Experts Share Hotel Industry Projections for 2021 and Beyond
Business travel will rebound, but when, how and what will it look like?
Alexandria, Virginia (October 27, 2020) As part of this week’s Collaboratory 2020 webinar series, the Global Business Travel Association (GBTA) – the world’s largest business travel association – hosted two global hospitality experts to discuss key market trends and forecasts for the hotel industry. Jan Freitag, Senior Vice President for STR and National Director of Hospitality Market Analytics for the Costar Group, and Tobias Ragge, Chief Executive Officer of HRS, covered a broad range of relevant topics as properties and corporate hotel programs navigate the unprecedented realities of the coronavirus pandemic.
In the webinar “Hotel Outlook: 2021 and Beyond,” GBTA Interim Executive Director Dave Hilfman led an informative Q & A session with Freitag and Ragge that included global data benchmarking and analytics, as well as an update on the state of corporate hotel negotiations for 2021.
Noteworthy insights during the session included:
- Corporate demand will return faster than Average Daily Rates (ADR) rebound. Transient and group hotel demand will start to come back with the introduction of a COVID-19 vaccine and increased rapid testing, but similar to the periods after 9/11 and the 2008 recession, ADR will take much longer to recover, possibly until the end of 2025 or later.
- A slowdown in Upper Upscale and Luxury hotel construction now will create a supplier’s market in 5 years. Hotel construction is still occurring but it’s predominantly in the limited service hotel space (71 percent). With Upper Upscale and Luxury Class not adding many new properties, existing properties in these categories will be in a prime position once the industry recovers.
- While not all hotels will make it through this tough time, the industry as a whole will rebound. In the U.S., loyalty programs will be key to pulling corporate travelers back to brands, with independent hoteliers struggling more without that brand association. Outside the U.S., particularly in AIPAC and EMEA, where independent properties have always been the backbone of the industry, independent owners must focus on getting in front of corporate procurement leaders and business travelers via search engines in order to survive.
- “Duty of Care” is now of primary importance for corporate travel managers when negotiating their 2021 hotel contracts. The pandemic has shifted the landscape to a buyer’s market, and corporate buyers want to see that a hotel property/chain has enhanced hygiene protocols and virtual or touchless payment options. Hotel program leaders are also pushing for dynamic pricing thresholds, removal of Last Room Availability (LRA) clauses, reduced cancellation time windows and altered breakfast options.
According to Ragge, “The pandemic creates an opening for longer-term strategic approaches for both corporate buyers and hotels. There’s a tremendous opportunity to use data and technology to enhance transparency in everyday program management as well as the on-site guest experience.” While technology has replaced in-person sales calls or client servicing during the pandemic, “not everything can be replicated in a virtual format, and this is what will drive meetings business back,” said Freitag. “The need to achieve business outcomes in person is what will enable the industry to survive in the long run.”
The “Hotel Outlook: 2021 and Beyond” webinar is one of many in a series being presented by GBTA. For the recording of this session and more information on future webinars, visit gbta.org.
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About the Global Business Travel Association
The Global Business Travel Association (GBTA) is the world’s premier business travel and meetings trade organization, headquartered in the Washington, D.C. area with operations on six continents. GBTA’s 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. GBTA delivers world-class education, events, research, advocacy, and media to a growing global network of more than 28,000 travel professionals and 125,000 active contacts. To learn how business travel drives lasting business growth, visit www.gbta.org.