The hotel industry is slowly recovering from the shots it’s taken during the COVID-19 pandemic. Unfortunately, the key word here is “slowly.”
And the reason for this agonizingly slow recovery? It’s not leisure travel, which has steadily recovered since the worst days of the pandemic. It’s business travel. Companies still aren’t sending their workers on nearly as many road trips requiring hotel stays. And no one knows yet when this will change.
According to an April 19 report from the American Hotel & Lodging Association and Kalibri Labs, U.S. hotel business travel revenue is predicted to end 2022 down more than $20 billion when compared to 2019. This comes after hotels lost an estimated $108 billion in business travel revenue during 2020 and 2021 combined.
“While dwindling COVID-19 case counts and relaxed CDC guidelines are providing a sense of optimism for reigniting travel, this report underscores how tough it will be for many hotels and hotel employees to recover from years of lost revenue,” said Chip Rogers, president and chief executive officer of AHLA.
Is there a glimmer of hope, though, for business travel? Rogers said there is.
“The good news is that after two years of virtual work arrangements, Americans recognize the unmatched value of face-to-face meetings and say they are ready to start getting back on the road for business travel,” Rogers said.
Again, though, no one is certain when business travel will finally rebound. And until it does, the U.S. hotel industry will face challenges.
These challenges are hitting urban markets harder. That’s because these markets rely heavily on revenue from business meetings, seminars and conferences.
According to the American Hotel & Lodging Association, two Midwest cities are among the 10 urban markets projected to end this year with the largest percentage declines in hotel business travel revenue.
This includes Minneapolis. In 2019, Minneapolis saw more than $698 million in hotel business revenue, according to the lodging association. In 2022, the city is projected to see more than $431 million in this type of revenue. That’s a dip of 38.2% from 2019 to 2022.
And the news is bad in Chicago, too. The lodging association said that in 2019, Chicago hotels saw more than $2.48 billion in business travel revenue. That figure is expected to drop to more than $1.27 billion in 2022, a decline of 48.7%.
The U.S. city expected to see the biggest drop in hotel business revenue? That’s San Francisco. The lodging association says that in 2019, San Francisco saw more than $2.4 billion in hotel business travel revenue. This year, the city is expected to see just more than $762 million in this type of revenue. That’s a big drop of 68.8%.
Minnesota as a whole is also expected to see a big drop in hotel business revenue this year. The lodging association predicts that Minnesota will see more than $826 million in hotel business travel revenue this year, down from more than $1.18 billion in 2019. That’s a drop of 30.2%, the ninth-biggest among all states, according to the association.
Illinois is expected to see the fifth-biggest drop in hotel business travel revenue this year, according to the association. In 2019, Illinois saw more than $2.9 billion in hotel business travel revenue. That figure is expected to drop by 41.1% to more than $1.7 billion this year.
But back to that glimmer of hope. The American Hotel & Lodging Association also recently released a survey showing that 64% of employed Americans and 77% of business travelers agreed that it is important to bring back business travel. The survey also found that 80% of employed Americans and 86% of business travelers say face-to-face interactions are important for boosting a company’s success.
That survey gives lodging association officials at least a bit of hope that companies will bring business travel back. But until that happens? Expect hotels, especially in urban areas, to continue facing economic troubles even as the pandemic, hopefully, wanes.
