While traditional business travel continues to lag stalling any potential full lodging industry recovery, the ‘bleisure’ travel trend has gained considerable momentum in the wake of the pandemic and could be the catalyst for a new paradigm moving forward.
During last month’s BITAC Symposium Live 2021 in New York City, a trio of hotel executives weighed in on current conditions as part of a panel discussion entitled “On The Rebound: Hotel Leaders Discuss Industry’s Prospects For A Full Recovery.”
Doug Collins, Chairman and CEO, Hospitality Lodging Systems, emphasized that “we remain a street corner business” while acknowledging a shift is taking place.
“I think that leisure is going to drive the recovery, but I think there’s going to be a fundamental change in what the business mix is,” he said.
Mitch Patel, CEO, Platinum Companies, fundamentally agreed. “I think long term we’ll recover as we always do. But I think we are going to be led with the leisure recovery and then next is bleisure, which I think is about to happen right now,” he said.
Kevin McAteer, SVP, marketing and sales, Concord Hospitality, put the industry’s recent struggles in context.
“I think the difference in this downfall is it was very deep and very steep, compared to 9/11 and the financial crisis, but the bounce back was pretty quick too. But we’re not going to get to that recovery on leisure alone,” he said.
Collins reinforced the point. “If you look at the top 25 markets they’re up about 40 percent this year. Everyone says ‘wow,’ but we’re still 20% to 40% down from 2019. There are still terrible problems in the big cities,” he said, specifically referencing San Francisco and New York City, the latter of which saw some 40,000 rooms exit the market.
McAteer noted that the industry has made at least some progress when it comes to recovering on the rate side of the equation.
“The leisure business is driving it and it’s allowed us actually to drive retail as well. If you go back and look at the summer in some of the top 25 markets the demand was back, even though it was different demand. In a lot of cases we were able to push rates and get close to 2019,” he said.
Meanwhile, the transaction market has yet to really heat up throughout the industry.
“You see a plethora of buyers and not a lot of sellers. At this point they’re a lot of buyers out there thinking that now is the time to buy because business is down. There’s a real disconnect between what seller expectations are and buyer expectations,” said Collins.
Collins did note there is one segment that has done particularly well with regards to asset prices. “Extended-stay economy hotels are getting premiums higher than they would have gotten pre-pandemic,” he said.
“I think there’s a lot of capital out there, but it’s chasing no deals because everybody was propped up by the stimulus. I wouldn’t call it ‘extend and pretend,’ but the stimulus definitely worked so I think what you’re going to see is asset prices pushing up,” added Patel.
Taking a look ahead, there are still plenty of reasons for optimism for a full recovery at some point in the near future, according to Patel, who pointed to employees coming back to work with major companies like Google building new office complexes.
“If anybody’s lost confidence that the business traveler is coming back you’re wrong. If the big companies weren’t inviting their employees back to the company they wouldn’t be building big office buildings. I’m sure it’s been in the mix for a while, but they’re actually executing on it so that should tell you that they do have the intent of bringing people back,” he said.
Patel added that while employees have been largely dictating where they work since the pandemic, employers will eventually be able to insist that they leave their homes.
“As soon as that equalization occurs that’s what is going to drive the conventions and the core business traveler that we’re missing,” he said.
“We were almost there if the [Delta] variant didn’t pop up. It delayed some business travel, but we’re ready,” added McAteer.
Collins concluded, “I think there’s a whole new paradigm in travel and in business in general. Who would have thought that Idaho would be the place where people want to move to? Who would have thought that we have a new business/leisure traveler? I think hoteliers can take advantage of the new business/leisure type travel by having hotels and places that people want to go to for business and relaxing.”