"It's been a year of flux," says travel technology company Amadeus in a new research report, 'Rebuilding Hospitality: Trends in Demand, Data, and Technology That are Driving Recovery', but with vaccines circulating and consumer confidence returning, "there are strong indications the industry is ready to turn a corner".
The report, which combines insights from an exclusive global hotelier survey and business intelligence data from the Amadeus Demand360 platform, highlights the trends that have defined the industry during the pandemic as well as best practices for hoteliers to plan their recovery.
The survey illustrated that hoteliers remain concerned over the current subdued global business travel demand. One third (33%) said the lack of business travel is the biggest problem they are currently facing, ahead of shifting government and health agency travel guidelines.
On the recovery, more than half (53%) said they expect pre-pandemic levels of occupancy to return in 2022, while operationally, hoteliers are most likely to prioritise the adoption of technology that streamlines operations, reduce stayover cleans, and maintain contactless deliveries of food and beverage, amenities and room service well into the future.
Approaching two-thirds (63%) of hoteliers said leisure will be the travel segment to contribute most to recovery. In fact, Marriott International CEO Tony Capuano told CNBC this week that the distinction between business and leisure travel is actually fading, a welcome development for the hotel operator as it recovers from the coronavirus pandemic. "We do think you'll see a steady return of business," he said in an interview on the channel's 'Squawk on the Street' programme. noting that in mainland China, business travel demand in March was +5% above where it was pre-pandemic.
"Increasingly we're seeing folks that say, 'I can blend trip purposes. I can combine leisure with business travel.' And we think that's really good news for our hotels across the country," Mr Capuano explained.
In an investor and analyst call to report 1Q 2021 earnings, Marriott revealed over 95% of its hotels are opened globally and it has seen overall worldwide occupancy improve every month this year. In Mar-2021, it saw the largest month-over-month sequential increase in global occupancy since the beginning of the pandemic.
"Occupancy reached over 45% up 9 percentage points from occupancy in Feb-2021. Mar-2021 global RevPAR was down -53% compared to Mar-2019, 8 percentage points better than Feb-2021's decline. Global occupancy in Apr-2021 rose again to around 48%. RevPAR for Apr-2021 declined roughly -50% compared to the same month in 2019," outlined Mr Capuano.
Things were brighter in the corporate sector. In Mar-2021, special corporate bookings for all future stays exceeded Feb-2021's bookings by +25%, the largest sequential monthly increase in this customer segments since the pandemic began. And special corporate bookings took another nice leg up in Apr-2021, confirmed Mr Capuano, improving +13% over Mar-2021.
Marriott's executive vice president and chief financial officer Leeny Oberg is confident that there is a lot of pent up demand ready to travel. "We hear from our corporate clients and association clients, that people are very anxious to be back in the groups, but whether that feels comfortable exactly in 3Q or exactly in 4Q is, where we do sense hesitancy. But that once you get past 2021 that there is a full expectation that people will be getting back into doing their group business," he said.
There was a similar viewpoint shared by Hilton Hotels in its 1Q 2021 presentation. President and CEO Chris Nassetta said that as expected recovery in group and corporate transit "continued to lag" but both segments showed "sequential improvement versus the fourth quarter". Overall, this positive momentum has continued into the second quarter, according to the Hilton boss. "While recovery varies by region and country, we can see the light at the end of the tunnel," he said.
Hilton believes that continued corporate office reopenings will "drive a meaningful pickup in business transient demand towards the back half of the year," based on the experiences it has seen in China and pockets of the US. "Once restrictions have been lifted and offices reopen business travel returns," said Mr Nassetta. In 1Q 2021 business transient revenue was roughly 75% of 2019 levels in states that were further along in the reopening process, according to the executive.
On the group side, forward booking activity continues to improve month-over-month, according to Hilton's 1Q 2021 data. Near-term group bookings continue to be driven largely by social events and smaller group meetings, but it is seeing a slow shift back to a more normal mix of business with corporate group lead up more than 70% for future periods.
"As we look out to next year our group position is roughly 85% of peak 2019 levels with rate increases versus 2019. Group bookings were up in the mid teens for 2023 versus 2019," said Mr Nassetta.
InterContinental Hotels Group (IHG) saw similar trends across its properties in 1Q 2021 as trading continued to improve through the quarter. "There was a notable pick-up in demand in Mar-2021, particularly in the US and China, which continued into Apr-2021," said Keith Barr, CEO, IHG Hotels & Resorts in its own 1Q 2021 presentation.
It has been a tough past year-and-a-half for the hospitality industry, but while the risk of volatility remains for the balance of the year, there is clear evidence from forward bookings data from some of the world's biggest hotel brands there are clear signs of improvement as we continue through 2021 and emerge from the clouds of COVID.