U.S. hoteliers went into this summer expecting a massive wave of leisure travel, and so far those expectations have been exceeded. Still, in an industry with the scar tissue of a years-long global pandemic, experts are behind the eight ball in trying to figure out how to best service that demand.

Across the board, hotel operators who spoke with Hotel News Now expressed excitement about the pace of travel since Memorial Day weekend, the informal kick-off to summer travel season, and expressed continued hope based on bookings through the next few months.

Rob Smith, executive vice president of full service, luxury and resorts at Aimbridge Hospitality, said hotel operators entered the season cautiously optimistic, with omicron-related disruptions from earlier in the year still fresh in their minds and growing concerns about the costs of gas and airfare potentially impacting travel plans.

But so far, so good.

"It seems like people locked in their travel plans earlier this year, and through August, our summer bookings look fantastic," he said.

John Kattato, senior vice president of operations at Essex Hotel Management, said the hotel booking pace this summer has been "extremely strong, above expectations," driven not just by overall demand but by continued strong rates.

Erica Lipscomb, senior vice president for commercial strategy at Crescent Hotels & Resorts, said that despite a good start to the summer travel season, she's been exceedingly cautious in looking for signs that another downturn might be looming.

"One of the sad things COVID has done to us is now we get anxious when we see a day or week drop off, and everyone was leery about the two-week drop ahead of Memorial Day," she said.

She said while her team is keeping a close eye on macroeconomic indicators and signs of weakness, there is plenty of optimism, driven by the combination of high demand and strong rate growth.

"Our assumptions are still for a very strong summer," she said.

Gilbert Arredondo, divisional vice president of revenue strategy, said he's been surprised how broad-based the recovery has been, with signs of life even in lagging urban markets such as Washington, D.C.

"D.C. was devastated, especially after omicron," he said. "It was starting to ramp up, but then got floored in January and February. Our thought process was it'd take forever to come back, but we've been really happy with how well those eastern gateway cities have rebounded."

Even in a typical year, the summer season is driven primarily by leisure travelers, but sources said one of the most encouraging signs is the return of group business at hotels.

Steve Contos, executive vice president of Davidson Resorts, said that across-the-board pick up is what has him excited.

"Group is better than it has been, and better than last year. Business travel is seeing an uptick, and we're still really driven by leisure at this point," he said.

Arredondo said that not only is business travel coming back, but there are more signs of blended business and leisure travel.

"People have more job flexibility to work from anywhere, so they do, or they'll start their weekend early or extend a weekend and work from a hotel on Friday or Monday," he said. "That's probably here to stay. I don't think that's going away."

Bryan DeCort, chief operating officer for Hotel Equities, agreed that bleisure travel is boosting the outlook for hoteliers.

"We've continued to see that strong weekend travel patterns, but what we're really starting to see is green shoots for early and midweek travel coming back," he said.

Lipscomb said Crescent has kept a close eye on business transient data across its portfolio and has identified that 7% of the total demand mix is the "magic number" indicating a rebound in this travel segment at a property. She said most of the company's hotels stabilized at around 4% business transient demand in 2021 and into early this year.

"It wasn't until early March and April that we started to see business travel in high demand markets inch up to that 7% mark," she said. "It's exciting to see, but it's not across the board."

Hoteliers also were encouraged not just by the overall demand for group business, but the different types of groups that are now booking.

Arredondo said the return of groups in 2021 was driven by weddings, other social events and traveling sports teams. In 2022, it seems to be more broad.

"You're seeing engineers coming back to places like Silicon Valley, and conventions are starting to come back in major markets. They're smaller but they're starting to come back," he said. "What we're still missing from the group mix, though, is that medium-sized meeting that we all used to get — 30 to 45 people in a room with breakouts, training and onboarding. That hasn't come back yet."

The biggest issue facing the industry, the hoteliers agreed, is staffing to meet the heavy demand for hotels amid labor shortages.

While having so much business it's hard to keep up is a good problem to have, it's meant having to pay more for labor and make sacrifices at a time when guests are getting more demanding in terms of overall service.

DeCort said staffing "continues to be the most significant pain point" for hotels, but he believes his company has made significant steps in trying to address labor issues.

"We've had to do a number of things since the beginning of the pandemic around recruitment, attraction and retention with our teams," he said. "We're not immune, in terms of open positions, but we feel like this is an area where our culture is a differentiator."

Smith similarly said things are better across Aimbridge's portfolio, but that doesn't mean staffing isn't still difficult, noting that there aren't nearly as many general managers forced to clean guest rooms this year as in 2021.

"I wouldn't say labor is optimal, but it's much better," he said.

What hoteliers have seen, seemingly over night, is guests losing patience and willingness to sacrifice on service and amenities such as daily housekeeping and food and beverage options on property, especially as they're forced to pay more than ever for their vacations.

"As a company, we're probably more focused than ever on customer service because the brands have made it a huge focus," he said. "And with higher room rates, we have to make sure we're delivering on that experience and make sure we're providing what guests are looking for."

Kattato said Essex has been able to tackle some of the staffing and service issues by incorporating technology on property, but he still believes labor is the biggest issue facing the company and industry.

"For certain departments, it's not as big of a problem as last year, but we're not at staffing levels that give anybody any real sense of comfort," he said.

He also noted things like digital keys and self check-in, which have alleviated some of the staffing burden, have significantly cut down on face-to-face interactions with guests.

"So we have to make every interaction with a guest as positive as we can," he said.

Another issue hoteliers will have to cope with throughout the summer is increasing costs and uncertainty around air travel.

Spiking airfares and mass flight cancellations represent hurdles for travelers and the hotels ready to welcome them.

Arredondo said the high cost of air travel has spurred his company to restrict most marketing to travelers within driving distance of hotels, but that too might be in flux with increasing gas prices.

"Having all of that in place makes it extremely difficult to forecast demand," he said.

Contos said airline-related disruptions are something his company continues to keep an eye on — along with gas prices — but the real effect so far is unclear.

"When it costs 60% to 90% more to fill a tank, you wonder if people are going to think twice," he said. "We're concerned, but I don't think we've had a lot of impact yet, and who knows how sustainable it is."

Smith pointed out that airfares in the past 30 days have spiked to the point that he's had to delay some business travel, but all hoteliers can do right now is try to be caring and understanding with guests dealing with difficult air travel.

"We spend a lot of time talking [with on-property staff] about empathy for travel pain and the cost of travel so they know what the guest goes through," he said.

DeCort said the cost of travel could be having an impact, with some signs that Memorial Day travel was softer than expected, but "disciplined" travelers are still able to find affordable airfares.

"There's no question that [costs are rising] particularly in the top [markets], but in more tertiary markets, we've not seen that kind of impact in air travel," he said.

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