Lead Stories

Leisure Fuels Industry Growth

Major Brand CEOs Are Bullish On ’22 As Group Business Begins To Return

By Dennis Nessler | February 18, 2022

A handful of major hotel company chieftains recently expressed optimism for a marked uptick in industry performance in 2022 citing both continued leisure momentum and the long-awaited increase in group business as leading factors.

Speaking during a panel at the recent ALIS (Americas Lodging Investment Summit) event entitled “Boardroom Outlook: Assets – Positioning For Growth,” the executives detailed what’s expected to drive operational growth for their respective companies.

Geoff Ballotti, President/CEO, Wyndham Hotels & Resorts, was particularly bullish on the future.

“Leisure travel is what will fuel the growth for Wyndham and will continue to fuel the growth for Wyndham going forward. I think for our segments—the economy drive-to and midscale drive-to markets—that growth has not slowed down in terms of what we’re seeing from Smith Travel Research. Average daily rates are rising, pricing power is there, and average length of stay continues to extend. I think it portends for owners in our segments a great spring, summer and fall ahead,” he said.

Pat Pacious, President/CEO, Choice Hotels International—which also has a handful of midscale brands in leisure markets—detailed some of the driving forces behind the segment’s momentum.

“We think leisure’s only going to get stronger. There are a number of trends going on that have gotten accelerated through the pandemic. The first is the retirement of the baby boomers and others. There’s just a lot of people that are making decisions to leave the work force. I’ve seen studies that show that the labor force participation rate is looking like it did in the ‘70s. That’s being driven by the retirement factor; it’s being driven by difficulty around child care; it’s being driven by the lack of positive immigration happening in the country; and I don’t see any of those things changing. I think we’re going to have fewer workers and they’ve got time to travel during the middle of the week, and they’ve got time to travel on the weekends, so that’s going to continue,” he said.

Pacious added, “we’ve seen road trips and domestic travel increasing for the past five years. The pandemic really accelerated that so I would expect to see more of that as well.”

Stephanie Linnartz, President, Marriott International, also touted the potential of the leisure sector despite the company having a strong presence in full-service, urban markets.

“In our case leisure room nights actually got back to 2019 levels in 2021. It’s worth underscoring that leisure as a segment is actually four times the size of business [travel], and it was growing at a faster pace even pre-COVID. So we’re leaning heavy into leisure making sure people understand we’ve got a lot of offerings in the leisure space and that will continue to be an area of growth for us as well,” she noted.

While Linnartz acknowledged that “group and business travel is lagging” when compared to leisure, she did stress there are several reasons for optimism.

“Group and meetings have surprised us quite a bit. I think many of us thought the individual business traveler would come back before groups and meetings, but surprisingly meetings have come back more quickly. Our group booking pace for this year, and particularly into ’23 and ’24, is quite strong. I think talking to our customers people have realized as great as all these tools are like Microsoft Teams, Zoom, and hybrid meetings, and thank God we had them, nothing replaces face to face. We’re quite bullish about the outlook for group heading into the next several years,” he said.

Michael Deitemeyer, President/CEO, Aimbridge Hospitality, noted the company’s research provides reason for optimism.

“From our perspective we feel very good about the year, and probably a little more bullish that things can come back more quickly in the fall,” he said, adding “we continue to see leisure outperforming.”

Nevertheless, Deitemeyer also sees positive signs when it comes to business travel despite the recent Omicron variant.

“There was a slight push out with some of the group, but we saw 87 percent of our group that moved in January push out to February or March. So it was rebooking pretty quickly and that has us certainly feeling very encouraged,” he said.

Pacious, meanwhile, offered some insight on where hotel development is headed.

“Labor’s going to continue to be a restricting factor and that’s going to drive more limited-service hotel development and it’s going to drive more extended-stay hotel development. Extended-stay does well in good times, it does well in bad economic times. Those are the trends that are going to continue to fuel our brand growth as we go forward,” he said.

To that end, Pacious acknowledged the company is exploring the potential of brand extension within the extended-stay segment down the line.

“I think what’s next for us—this is not in the immediate, but more as I look out on that five-year planning horizon—is an upscale, extended-stay product. We’ll probably do a different business model than what you’d normally see, but we’ve had some interesting conversations going on on that front,” he said.

Pacious added, “we think there’s a soft brand opportunity for us in the upper-upscale segment as well. Those are likely areas that we’ll play as we look out at that five-year time horizon.”

 

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Dennis Nessler
Editor-in-Chief

Dennis Nessler is Editor-in-Chief of Hotel Interactive, parent company of Hotel Community Forum. Nessler brings more than 28 years of editorial experience to his position, including some 17 years in the hospitality industry. As part of his duties, Nessler not only covers the industry editorially but moderates various high-level panel sessions at hospitality events and frequently conducts one-on-one interviews with C-level executives.


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