Business Travel accelerating
Despite ending 2022 still 29% below 2019 levels, transient and group business travel have made considerable progress this year.
With the traditional summer vacation behind us and leisure travel demand ‘normalizing’, it is increasingly important that business travel—both transient and group continue growing. And the signs are there.
Lodging data confirms the accelerated recovery of business and group travel.
STR reported that the hotel industry finished the month of September strong with room demand the second-highest ever for the month.
- Weekday occupancy has increased, particularly in the top 25 largest U.S. hotel markets. Notably, San Francisco posted the highest weekday occupancy the last week of September at nearly 90%.
Over the last year, corporate and association group demand has returned more strongly than transient.
- According to STR, group occupancy data is now approaching 2019 demand levels and there are expectations that it will reach 2019 levels this fall.
Trends we’re seeing:
- Slow and steady recovery: In recent Q3 earnings, Delta Airlines reported that strong travel demand continued through the summer, largely driven by international travel and continued slow, but steady recovery of business travel. American Express also recently reported that softening leisure travel demand will be replaced by the continued uptick in business travel, and meetings and events.
- Small and medium-sized companies leading the way:
Traditionally nimbler and more innovative, small and medium sized companies continue to drive transient business recovery and prioritize business travel. Many companies are evolving their products to cater more to the needs of small and medium businesses. - Return to office boost: Corporations are also reporting that the slow, yet steady, return of workers in the office, particularly in urban areas, are boosting the demand for transient business travel. Hyatt CEO, Mark Hoplamazian confirmed that business transient bookings are up in New York City, while corporate bookings, in everywhere but Asia, are “booming.”
- Bleisure continues to grow: Nearly half of global employees (46%) plan to travel for business or bleisure in 2024 and more than a third of Gen Z and Millennial business travelers say they plan to extend a business trip to enjoy leisure time before or after their work obligations.
- Hotel rate increases causing a shift in event locations: Hotel rates are expected to increase particularly in major convention destinations such as Chicago and Dallas. Additionally, cities with tight supply, such as Boston could see significant price increases. As a result of higher rates, many large conferences and events have shifted from large, urban city centers into secondary markets including Milwaukee, Albuquerque and Fort Myers.
- Flexible work arrangements: As many business travelers are opting to maximize their time on the road by incorporating opportunities for work, family, friends and leisure, blended travel has boosted demand for extended stay hotels. Hilton has seen the length of stay for transient business travelers increase 15% compared to 2019.
- Product offerings evolving: As leisure and corporate travel look more alike, global hotel chains are responding by expanding extended stay offerings including high-speed WiFi and later departures to facilitate remote working. Global hotel chains including Marriott, Hilton, Hyatt, and Wyndham have expanded their extended-stay offerings including new brands such as apartment style brand Project H3 by Hilton.
The bottom line: The desire to meet face to face cannot be understated. And although some challenges still remain, as office occupancies increase, the economy stabilizes, many traditional seasonal travel trends return and group demand continues to accelerate, it appears business travel is not slowing anytime soon.
