At the Hotel Data Conference in August, there were several panel discussions focused on the state and return of business travel. The one that piqued my interest was not the one focused on “Bleisure” but a much more demurely titled “The return of business (transient) travel”.

Why? Because there really wasn’t a conclusion. Business transient travel hasn’t really returned and no one really knows if or when it will return to 2019 levels. Daryl Cronk, Director of Hospitality Market Analytics at CoStar, offered three factors contributing to the sluggish recovery of business travel demand:

So, what is the good news? Well, COVID is no longer the most important factor in business travel decisions! Also, Bill Gates was wrong! Back in November of 2020, he was quoted as saying “My prediction would be that over 50% of business travel and over 30% of days in the office will go away,”. In an analysis by Kalibiri Labs for The American Hotel and Lodging Association, business travel overall is expected to reach 80% of 2019 levels by Q3. I’ll check back-in in September to see where we actually land against that figure. At the same time, the AHLA estimates that 2022 hotel revenue from business travel will be down $20 billion from 2019. Not great, but improving.

What I find really interesting is that not all states and markets are impacted equally or at all even. Through April of this year, Nevada (+16.7%), Mississippi (+6.6%), Montana (+4.6%), Maine (+3.2%), and South Dakota (+0.2%) had all realized increases in business travel revenue compared to 2019. Over the same time period, 3 of the Top 50 business travel markets were ahead of 2019 revenues; Las Vegas, NV (+17.7%), Knoxville, TN (+7.35%), and San Bernadino, CA (+5.8%).

I’m trying to find a common denominator among the 3 markets, here is my take. San Bernadino is home to America’s largest warehouse market and given the supply chain issues that have impacted every corner of every industry, increased business travel to the area makes sense. The Pilot Corporation, the parent company of truck stop operator Pilot Flying J, is based in Knoxville, Tennessee. Again, with trucking and container transportation in high demand, and an uptick in road trip-type vacations, I can see where business travel to Knoxville would have increased over 2019. Interestingly enough, Pilot recently announced a partnership with Kodiak Robotics to collaborate on developing autonomous truck services. I’ll bet there were a few extra trips and meetings at headquarters to make that happen. Las Vegas is Las Vegas and has been pretty resilient in the face of depressed demand over the last 2 years, all pre-pandemic conventions have returned to Las Vegas.

Major business travel markets are impacted by the three factors Cronk presented. While smaller markets, where major employers can’t really accommodate WFH programs or are home to industries that are insulated against economic slowdowns will recover more quickly. I would expect this to continue to be the trend through 2023 and into 2024 when the full business travel recovery is expected across the US.

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