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Business travel recovery stalls after spring performance surge

July 15, 2022
5 min read
Travelers in airport
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If you try to book a hotel room or reserve a flight these days, the prices are a clear indicator people are traveling.

The recovery adage in the hotel industry for much of the pandemic has been that leisure travel would bounce back first followed by corporate travel and then groups and conventions.

Leisure travel certainly rebounded the quickest, but there has been debate on if group travel — anything from social events like weddings to corporate meetings and retreats — might overtake business travel in the race to a full recovery.

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The CEOs of travel companies like Hilton and Delta overwhelmingly spew optimism when it comes to their respective business travel outlooks, and data from the last few months suggest they aren’t entirely off the mark.

However, there is a risk of it turning into blind optimism.

“We're seeing good pricing power for higher-end corporate travel and good recovery on demand for group travel and pricing for group travel,” said Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities. “But the higher-end corporate [travel recovery] is stalled.”

Truist Securities noted the extraordinary corporate travel recovery momentum from winter into spring.

Bookings were down 65% from 2019 levels in January and improved to being only about 20% down in May. Though, they have been stuck at those levels since that time.

It’s usually impossible to fully decipher what exactly is deemed business travel, and analysts typically flag business travel as stays that take place during the middle of a week.

However, the Truist analysis went deeper using reservations analysis from data provider Tripbam, as well as conversations with hotel owners and managers, as well as executives at large travel agencies.

Airlines play a similar tune

It’s a similar business travel recovery story in the airline industry. Delta Air Lines reported domestic corporate sales in the second quarter were 20% off 2019 levels, but the company’s president Glen Hauenstein sees this as a sign the travel recovery has momentum.

“Our recent corporate survey results show positive corporate expectations for business travel in [the third quarter], with several of the least-recovered sectors conveying strong optimism for increased travel this fall,” Hauenstein said on an investor call this week.

“As the recovery progresses in these sectors, we expect an outsized impact on our coastal hubs.”

He expects international corporate travel to see gains because of the elimination of U.S. testing requirements on arrivals from abroad earlier this year.

“Our thesis is really what I outlined in my comments that, as we get toward the end of summer into the more traditional business travel season, that we’re going to see an uptick in corporate travel,” Hauenstein said.

“That’s been reinforced by a couple of surveys. The Delta survey, which really just closed last week, had some very encouraging statistics in that our customers are expecting that travel will pick up meaningfully as we get to the fall.”

Shifting strategy

The optimism around the business travel recovery doesn’t mean everyone is just sitting around waiting for things to go back to the way they were in 2019.

The numbers show Bill Gates was likely incorrect earlier in the pandemic that half of business travel was going to go away permanently, but a stall at 20% off pre-pandemic performance should make companies consider a new business strategy.

Several have.

IHG Hotels & Resorts unfurled a new plan for its business travel-oriented Crowne Plaza brand this week. The brand will still focus on business travelers, but it plans to broaden its appeal to a new era of remote work and people who work second jobs or have a side hustle.

IHG also plans to better position Crowne Plaza for the increasingly popular blended travel trend, where people have a mix of leisure and business purpose during a single trip.

Details are a little sparse on how everything will shake out, but Crowne Plaza does have a flexible room design aimed at remote work from a hotel room. A Skift report indicates additional design changes are in the works.

Hilton’s plan encompasses catering more to smaller businesses that don’t have the luxury of remote work.

These types of workers generally have to be on the road and can’t rely on Zoom calls to conduct business.

Business travel from these types of companies accounted for 80% of the business travel demand at Hilton prior to the pandemic.

However, Christopher Nassetta, the company’s CEO, indicated on an investor call last year a plan to boost that to 90% and have less exposure to special corporate clients, which are larger companies that negotiate special rates.

“Business transient will continue to move up,” Nassetta said last fall. “You’ll continue to see great strength in small and medium enterprises, which aren’t fully back to pre-COVID levels but are pretty close.”

Featured image by Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

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  • Annual Fee

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Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

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  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases