Hotels Envision Group Bookings Will Make Up for Lost Business Trips

Skift Take

Most of the major hotel chains have now reported their fourth-quarter results. Tourists are back in full force, traditional business travelers are less so. But fortunately for them all those conferences and big events are keeping their properties filled.

Matthew Parsons

“An Outstanding year,” “thrilled to report,” “record-breaking…” every US hotel group CEO has been jubilant in their earnings calls these past days.

Hilton’s Chris Nasetta possibly the most: “We’re at a pivotal moment with great opportunities ahead in a new golden age of travel.”

The execs say they’re finally benefiting from all of that pent-up demand. Across the board with their reporting results, it’s clear that leisure travelers are mostly driving that recovery, with elements of blended travel mixed in.

They’re also optimistic on corporate travel. It seems the group business is set to be the star in 2023, on top of extra business from workers hitting the road as the US begins its infrastructure projects.

Truly Transformative Year

Hyatt CEO Mark Hoplamazian described 2022 as a “truly transformative year” during an earnings call on Feb. 16.

Group booking revenue hit a milestone in the company’s recovery, as it made it back to 2019 levels in its fourth quarter — “a testament to our association and corporate customers prioritizing in-person interaction and connection,” he said.

His comments echo a report from Deloitte that also found inadequate video conferencing software was driving the recovery.

Revenue from business transients — for example, individual business travelers checking in for a night or two for a meeting — but was 18 percent below 2019 levels for the quarter.

A report last summer warned travel company budgets were being cut by a quarter, a precursor to recent announcements involving layoffs and tighter controls on spending.

“Conversations with corporate customers continue to suggest further recovery is ahead for group and business transient travel and leisure transient shows no signs of slowing as evidenced by the strong bookings at our resorts,” added Hoplamazian.

They’ve Been Planning Them Like Crazy

Hilton is bullish too on the rise of group bookings.

The segment’s revenue per available room, or RevPAR, which is the metric most hospitality brands use to measure success, saw the biggest quarter-over-quarter improvement and it has recovered to 2019 levels

“… People really got comfortable, we were through Covid and they could start planning events,” said Nasetta during an earnings call earlier this month. “They’ve been planning them like crazy. Even the biggest groups, all the association stuff, that really starts to hit the second half of this year because of all of the planning.”

He said the group demand was resilient as people have gone years without doing things they need to do for survival.

“Even with robust forward bookings, the pipeline still remains strong with tentative bookings up more than 20 percent versus last year, helped by rising demand for company meetings as organizations bring their teams back together,” he said

But Nasetta also thinks there is still growing demand for business transient side.

Meaningful Improvements

Over to Marriott, where CEO Antony Capuano said that the hotelier’s group business “experienced the most meaningful improvement in 2022.”

But he noted recovery for business transient broadly was still at about 90 percent.

“We’ve seen slower though steady recovery from larger companies, but they’ve got a bit of a way to go to get back to pre-pandemic levels,” he said during an earnings call Feb. 14.

Building Momentum

Choice Hotels, meanwhile, is optimistic around strengthening its business transient and group segments this year, after year-over-year increases in business travel bookings in 2022. Revenue generated from its “business managed accounts” is more than doubled compared to 2019.

But speaking last week, president and CEO Patrick Pacious said he also expected business travel to increase in tandem with nationwide investments in infrastructure.

It’s this $1.5 trillion government infrastructure project that has also got Wyndham Hotels & Resorts excited.

Projects for new roads, bridges, rail, water systems, airports, broadband and public transfers represent an opportunity for Wyndham to generate more then $3.3 billion of incremental revenue for its franchisees, and over $150 million of incremental royalties for Wyndham, it was revealed during its earnings call Feb. 16.

“Our general infrastructure related revenues increased double digits in the fourth quarter versus 2019, a trend that began back in the second quarter of 2021,” said CEO Geoffrey Ballotti. “And we’re confident that it will continue to strengthen throughout 2023.”

Wyndham is even creating a dedicated business-to-business sales team to identify the biggest opportunity targets, he revealed. “There are 1.8 million infrastructure company businesses in the US today, and we’re leveraging our relationships with our third-party partners.”

But all this optimism comes as the hospitality returns with a slower, less perfect, traditional corporate travel recovery.

It’s no surprise that hoteliers are now prioritizing winning more group businesses over corporate businesses in 2023.

“I feel as though corporate travel has found a level, and will no longer compound upward to its 2019 level, and cycle around the macroeconomic environment,” one investment bank analyst told Skift.