Business-Travel Slump Undercuts Hotels as Vacation Season Ends

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Hotels see some recent momentum in corporate travel and the return of foreign tourists

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Hotel business-travel revenue for the year is expected to fall more than $59 billion compared to 2019, according to a report released last month by the American Hotel and Lodging Association.

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The report said that this is an even greater drop than in 2020, when there was a loss of about $49 billion in revenue. “We are on a downward slope for the end of the year,” said Chip Rogers, the association’s chief executive.

In the spring hotel owners pinned their hopes on increasing vaccination rates to promote corporate travel and large group events. The Delta version crushed that hope, leading organizations such as the National Association of Broadcasters to cancel their trade shows in Las Vegas and organizers of the New York International Auto Show scheduled for late summer.

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Analysts say companies are concerned that if they send employees to events they could be legally liable if a convention turns into a super-spreader event. “It comes down to liability,” said Mr. Rogers.

Hotels that rely on business travelers say advance bookings are much lower than usual and are usually done a few days before arrival dates, which is especially difficult these days as many hotels are also grappling with staff crunch.

Sandy Robinson, director of sales for Godfrey Hotel Chicago, said of late that advanced bookings are “when it comes to events,” said Sandy Robinson, a 221-room boutique accommodation that gets most of its business from business travel to pandemic . “We end up turning down some incidents because we have too few employees.”

Nevertheless, there are recent signs that business travel is slowly gaining momentum. According to STR, demand for the group, which is a mix of business and leisure, grew 5.7 per cent between the last two full weeks in September. Average daily rates for that business rose from $16 to $214, setting a pandemic record for group rates. STR said this is the highest average daily rate for the groups since February 2020.

Now that peak vacation season has passed, hoteliers can’t count on the same level of leisure travel as in summer, when hotel average daily room rates regularly exceeded their levels during the same period in 2019 , said James Sullivan, head of real property research at institutional brokerage firm BTIG LLC.

But hoteliers in big cities like New York and Los Angeles, which suffered from a lack of foreign visitors during the pandemic, are banking on the return of foreign travelers during the holidays, analysts and industry executives say. The Biden administration lifted the ban on foreigners who have been fully vaccinated in November.

Hilton Worldwide Holdings Inc.

on Monday reopened its 1,878-room property in midtown Manhattan, which was closed for most of the pandemic. The Hilton was planning to reopen last summer, but decided to delay partly because of a spike in Covid-19 cases.

According to Diramuid Dwyer, general manager of New York Hilton Midtown, Hilton opted to reopen in early October partly because of an expected increase in international travel, and a drop in many event and group bookings. He said the decline in the Covid-19 infection rate “had a direct impact on the important factors that influenced our reopening timetable.”

Meanwhile, Americans who called off family gatherings last year are unlikely to do so again, especially if they went on vacation earlier this year and are used to traveling during the pandemic, analysts say.

“Wedding season is in full swing,” said Jan Freitag, national director of hospitality analytics at Costar Group Inc.

Downtown hotel managers also expect a boost from more leisure travelers visiting cities, which have begun easing restrictions on events and indoor gatherings for those who have been vaccinated.

“You have Broadway coming back, the New York City Marathon, and the mayor and governor have confirmed that there will be a Thanksgiving parade,” said Corey Yoran, general manager of Times Square, the 234-room hotel Margaritaville Resort that opened in July.

Peter Grant at [email protected]

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