January 30, 2023

Springswines

The Tour And Travel Enthusiasts

Return of business travel: Hotels offer new perks, experiences

4 min read
Return of business travel: Hotels offer new perks, experiences

But it’s not all good news for hotels. Business travel—traditionally the industry’s largest source of revenue—is not expected to reach pre-pandemic levels until at least 2024.

U.S. hotels are expected to end the year down nearly $20.7 billion in revenue from business travel, a loss of 23.1% from 2019, according to an April report from the American Hotel & Lodging Association. 

“This report underscores how tough it will be for many hotels and hotel employees to recover from years of lost revenue,” Chip Rogers, head of the AHLA, said in April.

With markets like Detroit and Cincinnati seeing losses close to that 23% average, some of the country’s largest cities are experiencing even slower recoveries. New York City’s business travel revenue is projected to be down $2.5 billion from 2019, a 55% decrease. Chicago is expected to close out the year down 48.7% from 2019.

“There are clear winners, and there are markets that did not win or recover quite as well,” Jan Freitag, national director of hospitality analytics for CoStar Group, which owns STR, told Crain’s earlier this year.

But hoteliers in Chicago say demand has surged since the end of Illinois’ mask mandate at the end of February. A strong start to the city’s leisure travel season has lifted hotels’ bottom lines.  

And with weather improving, so has the return of larger conventions, along with pent-up demand for social gatherings such as weddings that were delayed earlier in the pandemic.

“Things are much better than where we’ve been over the last two years. The level of optimism rises every single day when I talk to hoteliers across the city,” said Michael Jacobson, president and CEO of the Illinois Hotels & Lodging Association. “We’re not fully recovered, but we are well on our way to reaching that point.”

The return of large conventions and trade shows will be crucial for hotels come fall, when leisure demand starts to dry up and cities depend more on corporate and group business. 

Some hotels are getting creative to encourage the return of business travel, and it’s coming in the form of new—and sometimes unusual—perks for guests. The goal is to create a business-leisure (or “bleisure”) experience that blends the evolving desires business people seek.

The Hoxton Chicago, for example, has dedicated the third and fourth floors of its Fulton Market location to a new co-working space under the brand name Working From__. It couples a professional office environment with the amenities of a luxury hotel, offering guests access to meeting spaces, phone booths, cafes, printing stations and more. 

Guests staying at the hotel get two hours a day of free access to the co-working space and can buy a full-day pass for $30. Working From__ also offers more personalized work experiences through its membership programs. The hotel offers memberships including access to private studios for large teams, personal desks, and access to lounges and meeting rooms. Working From__ members also get discounted—and sometimes free—rates for hotel rooms at The Hoxton.

Other hotels are looking to expand their traditional leisure amenities to be more appealing to guests who might otherwise be less inclined to make the trip. 

In Wilmington, Delaware, the corporate capital of the world, Hotel Du Pont brands itself as being “built for business” in the heart of the legal and financial district in the city’s downtown corridor. Earlier this year, the hotel launched an initiative partnering with local businesses to offer guests unique local experiences. This includes special access to book exclusive tours of local museums and even reserve one-on-one exercise training lessons with Olympic track and field gold medalist Anthuan Maybank.

Other hotels have adopted more welcoming policies toward guests’ pets, particularly dogs. 

Josh Griffin, marketing manager for the new Daxton Hotel in downtown Birmingham, Mich., said the hotel and its 151 rooms have been dog-friendly since it opened in April 2021. He estimated that there has been a 5% to 10% increase since then in the number of guests booking rooms with their pets, which requires a flat $150 fee for the length of the stay, no matter how long.

“So many more travelers are bringing their dogs along with them or some are even bringing other pets,” Griffin said.

“At the start of the pandemic, anyone and everyone was just looking for different revenue generators and hotels that historically did not allow pets saw that as an opportunity,” said Brandon Leversee, a Royal Oak, Mich.-based vice president for hospitality research company HVS.

The creative measures being taken to resurrect the hospitality industry go beyond just hotel perks, with businesses throughout the travel sector looking for new ways to tap into adjusting consumer habits.

The Nightfall Group, a California-based travel concierge company that provides clients luxurious accommodations, has looked to reach new clientele by accepting cryptocurrencies as a payment method. The move came earlier this year and is an effort to expand into the new market of high-value digital currency traders. 

The fate of these innovative appeals and their ability to bring back business travel remains a question. When leisure travel slows down at the end of the summer, that’s when we’ll begin to see if hotels have been able to bring back business travel faster than expected. 

Crain’s Detroit Business reporter Kirk Pinho and Crain’s Chicago Business reporter Danny Ecker contributed to this story.