Stats: 42 Percent of Business Travelers Comfortable Staying in a Hotel

The American Hotel & Lodging Association (AHLA) on Thursday released its “State of the Hotel Industry 2021” report, outlining the forecasted state of the hotel industry in 2021 and into the immediate future. The report examines the high-level economics of the hotel industry’s recovery, the specific impact on and eventual return of business travel, and consumer travel sentiments. 

The pandemic, according to AHLA, has been devastating to the hospitality industry workforce, which is down nearly 4 million jobs compared to the same time in 2019. While some 200,000 jobs are expected to be filled this year, overall, the accommodations sector faces an 18.9 percent unemployment rate, according to the Bureau of Labor Statistics. In addition, half of U.S. hotel rooms are projected to remain empty in 2021. In fact, hotel employment is unlikely to reach pre-pandemic levels until at least 2023.

In 2019, the nation’s nearly 56,000 hotels experienced an average annual hotel occupancy of 66 percent, selling 1.3 billion rooms. Hotel occupancy in the United States for 2021 is expected to average 52.5 percent, an increase of only 8.5 points from 2020. This would bring room revenue in 2021 to just 85 percent of 2019’s total.

While leisure travel is expected to restart by the second or third quarter of 2021, business travel—which comprises the largest source of hotel revenue—remains nearly nonexistent. The recovery of the travel industry, according to AHLA, is anticipated to take place in three phases: Leisure travel; small and medium events; and group and business travel. 

While business travel this year will remain below 2019 levels, business travelers are expressing greater comfort in traveling for any reason compared to adults overall, and they are more likely to say they will travel more in 2021. In fact, in a January 2021 survey of frequent business travelers, 42 percent of respondents said they are comfortable staying in a hotel, while 52 percent said their comfort staying in a hotel is connected to vaccination. Among frequent business travelers, 62 percent expect to travel more for leisure and 51 percent expect to travel more for business compared to last year. 

Prior to the pandemic, 13 percent of respondents took between zero to one business trips per year, another 24 percent took two to three trips per year, 29 percent took four to six trips per year, and 33 percent took seven or more trips annually. In 2020, those numbers dropped dramatically with 26 percent saying they took zero business trips and 73 percent stating they took three or fewer trips for work the entire year. That’s just 1 percent who took more than three trips for work in 2020.

Despite an uptick over 2020, business travelers still anticipate traveling significantly less for work in 2021 compared to normal years. Twenty-four percent expect to take zero trips for work, 14 percent expect one trip, 25 percent expect two to three, 16 percent expect four to six and 21 percent anticipate seven or more trips for work.

Business travel is forecasted to grow slightly in Q2 2021, assuming more widespread vaccine distribution, as essential meetings and small and medium events are held, and regional international travel begin to resume. Large shifts in business travel are not projected until a vaccine is widely available and warm weather has returned.

Group- and meetings-related travel surpassed 6 million travelers per month in January-February 2020, but only reached 1 million in August-October. Group demand is forecasted to be down by 85 percent compared to 2019 levels through April 2021, and then increase slightly—to 75 percent in May 2021. Large group- and meeting-related travel face a longer road to recovery as travelers take time to become comfortable with these types of events again. By the fourth quarter in 2021, group demand is expected to be 23 percent down from fourth quarter 2019 levels.

Business demand, however, is most likely to only return to pre-pandemic levels once individuals feel safe returning to the office. At that point, travel will resume in stages depending on the method of travel, reason for travel and industry sector. 

Source: AHLA

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