driving reconfiguration of hotel rooms, but not all hotels have the budget to overhaul their rooms. However, they can still think creatively about reconfiguring their existing offerings to accommodate the needs of “bleisure” and SMB travelers.
Partnering with local restaurants, for example, to offer on-site event catering is a win-win for both parties; the hotel provides additional food offerings without more staff, and local dining establishments gain new revenue. This option could be especially beneficial for hotels in central business districts experiencing reduced foot traffic due to low office occupancy.
SMBs travelers, many now fully remote, require professional settings to conduct collaborative events at regular intervals, often in face-to-face groups. This presents an opportunity for hotels to leverage smaller meeting spaces or partner with local event venues, which again benefits both parties. SMB groups are likely to include “bleisure” travelers willing to add more days to their stay to participate in leisure activities. Hotels that can identify guests who are combining business and leisure can target them with leisure amenities such as discounted dinners or spa services.