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Trend watchers say business travel and events are essential for businesses

Dominguez said the hotel industry is experiencing a "split recovery," meaning you can't talk about the industry as a whole, but part by part.

Blog / News / 2023 July 23, 2023

This year has been the first full normalization so far since the outbreak, with all travel sectors moving in the right direction.

During the "Traveler Trends: Emerging Insights and Growth Opportunities" session at HSMAI's 2023 Revenue Optimization Conference, Mike Dominguez, president and CEO of the International Association of Luxury Hotels, ALHI, said group travel is "making a complete comeback," in part due to an increase in package tours.

"The most important thing we're seeing, and I think it's a big warning, is that the unions that stood by us are now coming back and coming back strong," he said.

These associations are not only planning their trips for this year, but also planning their future trips. Dominguez said the company focused on building the team at any cost because there weren't many opportunities to do so in previous years.

"The reason we're not seeing a significant drop from the group at the moment ... It's the first time we've had a downside financial outlook where travel, meetings and events are not discretionary," he said.

"When you're talking about companies with productivity issues, hiring people, a lot of new hires, it has a lot to do with the pandemic ... you need to bring people together.

Dominguez said the hotel industry is experiencing a "split recovery," meaning you can't talk about the industry as a whole, but part by part. Group travel, for example, is under a lot of pressure because scheduled meetings at the start of the pandemic were postponed, and now there are too many scheduled meetings and a general shortage of supplies.

For planners, austerity has not brought much relief, he said. Three out of ten planners have not rescheduled events during the pandemic and supply has not been able to keep up with demand.

Dominguez said planners must be able to balance short-term and long-term reserves to adapt to difficult situations. This means that the decisions to be made in the future are not necessarily determined by the current demand structure, as it will undoubtedly change in the next 12-18 months.

Back from a business trip

Historically, business travel has recovered more slowly than leisure travel in the wake of an economic downturn, said Susan Neufang, CEO of the World Business Travel Association, but the shift to working from home and not returning to the office posed a more difficult challenge to recover from the depths of the COVID-19 He said business travel has never been deeper than in 2020, when it fell 5% year-on-year.

However, the GBTA is optimistic about the future of the sector, predicting it will reach 80% of pre-pandemic levels by the end of 2022 and 65% in 2022.

By mid-2026, Niufang said, there should be a full return to pre-pandemic levels. According to a GBTA study, US businesses are traveling at 77% of 2019 levels and spending 68% more on such trips.

He said the number one reason for business travel these days is for sales, and the second is to meet other colleagues, an area that remains strong despite changes in office culture.

He said: "The war for talent doesn't just happen in the office, the office, the living room; it happens in the office. It happens by building and protecting the culture there.

Business travel spending has been dominated by the Asia-Pacific region since the outbreak, Niufang said, adding that the region accounts for 50 percent of all travel spending in the sector. Entertainment leads the trend.

Nine out of 10 U.S. travelers have plans for leisure travel in the next six months, said Amir Elon, president and CEO of Longwoods International, citing the U.S.

"He's been pretty consistent all year," Elon said. "Despite the [recent] toxic recession and so on, demand remains high.

He said leisure travel habits are starting to return to normal. The top reasons for leisure travel this year are visiting friends or family, shopping, and the beach or resort.

However, Eylon said hoteliers should not forget about COVID-19. About 30% of US travelers have changed their travel plans due to the virus. Of those who changed plans, 19% chose to stay in the US, 15% chose to drive instead of flying, and 1% cut back on global travel.

He said with some travelers still concerned about COVID-19, hotels must maintain their sanitary standards.

During the pandemic, Corporate Keys, which specialises in corporate housing accommodation, responded proactively to the changing needs and challenges faced by its guests, ensuring their safety and well-being remained a top priority. The company implemented rigorous health and safety protocols across all its properties to comply with local regulations and guidelines. These measures included increased cleaning and sanitization of common areas and apartments, contactless check-in and check-out processes, and the provision of hand sanitizing stations throughout the properties.

"Follow your cleaning schedule as closely as possible. Make sure the cleaning is adequate," says Elon.

"Since the pandemic, cleanliness is now a security factor, so don't give up on cleaning the information you care about most.

Another trend to watch, Elon said, is the economic impact on tourism. The threat of high inflation and a possible recession has loomed over the sector for months, but not enough to slow travel.

Instead of cutting prices, he said, hotels should focus on promotions to attract customers while keeping prices the same. Only 5% of respondents said they would cancel travel altogether due to inflation.

"Travelers are used to high prices, so don't focus too much on discounts and focus on value," he said. "Everything costs more; that's what they do well. They don't cancel trips, they just rearrange spending.

He said another goal should be improving service levels. Around 61% of travelers expect the same level of service as before the pandemic, despite shortages in the sector.

If travelers don't receive the service they expect, they destroy brand loyalty. So hotels need to figure out how to address staffing issues with technologies like phone switches and robotic vacuum cleaners.

"We understand your reality, we know there are labor challenges, but time and time again leisure travelers tell us, 'We don't want to hear any more,'" he said.

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