Hoteliers’ Dreams of Post-Labor Day Business Travel Rebound Fade

Data Shows 71% of Travelers Less Likely To Attend In-Person Events

Hoteliers in the U.S. had been pinning their hopes on business travel picking up after Labor Day, but those projections are dimming as COVID-19 cases increase nationally.

On Marriott International’s second quarter earnings call with analysts in early August, CEO Tony Capuano said many of its corporate customers were telling Marriott they are starting to get back on the road this summer. Other hotel CEOs expressed similar sentiments in their calls.

“We expect to see a step up in business travel post-Labor Day, as children go back to in-person learning and workers increasingly return to office,” Capuano said on the call.

But new data from a national survey conducted by Morning Consult on behalf of the American Hotel & Lodging Association show U.S. business travelers are scaling back travel plans. A total of 67% of respondents said they plan to take fewer trips, and 52% are likely to cancel existing travel plans and not reschedule. Additionally, 71% are likely to attend fewer in-person events.

“Despite an uptick in leisure travel over the summer, the new survey highlights the dim outlook for business travel and events, which account for more than half of hotel revenue and aren’t expected to return to pre-pandemic levels until 2024,” the release states.

As recently as early August, Marriott’s group bookings in the U.S. were gaining momentum. During the call, Capuano said that for the first time since the COVID-19 pandemic began, group bookings made during June or any time in 2021 exceeded in-the-year bookings made in the same month of 2019.

Jennifer Driscoll, vice president of revenue management at Germantown, Tennessee-based hotel management company McNeill Hotel Company, said less than a month ago her company felt similarly to Marriott.

“If you asked us three weeks ago, four weeks ago, yes, everyone had all their money bet on September,” she said. “I do think there’s a little bit of a softening. The good thing is, what we’re not seeing is restrictions coming back.”

People are still traveling despite spikes in cases and mask mandates remaining, but the million-dollar question is will the business traveler be traveling in September, she said. By mid-September, that answer should be a more clear.

So far the bookings show business travelers are back, but it is not as high as they anticipated, and no where near 2019 levels, she said.

Dury Kim, regional vice president of revenue management of Ocean City, Maryland-based management company Real Hospitality Group, said three weeks ago there was less resistance from the business traveler. There was also an increased volume in advance purchase reservations.

“However, since then, we’ve seen a lot pull back,” she said, noting it does vary by market. Instead of a step up in September, she said it will be more like a small ramp.

Kim said her company was expecting the volume to come back, but several large city-wide conventions and trade shows in markets such as New York City have been canceled for September.

“There is still a lot of up-in-the-air mentality for the next month … we have a lot of hotels in New York that rely on corporate strength, group, transient and international,” she added.

Theresa Hajko, regional director of revenue management at Irving, Texas-based management company SPIRE Hospitality, said her company has had a step up in bookings each month, with the greatest being in August. SPIRE does expect another step up in September, but business travel will not be at 2019 levels likely until the first half of 2022.

“As far as the Delta variant, we are getting some smaller convention cancellations … we have had a lot of inquiries about what our cancel policy is,” she said. “But so far, we’re not really seeing it affecting our transient demand.”

SPIRE remains optimistic about the fall months, but Hajko said it’s important to keep in mind that post-Labor Day staycation leisure travel will soften as kids are back in school. Additionally, extended federal unemployment benefits end in September, affecting peoples’ disposable incomes.

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