Some hoteliers predict business travel, which ceased almost completely at the height of the COVID-19 pandemic, could start to revive post-Labor Day, but Pebblebrook Hotel Trust President, CEO and Chairman Jon Bortz said it's already started at his company's hotels.
The real estate investment trust's portfolio is in mostly urban markets and gateway cities in the U.S., which are highly dependent on business travel. Bortz said at the company's hotels, business travel is already at about 30% to 40% of what it was in 2019.
Along with reviewing its corporate accounts to gauge the level of business travel at its hotels, Pebblebrook looks at weekday business, which has been increasing gradually, he said.
Many business travelers don’t use a corporate account and rely on other channels, often not explaining the purpose of their trip when they book, which makes analysis of weekday booking trends important, Bortz said.
“If you’re there on a weekday, there’s a reasonable chance you’re there for business,” he said.
Airline executives have said business travel is about 40% of 2019 levels, is expected to reach 60% during the third quarter and continue to grow through the rest of the year, Bortz said.
Rising COVID-19 cases linked to the Delta variant of COVID-19 could push back companies' return to office plans, which could make the business travel recovery bumpier, Bortz said. New mask mandates, such as in Los Angeles County, could add to those bumps, he added.
“But we haven’t seen any slowdown in occupancies and bookings,” he said.
Group bookings have picked up dramatically over the past 60 days, including groups booking in the month, for the month, Bortz said.
As summer leisure travel trails off, bleisure travel — extending business trips with leisure activities — will grow, he said.
“Bleisure will be robust through next year because there’s still huge pent-up demand,” he said.
Many people didn’t start feeling comfortable traveling until this spring and early summer, and there a lot of people who still haven’t taken vacations yet, he said.
That demand will continue to drive hotel average daily rate, which Bortz said for Pebblebrook could normalize by 2022.
During Pebblebrook’s second quarter earnings call on July 30, Bortz said portfolio-wide ADR for July 2021 was expected to beat July 2019. The company reported same-property ADR during the second quarter amounted to $247.46.
Bortz said even in urban locations, where hotel demand has been low, there hasn't been "crazy discounting." For example, ADR at the company's San Francisco hotels is at 35% of 2019 levels.
“A lot of the rates have come back over the last three or four months,” he said.]
For more about Pebblebrook's strategy through the pandemic, watch HNN's exclusive video interview with Bortz at the Americas Lodging Investment Summit above.