Almost exactly one year ago today I wrote a blog titled "Will the Real Group Traveler Please Stand Up?"
Excuse my redundancy, but this year after reading through transcripts of hotel brand companies and hospitality investment trusts' first-quarter earnings calls, the return of business and group travel was once again a common through line.
Marriott International's Leeny Oberg and Host Hotels & Resorts' Jim Risoleo each shared during their respective calls the sentiment that group demand is firing on "all cylinders" this year.
This year, however, more of the spotlight was on small- and medium-sized groups. Risoleo said recovery in business transient demand across his company's portfolio of hotels was led by that size of groups. Hilton and Hyatt also saw improved demand from small- and medium-sized enterprises.
This is partly a surprise to me. On one hand, I feel this signals that more companies are realizing the benefit of meeting in person, especially when it comes to deal-making. But there's a greater risk of recession looming this year. It had me wondering if these small- and medium-sized companies ramped up their budget allocations for sending employees on business trips. In 2022, several companies cut back on employee travel to save costs.
But could this be the start of returning back to 2019's way of budgeting for employee travel? Perhaps. In March at the Hunter Hotel Investment Conference, hotel executives reiterated hospitality fundamentals are strong despite what's going on in the economy.
Executives' comments during first-quarter earnings calls further reinforced that. Across various hotel companies with differentiated hotel portfolios, executives said that future bookings for group are strong.
Ray Martz at Pebblebrook Hotel Trust even mentioned group demand is driving bookings at the REIT's resort hotels, which is "a different segmentation."
Last year, I predicted that urban hotels will get attention that they didn't receive during the pandemic as travelers were rushing to beach and mountain destinations. This year, I think that will be even more the case than it was in 2022, both for leisure and group.
Expedia's Peter Kern said during his company's first-quarter earnings call he's noticed a shift in traveler preferences. It's now turning away from beach and mountain and toward major city destinations.
"Throughout the quarter, we saw strong consumer demand with acceleration in international and big city travel [along with] more of Asia reopening," he said. "The reemergence of major international cities has meant an increase to hotel demand offset in part by flattening demand in vacation rentals as travel demand mix [shifted] to shorter-stay, urban destinations over extended beach and mountain trips. Similarly, air has continued to [lean] towards international travel and away from COVID-era concentration on domestic."
Kern even went as far to say this shift in traveler preferences appears to resemble a "post-pandemic environment."
Recent news from CAPA Centre for Aviation further supports the notion that business and group travel are rebounding nicely this year.
Highlights of the article include: "recovery in business travel slowed in the [second half of] 2022 ... but rapid recovery is expected for 2023. Customer meetings and new business prospects will hold weight of business travel investment. Suppliers are highly optimistic about the outlook for business travel; higher spend trend echoed by travel buyers and procurement professionals."
What are your companies predicting for business and group travel this year? Are you in the camp of "it's reverting back to 2019 levels"? Are you skeptical because of economic conditions?
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