While group travel demand is improving, hotels across the United States are less optimistic about the sustainability of business travel. Because revenue from corporate clients normally decreases in the fourth quarter, many hotels are now anticipating an improved mix of sales in the first quarter of 2023.
According to Mark George, senior vice president of sales and marketing at West Palm Beach, Florida-based hotel management company Island Hospitality, the recovery of hotel room demand from business visitors is a “separate issue” from that of group demand.
“You go to The Triangle area [in North Carolina] — that office space is empty. You go to Silicon Valley, there’s some emptiness there. But then you go to Dallas, and they’re starting to fill back up,” he said.
“We’ve had conversations with the brands, with large accounts [and] everybody is very optimistic that [business travel] is going to return, We’re budgeting for high-single to double-digit increases over 2019 as far as the corporate account pricing is concerned,” says Mark
As per Hannah Huse, vice president of sales and marketing at investment, development, and management firm Twenty-Four Seven Hotels, some corporate clients are still hesitant to send staff on vacations. The Federal Reserve’s looming rate hikes are another reason for anxiety.
“We’ll continue to see a gradual improvement in our mix of sales, but not without a proactive approach at educating our customers on the differences of travel and the why behind our pricing,” she said.
This proactive method involves using collaborations with companies to better identify market differentiators. At the local level, sales executives must also be viewed as educators, and they must conduct studies to understand market trends and other aspects impacting price. In terms of corporate travel, Huse stated that most large brands have rollover pricing from 2019 and that this is the first year her team has had to negotiate and rethink business travel since the COVID-19 pandemic began.
Trisha Grisko, vice president of sales and marketing at Sandpiper Hospitality, said business travel is still increasing at hotels in her company’s portfolio.
“We still see a good share of the blue-collar, gray-collar travelers. Those white-collar business transient folks are still … behind 15%-20% year over year,” she said.
From Atlanta-based Hospitality Ventures Management Group’s perspective, business travel recovery isn’t quite mirroring the boom in group travel.
“Unfortunately, I don’t feel as excited about business travel,” said Kim Brooks-Martin, corporate director of sales strategy and development at HVMG. “Business travel has been impacted tremendously and it has been slow to recover.”
“Individual travel has been largely based on the obligatory customer visit, and there’s not as much of that in person,” she said. “People are not as passionate about getting on the road as they were.”
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