PHOENIX — For months, hoteliers foreseeing a drop-off in leisure demand from the hot summer months have been hopeful for business travelers to come back in force after Labor Day to make up for that shortfall. Those expectations haven't yet been met, but hoteliers say there have at least been some promising signs of life.

During the recent Lodging Industry Investment Council Meeting at the 2022 Lodging Conference, Hotel News Now asked industry experts about the state of business travel.

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September 28, 2022 03:19 PM

2022 Lodging Conference

Read all of the highlights from the 2022 Lodging Conference held from Sept. 19-22 in Phoenix, Arizona.

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"Business transient is just different. It's not that sort of workhorse Monday through Thursday, like it was pretty tried-and-true before the pandemic. It's just going to shift and be different. We're gonna have to figure out what the new normal is. But people are traveling to meet with people. ... You do things via Zoom until you lose your first deal because the other guy went and met in person. There's a lot more of that happening and ... that's transcending across industries, not just hospitality."

"At least from our perspective as a broker, we had the two years of the pandemic, and now I'm trying to get everyone back on the road. I just did two and a half days in Minneapolis. I may be getting too old for it, but you set that agenda, breakfast meeting, two meetings, lunch meeting, two meetings, dinner meeting, and you get in front of people as opposed to on Zoom or a phone call, where other things can pop up. Competition and capitalism are going to get people on the road, and salespeople are going to lead the way."

"We're seeing a trend in some of our markets where you have a company that did a lot of business with international suppliers. Well with the supply chain, that's become a problem, but they had these big contracts that were negotiated so the regional supplier never could get their foot in the door. Now, all of a sudden, they're out knocking on the doors meeting with procurement departments. They're able to get that contract. They're traveling [and that is] really starting to pay dividends. A lot of companies are pivoting and doing business with regional and local providers because of supply chain issues. Those are [hotel room] nights that we're picking up — one- to two-night stays on a Tuesday and Wednesday, and that feels a lot like traditional business travel. The differences is it's not Accenture and IBM that are the mega companies. It's more of these regional type of providers. That's the more nimble company that's getting on the road, getting in front of the customers, whereas the bigger behemoths are struggling to mobilize."

"Business travel has been missing, and part of it is because people aren't in the office. Just take San Antonio and [financial services firm] USAA. We used to have their business. You'd have the accounting consulting firms come in to USAA, and basically be there for four days during the week, go home for the weekend, come back the next four days, and they'd be there for months at a time. To us, that was business transient [demand]. It really was project business, but was recorded as business transient. That business is not back yet, and it's not back anywhere because nobody's in the office long enough. You're not going to have [PwC] come into your office, and the people aren't there to work with. That's still a huge segment. That's about to come back ... because at some point, you're going to have to deal with your technology issues, your accounting issues, your systems issues; and you're going to bring in these project teams. ...

"Because projects and the big firms like IBM aren't back, [our sales teams are] totally focused on local corporate businesses and local business."

"This is a wake-up call for everybody. As a lawyer or accountant, Zoom calls have proven to be incredibly efficient. We all have gotten into them and appreciate how that has done a lot. But literally last week, we're working with a client and there are three consultants we're working with on a very significant problem ... but two of those consultants came to visit the site with with the company. I'm looking at that and what a difference it makes when somebody shows the interest and is there walking the property. A Zoom call is never going to do that."

"The lack of business travel is sort of the hole in the doughnut. How do you fill it in? Monday, at many of our assets, was always the busiest night for check-ins. Thursday is now the busiest night for check-ins, because of that business-leisure, bleisure thing. What we're finding is the traditional large group ... is much less on; and with smaller groups, sales teams have to be much more dynamic with shorter windows and figuring out how to use them to fill the hole in the doughnut. We're changing our sales structure. We don't just call PricewaterhouseCoopers anymore; we call all of them. That's where a lot of the work happens. But fundamentally, there is a lack of demand from business travel, filled in with leisure, or upended travel on top of business. The large, traditional corporate consultancy groups are still not on the road at the same level as they have been. And the real question is, will they ever be? Or can they work remotely like a lot of us have gotten used to?"

"Don't forget about the hyper-commuters. Look at my situation — I moved to the D.C. area, but I'm back in Milwaukee for about a week, every two months or so. We own hotels, so I can stay in our hotels, and it doesn't cost money. But if we weren't a hotel company, then the company is paying more — or I'm paying, however the structure would work — to stay in a hotel for that period of time, which is demand that didn't happen. That's another thing that our sales teams are focused on. Who's moved, who's traveling, and how do we connect to capture that business? Our company's back in the office, but I happen to be a unique individual who is living elsewhere, so I'm traveling. With companies and individuals, we have to parse who's traveling and what their needs are. It's just it's different than it was before."

"Obviously there are big conventions like this. This is a big one. But those large groups that we talked about, we're not there yet from a corporate standpoint. We do see small groups, companies that are trying to bring their people back together, rebuild the relationships. They are short-term bookings, but obviously social, association and sports [groups] are still fairly strong."

"What we did at our properties is we made everybody a salesperson. Even on the front desk, especially during COVID, we have taught them, trained them, that whoever comes through the door, you have to find out why they're there. What is their reason for traveling, and what is their plan for coming back? And it really does work out."

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