Hotels that understand how the pandemic has reshaped work will better serve the new business traveler and capture a larger market share.
The word recover implies that the travel volumes and revenue in a few years will be the same as they used to be. Recover has a built-in hope that things will change for the better more or less automatically, and we have to ride out the storm when we wait for the business to come back.
There is now a consensus that business travel will take longer, if ever, to recover after the pandemic. Down below, in the right column, there are links to some informative articles based on recent research.
However, recovery is misleading since it only looks at macro-economic figures and does not consider behavioral changes or business environment factors. Hotels wanting to recover faster need to understand what has changed, adapt products and services, and communicate their upgraded offerings in new ways.
The pandemic has accelerated three significant behavioral changes.
The future of work is already here
Many surveys of employees show that the way of work will not be the same as before the pandemic. Jobs that do not require physical presence will happen everywhere, not only in the office or home. Therefore, Work From Everywhere (WFE) replaces Work From Home (WFH) that has been mandatory during the pandemic.
WFE is possible because of new technology, such as video calls, virtual meetings, and digitalized work. There is no point sitting alone in a cubicle in an office, working digitally, and having virtual meetings with people at other locations. This type of work is not location-specific. The technology was available before the pandemic, so something else has changed. The pandemic forced management to figure out how to manage work and projects with people spread out in different locations. After one and a half years of training, managers have acquired these skills and see productivity gains compared to the old office management style. However, people are social and want to meet in person, so for the right reasons, people will meet in offices, hotels, and convention centers all over the world, but not as frequently as before the pandemic. People want to maintain the better work-life balance that they discovered during the pandemic.
Initially, WFE negatively impacts hotels since extensive business travel is no longer necessary to get the job done. However, people will start to travel, so hotels will see returning business travelers, but trips will be less frequent.
WFE also opens opportunities for hotels if they adapt products (rooms, coworking, meeting rooms, and technology) and services (tech support, food & beverage, health, and safety). For example, a well-crafted WFE offering from a hotel would attract business guests. Another opportunity is groups for regular corporate gatherings for building company culture and nurture teamwork. But, again, hotels need to understand the new needs and create attractive offerings.
Cost savings for companies and employees
Many corporations have reported substantial cost savings due to less travel. However, many companies' revenue is on record levels, so cost savings on travel only increase profits. Other cost savings from the WFE concept, such as less office space, will be a reality when companies renegotiate office leases. Companies will review their travel policies and try to keep the costs as low as possible.
Employees save even more by not working at the office. Costs for commute, lunch, clothing, accessories, and other expenses, decrease. These work-associated costs are significant for any household, and people like to save this money or spend it on something else.
Company cost savings impact negatively on hotels, but it also opens opportunities. For example, many business trips were only day trips before the pandemic and did not benefit hotels. Now, fewer but longer trips require a few more nights in a hotel. In addition, the company gatherings will become more significant and therefore less price sensitive. The content and frictionless service will be more important than the cost.
It is also likely that employees spend their savings on leisure travel. One reason is to get away from home. Another reason is the increased flexibility with WFE to when it is possible to travel.
New rules and regulations
The pandemic is over in countries where people are vaccinated or have had the virus. Media blows things out of proportion with alarms of new virus variants and other risks. Politicians make impulsive decisions about lock-downs and other restrictions that make it difficult for people to travel. A vaccine pass to travel, visit events, restaurants, and gyms is just one example. These restrictions and rules will impact hotels negatively for a long time. People are less willing to travel when there are too many barriers and inconvenient processes in place. Right now, it seems like many rules and regulations will stay for some time, so people have to get used to them as we adapted to new security rules after 9/11.
The focus will start to shift away from the pandemic to climate change, where companies will feel a lot of pressure from the general public and politicians to make an effort to comply with new standards. For example, travel is a minor (less than 5 %) but highly visual contributor to climate change. Therefore this will impact airlines and hotels negatively. In addition, there is a risk that politicians make impulse decisions when media continue to report on bad weather, flooding, fires, and melting ice.
Business travel will never be the same
The three notable behavioral changes above will positively and negatively impact hotels. Hotels that understand how the pandemic has reshaped work will better serve the new business traveler and capture a larger market share.
The most critical role in the commercial team for understanding and attracting business travelers is the salesperson. The corporate business will not automatically return to hotels that ignore new needs based on changing behavior. Therefore, adapting to new requirements and building solid relationships with current and potential corporate clients and travel agencies is vital for future success.
