Hotel business travel revenue down $20 billion
NASHVILLE, Tenn. (WKRN) – Hotel business travel revenue is expected to drop about $80 million in Nashville by the end of 2022, according to the American Hotel and Lodging Association. However, the 8% loss from 2019 is still much better than the situation for hotels nationwide.
“If you look at the state of Tennessee, and you look at Nashville in particular doing much better, really much better than the rest of the country, and a lot of credit has to go to the pro-business environment there,” said Chip Rogers, President and CEO of AHLA. “What we’ve seen across the country, really, since the pandemic started, is if the message is clear that we’re open for business, and that doesn’t change from time to time, and that the restrictions don’t change going on the books and off the books, people are much more likely to book a trip.
US hotel business travel revenue expected to be 23% below pre-pandemic levels in 2022, ending the year down more than $20 billion, according to AHLA report compared to 2019. Additionally, this comes after hotels lost an estimated $108 billion in business travel. revenues in 2020 and 2021 combined while the federal aid they received was around $50 billion to $55 billion.
“Pre-pandemic business travel, what you typically think of people going on a business trip, or a conference or a large meeting, which was about 55% of all hotel revenue,” said Rogers. “Now it’s between 30% and 40% of the hotel’s revenue, the mix has changed dramatically.”
They do, however, see leisure travel already returning to pre-pandemic levels with the possibility of setting a record this summer. For the week ending April 16, 2022, hotel occupancy in Nashville was 68.8% compared to 75.8% in 2019. Average daily rate was $167.09 compared to $150.15 in 2019 .
“What happens is people check into a city at a hotel a day early, sometimes they stay a day late because they can work from their hotel room, they want to experience the city of Nashville is a perfect place to do that,” Rogers said. “What we’re actually seeing is these business trips stretching out a bit to become what we’d like to call leisure, business and leisure mixed .”
According to Rogers, the main problem now is also staffing.
“If you ask any hotel you’re currently anywhere in the country, what’s the biggest problem you’re facing? They’ll tell you there aren’t enough people working in my hotel. You know, we’ve talked a lot about how much money has been lost in the last two years,” Rogers said. “Now we’re in a situation where the demand is largely there, the levels of occupations in Nashville are about what they were in 2019. But you don’t have enough workers.”
He added that it could also have a ripple effect on the income of related industries.
“When you have the big hotels, especially those that are connected to a convention center. Keep in mind these hotels with these big events, they have banquets, they have meals, and when they have those meals, serving hundreds and maybe thousands of people, that’s where the jobs are “, explained Rogers. “So it’s those kinds of jobs, the food and beverage jobs, that haven’t come back to our hotels that we’re desperate to get back.”
He added that he thinks cities need a consistent message that office parks are open again.
“In particular, where we are seeing most of the damage across the country is in urban city centers where people have not yet returned to the office. If people are not back in the office, they will not have the business meeting, the convention centers. You know, some of these events are incredibly important, so it takes time to reschedule them all,” Rogers said. “You see them over there in Nashville. But once they’re planned again, once people are back in the office, again, we think business travel, we’ll be back to where it was.
They don’t expect business travel revenues to return to normal until 2023.