After a couple of years of lacking business and group demand levels compared to 2019, executives from publicly traded hotel brand companies and real estate investment trusts say they not only see the light at the end of the tunnel, but they’re already basking in the sunlight.

Here are some highlights of commentary on business transient and group travel expectations from hotel executives during the 2022 third-quarter earnings season.

“Fourth quarter full‐service group revenue is currently pacing up 4% but is likely to improve further given the strong last‐minute group bookings that we’ve seen all year.

“The trend towards last‐minute bookings has led to meaningful compression and pricing power, helping group ADR for new bookings rise each quarter this year. At our managed hotels in the U.S., ADR for in‐the‐year, for‐the‐year group bookings made in the third quarter rose 17% compared to same-year bookings made in the 2019 third quarter, a significant jump from the 6% increase we saw in the first quarter. ADR for group bookings made in the third quarter for 2023 outpaced 2019 third quarter bookings for events in 2020 by 24%.

“Business transient demand also continued to improve during the quarter, although it still lags 2019 levels. Third-quarter business transient room nights in the U.S. and Canada were 11% below 2019. We are currently in the midst of our special corporate negotiations for 2023 and are very pleased with how they are progressing. After two years of holding rates steady, the early results look positive for at least high-single-digit, year‐over‐year rate growth.

“Third-quarter day‐of‐the‐week trends continue to suggest that travelers are combining leisure and business trips. In fact, the average length of a transient business trip has increased meaningfully, and year to date is up more than 15% compared to 2019.”

“On the business front, our weekday occupancy was the highest on record for the month of September as we continue to capture new infrastructure-related accounts. As we look beyond 2022, infrastructure bookings represent a significant tailwind for our business as more projects commence and construction ramps up on the largest public work bill signed into U.S. law in 70 years. …

“This was the third consecutive quarter where our infrastructure account spending increased double digits to 2019. It is now running over 25% year to date. To just try to size how meaningful this is for our brands and our small business owners: If you recall, if you step back and you think about us versus many of our competitors, 70% of our business is leisure, which is very strong; 30% of it is business, but that business is different.

"It’s not white-collar business travel; 70% of that 30% business mix is that infrastructure business. And those are the companies that are being contracted to repair our nation’s highways and bridges and ports. And it’s those companies who book these blue-collar workers into economy midscale lodging that is just so attractive for our brands and for our hotel owners.

"The Congressional Budget Office was estimating that only $25 billion of the incremental infrastructure spending will be spent in 2022. They are estimating that outlay is going to triple in 2023 to $75 billion and then is going to run $100 billion, $140 billion and $175 billion in ’24, ’25 and ’26. … And this $550 billion that we are all reading about of incremental authorization spending is on top of the $650 billion of the regular reauthorized legislation, which gets us to the $1.2 trillion that’s in the news.

"So, significant tailwinds for our team. We are very excited about it. We are adding more sellers to sign accounts, and we think we are going to continue to win more bids and gain more midweek domestic market share.”

“Clearly leisure has been an important factor in our [third-quarter] numbers … but we have seen recovery across all the week. RevPAR has become flat across Monday through Wednesday, and these numbers give us confidence that there is more recovery to come.”

“Occupancy was a major driver of the improvement year over year, reaching 93% for the quarter, the highest it's been since the start of the pandemic, an improvement — and an improvement of over 1,000 basis points year over year. The key driver of the occupancy gain is midweek demand, which is returning to more normal levels as conventions and groups return. The value proposition of our group business supports our pricing power in Las Vegas. ADR hit a record $227 in the third quarter, an increase of 26% year over year.”

“Looking ahead, our optimism is further reinforced by the strengthening of our business transient and group travel segments. In the third quarter, we drove sequential quarter-over-quarter increases in our business travel bookings. In addition to continued robust leisure travel, the business travel component of our guest mix continues to approach historical levels and accounted for approximately 30% of stays in the third quarter.

“Furthermore, our strongest occupancy growth during weekdays in September, year over year, was on Tuesday and Wednesday, illustrating the strength of returning business travel. We expect business travel in our key industry verticals to increase, fueled by the additional onshoring of the U.S. supply chain and significant nationwide investment from the infrastructure bill.

