Industry Update
Opinion Article 7 April 2021

The Return Of Business Travel

By Bob Rauch, President of RAR Hospitality

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When Is business travel really coming back? Many corporate executives had all their meetings online in 2020. In 2021, we believe that will change soon due to the pace of vaccines, decline of COVID-19 cases, and negative impacts of closed economies. Regional sales trips are beginning again and airport executives suggest that business travelers are coming back. But when will this segment really return? Realistically, look at Q4 of 2021. Q2 will see an uptick, Q3 will be all about pent-up leisure demand and Q4 will see a strong return of business travel.

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Companies have been able to conduct business online with improved online meeting technology however, there is no reason to believe that these meetings will continue online much longer. Certainly, our opinion is that a team that gets to break bread together will be more closely aligned than a team that uses technology for 100% of their meetings.

Hybrid meetings will reduce the amount of corporate hotel use which may be a lasting factor. With the advent of technology that provides diagramming of meeting rooms for distancing, safe meetings can return more quickly. Cvent provides software that we use to lay out a meeting room for each of the ever-changing state laws.

We believe that when the convention segment comes back, it will come back vigorously. Event sponsors do not want to pay $10,000 or more to be part of an online event. There might be a different approach to attendee participation as well as the serving of food and beverage and person-to-person interactions will come back beginning in Q4 and will grow quickly in 2022.

STR and Competitive Sets For Business Travel Analysis

It might be time to revisit and if necessary, change your STR competitive set. We like to have a beauty contest among our competitors – which property looks the best, has the most up-to-date furnishings and appeal, and has an amenity package that meets today's COVID standards. We will rate each hotel in the comp set by features that are important and weigh the features as appropriate. While we have been doing this for 30 years or so, we often change the components. Much of this analysis requires a site visit to truly get a feel but some must be evaluated online. Below is one you can use – note that some features might be stronger benefits to some markets and market segments so we weigh them accordingly and we limited the set to four hotels for space purposes only:

Revenue Management & Marketing Trends

Today, it is more critical to build a base so that we can drive the average rate after the base is filled. Taking a healthy in size, low-rated piece of business might be exactly what you need to do to shrink the size of the hotel and drive that rate. A good revenue manager can analyze what type of guest is ideal for that base as well as what type of guest is appropriate to pursue after the base is established. Kalibri Labs can help with that long-term analysis.

Digital marketing and analytics will play a role in everything we promote today. Understanding how the search engines work and what we must do with our websites today is paramount to moving the needle online. Our needs going forward will likely include an SEO (search engine optimization) expert, a content writer, and an overall digital marketing generalist. We will need a salesperson who not only understands analytics but can make virtual sales calls as well as traditional ones. And we will need a lean, well-trained organization to make profits in the near term.

Other trends that are occurring include:

  • Breakfast special packaging that cuts moisture and retains heat
  • Google reviews have been gaining ground on TripAdvisor
  • Cleanliness and sanitation will continue to get kudos from guests
  • Room service may largely be replaced by delivery of high-quality, packaged foods
  • The biggest trend? Finding employees – that's right, other industries have scooped up some of our good ones, some are on unemployment and not ready to come back and others are not qualified, according to some HR executives. But we will survive and thrive!

Bob Rauch

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