The recovery of business travel was likely to stall in the fourth quarter, according to a note from UBS.
The comments came as hotel groups continued to expand their corporate offering away from traditional business travel and towards working from hotels and corporate subscriptions.
UBS analyst Robyn Farley said: “We continue to highlight risk that lodging momentum (sequential improvement) may stall in Q4, as leisure makes up a smaller percentage of mix and hotels are more reliant on business transient and corporate group. The latter segment of demand will likely require either a vaccine or effective therapeutics to fully recover. We note that group took seven years to recover to 2007 levels following the great recession.”
The comments were made as Zurich North America introduced an enhanced Business Travel Accident Insurance product including emergency overseas medical care, medical and security evacuation and repatriation, and travel inconvenience.
Marty Banaszek, head of group Accident for Zurich North America, said: “The Covid-19 pandemic has heightened employers' duty of care for employees traveling on company business, particularly overseas. Our robust, global risk management solution can help bolster safety and confidence for employers and their business travellers."
Last month https://www.hospitalityinsights.com/content/investors-underestimate-importance-corporate Credit Suisse estimated that 20% to 25% of the sector’s revenue was driven by international corporate travel, where it saw 2021 international corporate travel 65% below 2019 levels given restrictions remaining in place before a vaccine was available.
From 2022 onwards, it expected an “incomplete recovery” as while its research indicated 65% to 80% of corporate travel was to directly drive revenue, the remaining 20% to 35% for internal meetings was expected to be in part replaced by digital alternatives as travel budgets were rebuilt.
Hotel brands’ demand, it said, was primarily driven by corporate travellers: across the hotel sector, it saw average reliance on corporate travellers at 60%, depending on the portfolio of brands and regional positioning
The report’s author, Leo Carrington, said: “We expect to see strength in mainstream brands at the expense of upscale and luxury brands as both corporate and leisure guests trade down due to the significant economic impact of the Covid-19 pandemic. We believe that the economy and mainstream brands on average attract more corporate customers, with a significant customer base being travelling tradespeople, sales teams and professional service workers with limited ability to replace travel with video calls.”
In a recovery that saw corporates rebalancing their travel spend downwards, Credit Suisse said it would expect to see some trading down of brands into the mainstream segment. This trend would be likely to favour Whitbread over IHG and Accor. IHG, it said, appeared slightly better positioned than Accor; however, Accor’s mainstream portfolio was skewed to a lower price point, while the group estimated almost 60% of IHG’s mainstream exposure was the North America Holiday Inn and HIE business.
Accor has been amongst the companies looking to open up its hotel rooms as the ‘hotel office’. A survey undertaken by the group, of 2,000 British office workers currently working from home, revealed that 41% felt their work like balance ‘had worsened since working from home due to coronavirus’. And 22% of Brits stated their productivity was down due to working from home distractions.
Karelle Lamouche, CCO, Accor Europe, said: “Workers are looking for alternatives to home working and many aren’t ready to or can’t return to offices. Hotel Office is a safe and flexible ‘working from anywhere’ solution to meet spontaneous needs as well as planned working. Hotel Office also responds to the needs of employers needing to tackle productivity drops whilst answering their duty of care to their staff to meet their physical and mental work pressures. As such many employers need a cost-effective, contract-free workspace solution for their staff which provides a reduced commute, flexibility and productivity in safe, clean private work spaces.”
Insight: Post-First-Lockdown, many hoteliers have a common story to tell; demand was coming at them from workers from home looking to escape their lives and hear themselves think. For some extended stay providers, this extended itself into providing a new home for those who found that too much family contact was too much and this correspondent knows a family lawyer who opened a second office on the strength of it.
As we looked at Second Lockdown, lessons have been learned and many hotels are looking to attract the corporate market with not-at-home-home-working and there are liable to be quite a few takers. Will this last once the world has opened up again? Probably not, save for the same freelancers in the lobby which Starbucks will be happy to be shot of, slow sippers as they are.
There is some hope to be had as the EU pulls itself together and starts to form a unified approach to travel which may allow companies to feel that they can take the risk of sending their executives around the world. Think of it as Travel Bubble Two. The first one didn’t work, but with targeted testing and tracing - and sharing of data - it should be possible. Corporate travel may see some tentative return before the vaccine after all.