During the latest round of third quarter earnings reports from public hotel companies, executives pointed to a likely recovery of business transient and group demand in 2022.

Leaders from hotel brands and real estate investment trusts noticed similar demand patterns and future bookings that increased their optimism for these segments.

Here are some highlights from the transcripts of hotel company conference calls with industry analysts:

"Group demand accelerated nicely in the U.S. and Canada in the quarter. Group room revenues for the quarter were down 46% versus the third quarter of 2019, a significant improvement compared to the second quarter's decline of 76% versus the same time period in 2019. Group bookings have also been increasing. In the year, for the year, U.S. managed group bookings beat 2019 levels for each of the last five months through October, as event booking windows have shortened during the pandemic. Most importantly, group ADRs continue to rise and for full-year 2022 is currently pacing nearly 4% above pre-pandemic levels.

"In the U.S. and Canada, special corporate was the segment most impacted by the delta variant during the quarter, given the delay in return to office timelines. As a reminder, the special corporate segment represents business transient customers who booked at pre-negotiated rates. We estimate this segment has been accounting for roughly half of business transient room nights, although we can't know with certainty the trip purpose for transient bookings other than special corporate. The special corporate segment, therefore, gives us the best indication of business demand trends. Special corporate bookings showed steady recovery each month this year until we saw a slight pullback in the back half of the third quarter. The gradual upward trajectory returned in October with bookings versus 2019 growing each week during the month. Special corporate bookings are currently down less than 40% compared to the same time frame in 2019.

"From conversations with our corporate customers, we know that many of them, especially those with more client-facing jobs, are increasingly eager to get back on the road. We expect a recovery in business transient to gradually continue as more workers return to the office, guest visitation policies are relaxed and greater numbers of employees are permitted to travel again. We also expect the traditional business trip to continue to evolve with a blurring of the lines between business and leisure travel."

"At this pace, we anticipate the festive season could be one of the strongest we've ever experienced. We've also been pleased with the progression of group and business transient demand. While demand did not accelerate immediately following Labor Day due to the delta variant, the upward momentum has been steady throughout September and October.

"The rate of improvement in group during October has been particularly meaningful after seeing elevated levels of cancellations in August and early September due to the Delta variant. Since that time, cancellations have receded while short-term group demand has strengthened. Overall, systemwide group revenue jumped 16% in October as compared to September and is trending at 50% of fully recovered levels.

"Group bookings for 2022 are also showing significant improvement. In October, our leads for 2022 grew by 38% as compared to September, and we're now 10% ahead of 2019 levels for group business that is likely to book. Meanwhile group pace for 2022 is approximately 80% recovered, a bit weaker than what we reported last quarter. The strong current level of group bookings, coupled with growing lead volume provides confidence that momentum will build as we head into 2022.

"As for business transient, the recovery has been softer than group, but is still showing steady momentum with demand recovering to 46% of 2019 levels in October. We continue to see stronger growth in our regional accounts as compared to our larger national accounts. However, that gap is narrowing. Our largest corporate accounts have grown by 50% since June, and we continue to be encouraged by dialogue with our corporate customers who are returning to offices in bigger numbers, with many planning on a more robust return to travel in 2022."

"Business transient will continue to move up. You'll continue to see great strength in small and medium enterprises, which aren't fully back to pre-COVID but getting pretty close. And my own belief is you'll start to see the large corporates step into the game. I mean they're already in the game, but they're still sort of like 40% off of '19 levels. I think you'll see a step change in the large corporates which will contribute, along with SMEs [small and medium-sized enterprises], to continued upticks in business transient. And then I think group is clearly going to be better next year than this year.

"Reality is the first quarter is typically a slow group quarter. I don't think it will be different in that way. I think people are going to want to clear the mechanism of getting past the winter, just because concerns of flu seasons and all that, given what we've all been through. But I think as you get into [the second, third and fourth quarters] both booked business and realized business on the group side are going to be better. The fourth quarter is sizing up to be fairly similar to the third quarter, and I think 2022 is sizing up to be another big step forward on recovery to more normalized times. ...

