While leisure travel has buoyed the hotel industry through the early stages of the recovery, many hoteliers are still hoping that 2022 sees a more broad-based return of demand, including a rebound in business transients and groups.
But with COVID-19 cases still spiking and companies reticent to make big commitments to travel, the return of large, citywide events that drive a lot of that demand could be slower to return.
The Recovery So Far
Jan Freitag, CoStar's national director for hospitality market analytics, said the next six months will see some similar disruptions for large events, but small groups are coming back.
"We've always said the recovery trajectory would be leisure first, business transients second and group third," he said. "I think that's wrong, and we have to revise that. It seems like it's leisure first, small groups second, then transient, then large groups."
He said the demand from small groups has been significant, but the benefits of it aren't felt evenly across all hotels.
"That small group piece is a lot of boards of directors and partners, people who are older and vaccinated setting strategy," he said. "That's happening already, and we see it. If you look at the small, high-end resorts, they're super busy even on the group side, although some of that is weddings."
There have been large signs recently, though, that the return of major events is still a ways off.
San Francisco was slated to host the 40th annual J.P. Morgan Health Care Conference this month, but that event was moved exclusively online at the end of 2021 amid concerns over spiking COVID-19 cases connected to the omicron variant.
Freitag said those circumstances are more unique than a harbinger of bad things to come for hoteliers.
"That was so early [in the emergence of omicron], and with people out for Christmas for two weeks, they just had to make a call," he said. "People are afraid to get guests into an enclosed space, and then they probably took the pulse of important attendees and sponsors."
Freitag also said it was bad optics to host a healthcare conference that could expedite the spread of the virus.
Andrew Jordan, chief marketing officer for Aimbridge Hospitality, sees any disruptions to the group rebound as temporary.
"Travel disruptors such as periodic variant or public health announcements may momentarily pause travel for meetings, but just as seen throughout 2020-2021, travel is essential to growing most businesses and it continues to improve," he said via email.
The event that is probably more indicative of what hoteliers can expect for early 2022 is the Consumer Electronics Show, hosted in Las Vegas with less than a quarter of the attendees seen in 2019, Freitag said.
"That's what we'll unfortunately see through the first half of the year, for sure," he said. "Events will happen, but not everybody will show up. Attendance numbers will be hit. Organizers will try to be responsible and use mitigation systems or say only come if you're vaccinated or require a negative test. Nonetheless, some people are not comfortable."
At the same time, the U.S. Travel Association lauded CES as a model for how events can be carried out safely in 2022, hoping more organizers will venture to put on events even if they have drastically reduced attendance.
“By staging an influential live event that safely convenes thousands of global professionals across the technology, business and political spectrum, CES is nothing short of a model for how business trade events can and should take place in 2022," U.S. Travel Association President and CEO Roger Dow said in a statement. "It is our sincere hope that other professional event organizers will follow their lead this year.
Dow added he's hopeful CES is a sign of better times to come.
“The success of this year’s CES will contribute to the recovery of business travel in general and related industries" the statement reads. "But of critical importance, it is producing jobs for American workers who are dependent on the safe return of all sectors of travel, which accounted for 1 in 10 U.S. jobs pre-pandemic."
Jordan said he's seen lots of positive signs for group business in 2022, in large part because the company has made group bookings a focus for its sales teams. He added Aimbridge's hotels are seeing more events delay than outright cancel at this point.
"Demand is still evolving and while leisure remains strong, we are seeing solid pickup from [business transient] and group," he said. "Importantly, the group bookings in 2022 go beyond SMERF to include corporate, and more training."
Aimbridge's sales teams have heard from a lot of planners that want hybrid meetings, and they've been focused on insuring they can pull those off.
"Clearly, we heard from all that hybrid would be an aspect of meetings — both from a cautionary and efficiency standpoint," Jordan said. "Our sales leaders are fully equipped to discuss how a virtual component can be incorporated, and our properties have the bandwidth and expertise to support them."
He said it's clear the demand and desire is there.
"We heard loud and clear from our customer panels the importance of live meetings, and they were confident demand is returning," Jordan said. "The reality of hybrid options was important, but likely attendees are ready to attend live — for interaction. Also, business leaders realize the value of face-to-face interaction."
He said the rebound of group is important for a segment of the company's portfolio, but that demand is coming together in a different way than the past.
"Our big-box hotels have solid group pickup this year; the bookings are shorter-term windows than in the past," he said. "Our teams must be, and are, responsive to the meeting planners’ questions and needs."
Long-Term Concerns
While much of the discussion about the lack of and eventual return of events and group demand have been in relation to COVID-19, Ben Seidel, president and CEO of Real Hospitality Group, said the hotel industry has group-related hurdles to face even after the pandemic ends.
He said signs are pointing to the pandemic ending sooner rather than later, and at that point many of the large cities that are often vying to host events will now have to grapple with souring perceptions in relation to crime and unrest.
Seidel pointed to specific markets such as Chicago, San Francisco and Portland, Oregon, as places that struggle with high crime rates that could ultimately deter meeting planners.
"Portland is a beautiful, but if you're a meeting planner now, holding a conference there with their crime rates is not going to appear on the radar screen," he said.
Seidel said he's already killed two deals in Portland while in the due-diligence stage over these specific concerns.
The markets that are poised to benefit post-pandemic are those in places such as Florida and Arizona, although Seidel did admit those markets are also seeing benefits from now from having fewer COVID-19-related restrictions.
He said this pattern can also be observed in hotel industry events, with the Arizona-based Lodging Conference reaching attendance numbers closer to a typical year in 2021 than other major industry conferences.
Despite those concerns, Seidel said the industry's overall view of the business transient and group recovery are too pessimistic, even if that demand is going to finding new destinations.
He expects a wave of "revenge travel" similar to what was seen with leisure as soon as it's viable.
"I want to know why we all think we won't see a wave of corporate travel with the light turns green and the in-house counsels and HR people say it's OK," he said. "Why won't we see that pent-up demand to make up for the last two years? I think it's definitely coming."
He added if that predication rings true, ultimately the industry will be facing a new golden age, with overall demand significantly higher than what was seen in 2019.