How long is a piece of string? Big hotel group leaders offer mixed views on the recovery of business travel
There are clear signs that the hotel industry has adapted to the ‘new normal’ and occupancy levels are generally moving in the right direction, albeit remain significantly down on the levels recorded this time last year. Just like with the return of air capacity and air travel demand there is so much uncertainty and outside factors that even the senior management of some of the biggest hospitality brands have different viewpoints on the recovery.
At Hilton Worldwide, president and CEO Christopher Nassetta is perhaps the most optimistic and speaking on a Q2 2020 earnings call this week, he said he believed that the impact of technology, travel restrictions will be short-lived and business travel confidence will return and will return to levels seen in 2018 and 2019 within a three year window.
Mr Nassetta says the company is already seeing a small rise in business demand, albeit the demographic has changed somewhat. “It’s a little bit different makeup of business traveller than probably it was last year for the last decade or two or three… you are starting to see that come back not rapidly, but slowly. And I do think all things being equal as you get into the fall, you will see that continue,” he explains.
“I think its two or three years to sort of get back to the demand levels that we were experiencing in ‘18 and ‘19. But I think it’s sort of – that is sort of the broader trajectory we will be in this hopefully 45%, 50% range and then moving our way steadily, slow and steady up from there,” he adds.
At Marriott International, president and CEO Arne Sorenson reinforces that leisure demand is undoubtedly outperforming other segments, but had a positive viewpoint on the corporate travel during its own 2Q 2020 earnings call. He says that corporate performance has risen five points in the last eight weeks in terms of the level of RevPAR year-on-year declines.
“So far in the recovery, every sector has gotten better in every month,” he acknowledges, and puts the uptick in business demand mainly to travellers in smaller companies and mainly related to those where travel is mainly by road and less dependent on flying.
“I think a lot of us have a little more caution around the corporate traveller than we do around the leisure traveller based on the first few months of recovery here,” acknowledges Mr Sorenson who is especially frustrated as decisions by big corporations about keeping offices closed for as much as the next year. “Frustrating to us because in a sense that’s just sort of withdrawing from the economy,” he says.
In the case of Accor, chairman and CEO Sébastien Bazin believes that business travel levels will be down by around 10% to 15% in the medium to long term. “The shock that our industry is experiencing is both violent and unprecedented,” he says and while acknowledging that the peak of the crisis “is undoubtedly behind us,” he warns that “the recovery will be gradual”.
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