"But as you look forward, because there's so much pent-up [group] demand, and as I've talked about at least on the last call, we're actually pricing already over '19 levels. So there's pricing power. And you'd say, 'Wow, if group is still way off from a consumer revenue point of view, what's going on?' Well, what's going on is group is the one segment that books way in advance, and there's a limited amount of meeting space in the world and in the United States. We happen to have a lot of it. I mean there are a few of us that are very big players in that space. A lot of people want it."

“Just as [third quarter] domestic leisure demand outpaced [third quarter] 2019, so too did demand from our everyday business travel segments whose office is the road. Our infrastructure and transportation segments, representing the vast majority of the 30% of our domestic business travelers, continued to outperform the broader white-collar business transient and group segments by nearly 40 points, increasing by 8% overall versus 2019, driven by growing construction activity, utility project work and trucking demand from coast to coast.

“Corporate transient, which represents about 10% of our business travel segment and only 3% of our franchisees total revenues, added another 16% of sequential growth since last quarter and is now down less than 30% compared to 2019. …

“I think the industry, all of us were positively surprised as kids went back to school … to see that [leisure demand] strength continue. I mean, it just keeps getting better. The demand is out there despite being out of the peak leisure season. To see the economy [segment] is so far ahead of 2019, with midweek occupancies near 2019 levels just continues to speak to that demand. And we think that demand certainly is going to continue throughout this fall as its been and into next year. And from a business travel standpoint, it keeps picking up. Our infrastructure and construction, and transportation business just keeps chugging along, and we do not expect that to slow down at all.”

“While we are still seeing very modest numbers overall, both business transient and group revenues also doubled from the first quarter and support the trend we are seeing of increased mobility. Over one-third of our total group business for [the second quarter] was picked up in the quarter for the quarter as people gained confidence and restrictions eased. We are seeing group pace picking up beginning in the fourth quarter with confirmed bookings pacing at roughly 50% of 2019 revenues. Looking ahead to 2022, we are trending at 72% of pace for 2019 at the same time in 2018.

"Our top group markets for 2022 include Hawaii, New Orleans, Key West and Orlando. Group pace for our Hawaii hotels is currently up over 20% for 2022. And at this time, we have every expectation that these groups will be able to meet, albeit with potential attrition from international attendees in the early part of the year. …

"On the group side, our hotels hosted 5,200 group room nights during the quarter, and local catering was up 26% from 2019, driven by weddings. The resorts have more weddings on the books than they have had in any prior year with 136 weddings on the books in 2021 versus 122 in 2018. In Miami, our teams have employed aggressive rate strategies to drive ADR 23% higher than the second quarter of 2019. Our rates this summer have been more in line with peak season rather than the typical post-spring break discounting we see, although we do expect this to moderate post-Labor Day and then reaccelerate as we move into the peak winter holiday season.

"In Orlando, we are starting to see the return of traditional group demand. Our newly rebranded Hotel Signia by Hilton Bonnet Creek has over 50,000 group room nights on the books for the back half of the year, which is down just 5% to 2019 levels. In addition, the Orange County Convention Center lifted all capacity restrictions in June, and the convention calendar for the balance of the year sits at roughly 75% of 2019 levels in terms of room nights. Based on past trends, we expect Orlando and Florida to continue to remain accommodating of both transient and group visitors, which should continue to translate into increased bookings going forward."

"As a result of the seasonal slowdown in leisure travel and business demand that did not pick up the slack, same-property RevPAR weakened compared to 2019 for August, which was down 39.4% and also then September, which is also down 43.4%. ...

"Fortunately, as the trend of new COVID cases began declining in mid-September and have been falling for six weeks now, booking trends began to reaccelerate in mid-September and this improving trend has continued into October. Both transient and group business demand have picked up with volumes exceeding levels earlier in the year before the delta variant and associated restrictions were imposed. Corporate transient is returning, led by small- and medium-sized businesses as well as larger companies, including those in banking, consulting, life sciences, medical, entertainment and music segments, among others. Big Tech has also begun to travel but remains slower to recover. For us, the most significant improvements in business demand have been in Boston, Los Angeles, Philadelphia and San Diego. Slower to recover markets continue to be San Francisco, Washington, D.C., and Chicago, which seems to be three to four months behind the faster-recovering cities."

