Skip to main content

Will business travel spending return to the pre-pandemic level soon?

Business travelers in an airport

The U.S. hotel industry reported the highest room rate in July 2022 on a nominal basis. According to the STR (Smith Travel Research) data, the key performance indicators for the industry include:

  • Occupancy: 69.9%
  • ADR (average daily rate): $159.08
  • RevPAR (revenue per available room): $110.73

 

Using June 2019 as a reference point, the industry reported a -5.4% percent change in occupancy, a +17.5 percent change in ADR, and a +11.2 percent change in RevPAR for the month. If inflation is ignored, the hotel industry had already recovered in ADR and RevPAR, exceeding the pre-pandemic level. This recovery is driven by the rate instead of occupancy. 

 

Yet, there is no real sense of recovery without the business travelers

 

AHLA projected that business travelers would make up 43.6% of the room revenues for the hotel industry in 2022, down from 52.5% in 2019. That is a $21 billion difference. Although there are more “bleisure” (business + leisure) travelers in the market, the industry still needs business travelers to support its recovery. 

 

When will business travelers come back? 

 

It depends on how you see the market. Earlier this year, corporate travel managers observed an upward trend in booking activities for business travel. They were optimistic about the outlook. Global business travel spending is projected to have a year-to-year increase of 34% in 2022 to $933 billion. Still, that is far from the $1.4+ trillion in business travel spending in 2019.

 

Others are not as positive about the market outlook. A more recent update suggested that business travel spending might not recover to the pre-pandemic level after all until 2026, two years later than the earlier projection. Such an adjustment was made after inflation, labor shortage, and geopolitical issues were put into consideration. 

 

When do you expect to see a comeback of business travel? How will business travel evolve from pre-pandemic to post-pandemic? 

 

References

 

Josephs, L. (2022, April 15). Business travel spending might not return to pre-pandemic level until 2026. CNBC News. Available via https://www.cnbc.com/2022/08/15/business-travel-spending-might-not-return-to-pre-covid-levels-until-2026.html

 

Kwok, L. (2022, May). Groups to have robust come back 2022. The Hospitality News Magazine, 2(4), p. 34. 

 

STR. (2022, August 19). STR: U.S. hotel performance for July 2022. STR.com. Available via https://str.com/press-release/str-us-hotel-performance-july-2022


Note: This viewpoint was also published in The Hospitality News Magazine; the picture was downloaded from Inc.com

 

Comments

Popular posts from this blog

Luxury vs. Millennials and Their Technology: The Ritz-Carlton (By Julia Shorr)

Embodying the finest luxury experience, The Ritz-Carlton Hotel Company, LLC has been established since 1983. In 1998, Marriott International purchased the brand offering it more opportunity for growth while being independently owned and operated. They are known for their enhanced service level as the motto states, “Ladies and Gentlemen serving Ladies and Gentlemen”. The luxury brand now carries 97 hotels and resorts internationally and is attempting to keep the aspects of luxury while keeping up with the trends of the technologically improving generations. The Varying Demographics of the Target Market The Ritz-Carlton’s typical target market includes: business executives, corporate, leisure travelers, typically middle-aged persons and elders, and families from the upper and upper-middle class section of society .   This infers a large range of types of travelers in which all are similar in that they are not opposed to spending extra for the luxurious ambiance. However, with

The challenges of SB 93 (California Senate Bill No. 93) will impose on the employers and their human resource management team (by Brittany Schaffer)

The COVID-19 pandemic started in early 2020, and it has caused massive changes within a short period of time. One of the most rememberable effects of the COVID-19 pandemic was that businesses had to come to a complete halt, forcing them to lay off employees. California's unemployment rates went up.  Now that the stay-at-home orders have lifted, people start to come out. Businesses are now reopening, looking to rehire their laid-off employees. Before the pandemic, employers had the option of recalling only a certain number of laid-off employees they would want to rehire based on employees' job performance. That option had been changed after Governor Gavin Newsome signed into law - Senate Bill 93, which went into effect on April 16th, 2021. The California Senate Bill No. 93 (SB 93) According to SB 93, companies in specific industries, mainly the hospitality industry, have the obligation to provide job opportunities in written form to qualified employees being laid off due to COVI

Want to win in future competitions? Invest in data-driven decisions now

Speaking of the permanent changes in the hospitality industry, many people will probably agree that demands for “bleisure”/“work-from-anywhere” travel and contactless self-service will continue to grow in the near future. Not everyone, however, realizes that data-driven decisions will become a key driver for growth in the industry, which has already affected how we do business now.   Automatic service enables businesses to capture more operational and consumer data for business decisions   One advantage of using automatic service comes from its ability to spontaneously capture and store real-time operational and consumer data for additional analysis. In the old-time when businesses still relied on workers to serve customers, operational data were collected usually through careful book-keeping, documentations, and observations; consumer data through market research were often limited to their perceptions, behavioral intentions, or past experience.     Now that automatic service is provi