Oh what a difference a few weeks makes.
In my last blog, I talked about business travel as that last line of industry recovery, that tough nut to crack, that elusive segment to get back into hotels.
How little faith I had in companies to get road warriors back out there! Because as it turns out, the second quarter was a big one for business-transient and group demand acceleration, according to public company earnings calls, which continue this week and next.
Note that I say acceleration, though. Business-transient demand in total is still way behind pre-pandemic levels and what's back is elusive, changing and different. My STR colleagues on the data analysis side Kelsey Fenerty and Isaac Collazo have interesting takes on this; stay tuned to the Hotel Data Conference coverage for more of that (more on that later).
But group travel is back. Yes, most of it is still pandemic-hangover group travel, but it's back.
Group demand across Marriott’s portfolio accelerated hugely in the quarter, along with revenue per available room and revenue pace.
Over at Hilton’s properties, group RevPAR hit 85% of 2019 levels, and group business on the books for the remainder of 2022 continues to climb.
And while it's certainly not "back," business-transient demand is showing growth too, to be fair, according to the public companies. In June, Marriott CEO Tony Capuano said business transient room nights were only 9% below June 2019 levels, compared with being down 20% year over year in the first quarter of this year.
All this optimism made me especially excited to read this, from our Terence Baker’s exclusive coverage of the Accor Global Meeting Exchange, which took place in San Francisco in late July.
Scot Hornick, partner at business advisory Oliver Wyman, told attendees that in order for this incoming wave of group business travelers to confer their loyalty on your brand and hotel, group agendas need to have a leisure component.
“Our research reveals strikingly similar need patterns for business and group leisure travel,” he said. “The need for fun stands out.”
Takeaway: Research, aka, science, says business meetings need elements of fun.
Last blog I said business travel needs coffee, outlets to plug in and happy hour. Allow me to revise that to add fun into the list.
This all comes back to the concept of bleisure, which isn’t going anywhere.
Marriott’s booking data also shows travelers combining leisure and business. Capuano said midweek occupancy continues to recover and — this is key — occupancies on Thursdays and Sundays were close to 2019 levels.
We’ll see bleisure creep into group itineraries in the form of afternoons “off” regularly scheduled conference programming for a visit to the hotel rooftop’s apiaries and a honey dessert tasting. This is where your on-site sales team needs to be at the ready with suggestions to planners.
And we’ll see it creep into business-transient itineraries as that extra shoulder day off to explore a city or relax at a well-appointed hotel.
So hoteliers, how are you managing the nitty-gritty elements of bleisure? Do you see groups extending negotiated rates in the block to shoulder days more, or do you have to deliver the news to guests that that extra weekend outside the group rate will be pretty pricey? Are you running up against groups who want certain days for their events who face unavailability at the hotel because of such high occupancies from leisure or bleisure travelers?
We ran into that a bit with our upcoming Hotel Data Conference, taking place next week in Nashville. That town is so booked these days with leisure bachelorettes, er … travelers, getting a room for a business event is tougher and tougher. And it’s also a city with a lot of amenities drawing digital nomads to a bleisure lifestyle, so what’s a hotel group to do in that case, besides book early?
And then how successful will it be to layer business-transient travel in, once that segment fully takes off this fall, if your hotel is already full of group travelers staying at pre-negotiated 2019 rates, and leisure travelers who just won’t go home?
Hey, it’s not a bad problem to have, all this demand. Just interesting to watch it play out.
This topic and many others around hotel revenue management, operations and more will be talked about a lot at next week’s Hotel Data Conference. While the event itself is approaching another sellout, the intrepid Hotel News Now team will be there to bring you all the highlights, so keep an eye on our site and Daily Update newsletter.
Will you be there? Stop and say hi. Otherwise, email me, or find me on Twitter or LinkedIn.
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