“Our hotels saw a 49% increase in business transient room nights and a 72% increase in group volume over the second quarter. Our recent acquisitions all contributed to the outperformance during the third quarter and are exceeding our underwriting expectations. Preliminary October RevPAR is expected to be approximately $143, a $15 increase over September and the highest RevPAR we have seen this year. We believe RevPAR will dip slightly in November due to seasonality before coming back in December.

“Our hotels in urban and downtown markets saw strong improvements in transient demand compared to last quarter, as municipalities relaxed COVID-19 restrictions. Occupancy in these markets increased by 17.4 percentage points to approximately 50% in the third quarter along 24% ADR growth. In our Sunbelt and Hawaii markets, transient rates remained resilient, up 26% in the third quarter compared to 2019 despite a modest softening of transient demand over the prior quarter due to seasonality.”

“Overall, group room nights in the third quarter were 52% of 2019 levels despite the delta variant headwinds. We were pleased to see corporate group perform better than expected in the quarter. This segment contributed 43% of total group room nights in the third quarter, which is on par with our pre-pandemic mix. Corporate group rate also ... [was] the highest it has been since the first quarter of 2020 and indicates that more traditional groups are coming back. …

“We continue to expect sequential quarterly RevPAR improvements driven by rate growth from leisure travelers at our resorts, and we are encouraged by the performance of our urban hotels as demand drivers in those markets continue to recover. We also expect group and business transient to continue improving in our urban and downtown markets as impacts from the delta variant moderate, companies return to the office, and traditional groups get back to meeting in person.”

“We are pleased with the overall improvement in occupancy during the month of October, which rose back to approximately 73%. With children back in school and the transition to fall, which is generally characterized by lower leisure demand, we are encouraged by the continued strength in our weekend occupancy as well as the improvement we saw midweek relative to August and September — a further indication of improvement in business transient demand. Consistent with historical seasonality, we expect to see slightly lower occupancy for our portfolio in November and December, but we believe we will continue to see strength in leisure demand and improving business transient demand through the remainder of this year and throughout 2022. Looking forward, we have meaningful upside in our portfolio.

“First, our hotels have produced industry-leading results despite historical dependence on traditional business transient, a demand segment that has lagged the more robust leisure recovery. While our ability to pivot to and benefit from existing demand shows the versatility and broad appeal of our assets, we are optimally positioned to benefit as business travel increases.”

“Hotels like our Hilton Garden Inn located in Chicago O'Hare, our Courtyard in Seattle and our SpringHill Suites in Burbank, all of which have historically been strong performers, had RevPAR for the quarter down 38% or more versus 2019. With anticipated improvement in [business travel] and group demand, hotels like these represent meaningful upside for us as we continue to move through the recovery. In terms of room night channel mix, brand.com bookings, which moved from 33% of room nights in the first quarter to nearly 38% of room nights in the second quarter, came down slightly to 37% in the third quarter. OTA bookings continue to be elevated relative to prior years, but decreased slightly from just over 17% of room nights in the second quarter to under 16% in the third quarter. …

“We continue to benefit from local negotiated and regional travel, more midmarket and smaller accounts. That's not atypical for our portfolio generally. But certainly, as we've recovered, those small and midsized accounts have outperformed. As we look at the different channels that can be booked and look at our mix overall, we are starting to see some improvement on larger corporate negotiated accounts, which we also benefit from as they still continue to return.

“We do believe that part of the improvement that we're seeing, for example, in GDS [global distribution system] bookings as we moved through the second and third quarter and into the fourth is through more larger corporate negotiated accounts. We're starting to see improvement there even in the absence of everybody being back in office.”

Editor's Note: Chris Nassetta serves on CoStar Group's board of directors.

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