The future of business travel is cloudy, spelling trouble for hotels
- Companies are evaluating whether business travel will be worth it once the pandemic ends.
- After a year of working remotely, some think that Zoom and Slack can replace in-person meetings.
- But, hotel companies rely on business travelers for a large portion of their revenue.
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The question of whether working professionals will once again travel for business after the COVID-19 pandemic subsides has been one of intense debate in recent months.
And while cutting costs and working more efficiently may be top of mind for corporations, the uncertain future of business travel could have major repercussions for the travel industry, including hotel companies.
A November 2020 survey from consulting firm Oliver Wyman found that 43% of the 2,500 business travelers polled expect to make fewer business trips even once the pandemic is over.
At The New York Times Dealbook conference that same month, Bill Gates said, “my prediction would be that over 50% of business travel and over 30% of days in the office will go away.”
Gates added that in-person meetings that require a flight and an overnight stay in a hotel are no longer the “gold standard” and that many companies will have a “very high threshold” for sending employees out on such trips.
It’s common for corporate travel to be among the first expenses cut when businesses face tough financial periods. But with much of corporate America working remotely for almost a year, digital tools like Zoom and
that are frequently used to conduct meetings may prove pivotal even in a post-pandemic world.
Booking Holdings CEO Glenn Fogel said on an earnings call February 24 that he expects business travel volume to recover over time, but to ultimately be a smaller share of total travel spend compared to past years.
In an interview with Insider on his first day on the job, new Marriott CEO Tony Capuano said the hotel giant does not share that opinion.
“I do think there will be some tweaks to what we saw in business travel before in terms of frequency and which trip purposes travelers believe require in-person versus which trip purposes can be accomplished through technology,” he said. “But there have been lots of opinions out there about a fundamental and permanent reduction in business travel over the long haul, and time will tell whether they are right. We don’t have that point of view.”
He added that Marriott is “quite optimistic” about business travel’s recovery in the long term.
Indeed, hospitality companies likely need business travelers to come back in order for them to survive.
Before the pandemic, business transient travelers accounted for as much as 60% of business for major hotel chains like Hilton. They provided reliable occupancy year-round as well as during the workweek, and hotel executives say these travelers also tended to be among their most loyal.
About 30% of total travel spending in 2019 was allocated to business travel, accounting for about $334.2 billion in spending, according to the US Travel Association.
Hotel executives speaking with Insider in February said they expect more broadly distributed vaccines will be necessary for the travel industry to fully recover, and that it’s likely leisure travel would return well before business travel does.
To account for the plummeting demand that has accompanied the pandemic, major hotel conglomerates including Marriott, Hilton, Hyatt, and Four Seasons have developed offerings to appeal specifically to remote workers looking for a change of scenery. It’s part of a trend that the hotel industry calls “bleisure” travel, or trips that combine aspects of both business and leisure.
The packages tend to include benefits like daily food and beverage credits, complimentary or discounted laundry services, free Wi-Fi, and waived resort fees.
Some hotel companies are also developing on-site COVID-19 testing capabilities in an effort to entice groups to begin planning events at their properties again.