Business travelers made up 52.5% of the room revenue for the hotel industry in 2019. Such a number was projected to hit 43.6% only, according to the AHLA’s 2022 State of the Industry report (AHLA, 2022). That is a $21 billion gap (estimated $69 billion in 2022 vs. actual $90 billion in 2019) (Tanzi, 2022). The recovery of the lodging industry is primarily driven by leisure travelers now, some of whom have become the new “bleisure” (business + leisure) travelers.
NYC’s business-travel revenue gap between 2022 and 2019: -$2.5 billion
Traditionally, metropolitan markets were the top destinations for corporate events and large conventions, but that was also the sector that got hit the most by the pandemic. The work-from-home trend could possibly encourage more bleisure travelers to stay/work in a hotel for a stretched weekend. Still, bleisure travelers are different from those attending large corporate events or conventions. They do not need any boardrooms or convention spaces during their trips.
In New York City alone, it is projected a $2.5 billion business-travel revenue gap between 2022 and 2019 (down from $4.5 to $2 billion). Other metropolitan areas across the nation, such as Washington D.C., Chicago, and San Francisco, are not doing any better, with a projected revenue gap of $1.5 billion ($1.3 vs. $2.8), $1.2 billion ($1.3 vs. $2.5), and 1.7 billion ($0.765 vs. $2.4) respectively. Such losses cannot be easily covered by leisure travelers alone.
The glass is half empty and half full, depending on whom you ask
STR surveyed close to 500 global business travelers in February 2022 about their likelihood to travel for business, right after the surge of Omicron cases in the U.S. (Klauda, 2022). The results were not optimistic, with 43% saying they would be less likely to travel but only 12% indicating they would be more likely to travel post-pandemic. Moreover, only 30% of them agree or strongly agree that business travel would return to the pre-COVID level, whereas 48% disagree or strongly disagree.
On the contrary, corporate travel managers are more optimistic about the outlook for business travel. According to TRIPBAM, a firm that tracks corporate bookings, the overall trend for business travel has gone upward since 2021, although with some vibrations when the Delta and Omicron variants hit. Entering February 2022, the pace of bookings has been quickly picking up.
Are you feeling hopeful? Will hotels begin seeing more business travelers soon?