“Likewise, we anticipate additional tailwinds from business travelers in sectors such as healthcare, technology and professional services, especially in the context of the Radisson Americas acquisition and our growing presence in more RevPAR accretive segments and locations.”

“Lodging fundamentals continued their positive momentum into the third quarter supported by a strong labor market and healthy consumer and corporate balance sheets, which translated into steady growth in business transient demand and stronger-than-expected group demand in the quarter, especially post Labor Day as we witnessed some broad-based return-to-office trends and despite headline risk over increasing macro uncertainty, we currently do not see weakness in our business with continued improvements to group, business transient and international demand for the fourth quarter and beyond.

“We expect the positive momentum to continue into the fourth quarter, driven in large part by a healthy pickup in group business while [fourth quarter] transient pace on the books is now 95% of 2019 levels on a pro forma basis up from 83% reported two months ago.

“September group pickup for 2023 coming in 106% ahead of the same period in 2019 for 2020 with group ADR projected to be 40% higher.

“Generally speaking, group demand is coming more heavily from higher-rated corporate group with leads in this segment accounting for almost two-thirds of new demand, double the historic volume mix in 2019. Group pickup trends for future periods also continued to improve during the third quarter with definite bookings for the fourth quarter increasing by $21 million with more than half of the new bookings coming in September alone.

“[For the fourth quarter], group pace currently sits at 77% of 2019, a pickup of 800 basis points since June with definite bookings increase by over 90,000 room nights since the second quarter. For the year, definite bookings increased sequentially by nearly 10% to over $1.7 million over three times the amount for the same time last year.”

“Business travel, both transient and group, continued its recovery throughout our markets, clearly benefiting urban properties the most. Leisure travelers returned to the cities as well. Bookings improved after Labor Day as business travelers got on the road to meet with our customers, reconnect with their co-workers, and participate in major conventions and meetings. Leisure travel in the quarter remained robust, along with very strong rate premiums over 2019. We saw a solid and consistent improvement in our operating metrics throughout the quarter. Overall, we experienced encouraging trends across our portfolio throughout the quarter, which continued in October. We have not seen any signs of a slowdown in travel demand.”

“Our recent trends reflect increasing lead volumes and strength in short-term booking activity with a higher contribution from corporate group events. Our group pickup in [the second quarter] for the third and fourth quarters was nearly 170% of what was booked for the same time period in 2019. Group room nights for the third and fourth quarter 2022 are pacing at approximately 82% of pre-pandemic levels at an average rate that is 5% higher than 2019. This would imply that our overall group revenue pace for this time period is down only 15% from the same time in 2019.

“We have seen strong group booking activity in Boston and San Diego, where active citywide calendars should allow us to take advantage of compression in those markets. The group outlook at our Hilton Bayfront has improved as the year progressed and the second half of the year is down only 5% as compared to 2019, and the hotel’s full year EBITDA should finish higher than 2019. Boston has also shown solid growth on the transient side with increased demand from both leisure and corporate travelers. While San Francisco has been slower to recover, we are encouraged by positive recent trends in the market as well.

“Our second quarter occupancy at the Hyatt Regency San Francisco more than doubled year over year, with rates higher by nearly 40%. Our newly renovated rooms are generating great guest feedback as they continue to come online. The city remains a supply-constrained, desirable long-term lodging market, and we expect it will continue on its positive trajectory as it catches up to the other major gateway markets. While the strength of the recovery has not been uniform across all markets and segments, we are increasingly seeing signs that travel patterns are normalizing.

“While leisure has led all segments, we expect increasing amounts of corporate and group travel to become a larger portion of demand as we head into the fall and that traditional seasonal patterns will increasingly reemerge. This is consistent with what we experienced in the second quarter with group and business transient strength in certain markets as well as a higher degree of seasonality in the quarter as our recent wine country acquisitions moved into their peak seasons. Our wine country resorts continue to ramp up nicely. And for the current year, we expect that they will generate approximately 80% of their combined full-year earnings in [the second quarter] and [the third quarter] with the balance coming in [the fourth quarter].”

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