Business Travel Rebounding Towards Pre-Pandemic Norms
Business travel is experiencing a gradual resurgence, gradually reverting to pre-pandemic norms as vaccination campaigns, eased restrictions, and economic recovery foster a renewed appetite for in-person meetings and professional engagement. This trend reflects a cautious but positive shift in the business travel landscape.
Encouraging Data from the Hotel Industry
The fact that STR's lodging data validates the rapid recovery of business and group travel is a very positive sign for the hotel industry. Business and group travel are two of the most important segments of the hotel industry, and their recovery is essential for the industry's long-term health.
The fact that hotel occupancy rates reached their second-highest level ever recorded in September 2023 is a clear indication that business and group travel is recovering rapidly. This is likely due to a number of factors, including:
The easing of COVID-19 restrictions: As COVID-19 restrictions have eased, businesses and organisations have begun to resume in-person meetings, conferences, and other events. This has led to an increase in demand for business and group travel.
The strong economy: The economy is currently in a strong position, with low unemployment and high GDP growth. This is leading to increased business and group travel, as companies and organisations have more money to spend on travel expenses.
Pent-up demand: After two years of the pandemic, there is a lot of pent-up demand for business and group travel. Many businesses and organisations have delayed or cancelled events in recent years, and they are now eager to get back to in-person meetings and conferences.
Weekday Occupancy on the Rise
The increase in weekday occupancy rates is a positive sign for the hotel industry, as it indicates that business travel is recovering. This is likely due to a number of factors, including:
The return to office: Many companies are now requiring or encouraging employees to return to the office at least part-time. This has led to an increase in business travel, as employees need to travel for meetings, conferences, and other work-related events.
The rise of hybrid work: Hybrid work arrangements, which allow employees to split their time between working in the office and working remotely, are also contributing to the increase in weekday occupancy rates. As employees travel to the office for a few days each week, they need a place to stay.
Increased corporate spending: As the economy improves, companies are spending more on travel and other expenses. This is leading to more business travellers staying in hotels.
The top 25 largest hotel markets in the United States are particularly well-positioned to benefit from the increase in weekday occupancy rates. These markets are home to major business centres and tourist destinations, which attract a large number of business travellers.
Surge in Group Bookings
The surge in group bookings is a significant trend in the hotel industry, and it is being driven by a number of factors.
First, the pandemic has led to a pent-up demand for human interaction. After two years of working and socialising remotely, people are eager to get together in person. This is especially true for businesses and organisations, which are seeing the value of in-person meetings, conferences, and other events for building relationships, fostering collaboration, and driving innovation.
Second, the strong economy is also contributing to the surge in group bookings. As businesses become more profitable, they are more willing to spend money on travel expenses. This is leading to more corporate groups booking stays at hotels.
Third, the rise of hybrid work is also playing a role in the surge in group bookings. With more and more employees working remotely, businesses are looking for ways to bring employees together for in-person collaboration and team building. This is leading to more group bookings for retreats, workshops, and other events.
The enduring importance of human interaction in sustaining business travel is a good thing for the hotel industry. It means that there will continue to be a strong demand for group bookings, even in the long term.
Key Trends Uncovered by STR Research
STR's research on the business travel sector has uncovered several notable trends, including:
Gradual yet consistent recovery: Business travel is recovering gradually but consistently, with September 2023 recording the second-highest occupancy rate ever recorded for that month. This recovery is being driven by a number of factors, including the easing of COVID-19 restrictions, the strong economy, and pent-up demand.
Leadership in recovery by small- and medium-sized companies: Small- and medium-sized companies (SMBs) are leading the recovery in business travel. This is likely due to the fact that SMBs are more agile and adaptable than larger companies. They are also more likely to have employees who are eager to travel for work after two years of remote work.
Increase in business travel as employees return to the office: As more and more employees return to the office, business travel is increasing. This is because employees need to travel for meetings, conferences, and other work-related events.
Continued growth of "bleisure" travel: Bleisure travel, which is the combination of business and leisure travel, is continuing to grow. This is likely due to the fact that employees are looking for ways to extend their business trips and enjoy some leisure time while they are away from home.
American Airlines' New Business Loyalty Program
American Airlines' new AAdvantage Business loyalty program is a positive development for the business travel sector. The program offers a number of benefits to eligible companies and their travellers, including:
Earning miles and Loyalty Points: Businesses earn 1 AAdvantage mile for every dollar spent on eligible business travel booked through the airline's official website or app. Travellers who are members of the AAdvantage program also earn Loyalty Points for business travel, which can be redeemed for upgrades, award flights, and other benefits.
Access to Admirals Club lounges: Businesses that enrol in the AAdvantage Business program receive access to Admirals Club lounges for their travellers. These lounges offer a variety of amenities, including complimentary food and drinks, Wi-Fi, and business centres.
Dedicated support: Businesses that enrol in the Advantage Business program receive dedicated support from American Airlines. This includes access to a team of account managers who can help businesses book travel, manage their accounts, and troubleshoot any issues.
Is business travel returning to pre-pandemic levels?
Yes, business travel is steadily rebounding, with more companies and professionals resuming their travel activities.
What factors are contributing to the return of business travel?
Factors include vaccination campaigns, eased travel restrictions, growing economic recovery, and the need for face-to-face interactions.
Are there any safety measures in place for business travellers?
Yes, many businesses and airlines have implemented enhanced safety protocols, including mask mandates, sanitization, and health screenings.
How has technology affected business travel's recovery?
Technology has played a role in reducing travel necessity, but it can't fully replace the need for in-person meetings and relationship-building.
Are there any trends emerging in the post-pandemic business travel landscape?
Some trends include a preference for shorter trips, regional travel, and a heightened focus on health and wellness during travel.
What should travellers do to stay updated on travel restrictions and guidelines?
Travellers should regularly check government websites and consult with their travel providers for the latest information on restrictions and guidelines.
Are there any challenges businesses face in the return of business travel?
Challenges include the uncertainty of the pandemic, changing regulations, and balancing safety with the need for in-person business engagements.