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When Will Business Travel Return?

Updated: May 21, 2021

With 'Staycation' being the industry buzzword of the summer, Austen Bushrod fears hotels are losing sight of the changes in business travel.

 

Staycation.

Has a nice ring to it. Feels warm, cosy… homely. I am even planning one myself. Go visit some UK places that I haven’t had the time to take in properly in my years of travelling around on business.

Yes, I can talk about the benefits of Norton Canes versus Keele Services, but I have never shopped for pottery in Stoke. You get my point.


Staycation. Perhaps the most dangerous word to the hotel industry in 2021.

Right now, the industry (quite rightly) is focussed on getting reopened. However, there is a storm in the distance. I can see the clouds gathering and somehow in the euphoria of reopening, Stay cations, and general excitement, I think we're missing the long-term picture.

When the press and the public talk about hotels, they are naturally drawn to the holiday market. After all, for many people, the mention of a hotel automatically leads them to thoughts of summer breaks. For the industry, we are so desperate for some good news and positivity – perhaps we have fallen into that trap too.

When I look at the overall hotel market in the UK, I never forget our significant reliance on business travel to generate our profitability. This goes for the wider hospitality industry also. Think about the last time you had a meal out midweek and how many expense accounts were being used across the restaurant.

The UK hotel industry is desperately longing for a slice of the Staycation pie – but let’s be realistic. For every hotel that fronts onto the beach at Bournemouth, there are 2 near an industrial estate in Bolton.



But what will become of the 50%+ of UK hotel stock that relies almost totally on the business traveller? Also, remember that even if you don’t rely solely on the business traveller, your hotel can still catch a major cold from the change in business habits.

I don’t want to cut across the industry excitement and the hospitality spirit that is being seen – but I do want to encourage every hotelier to think beyond this summer, on into 2022, and what the changing business habits might mean for their hotel.

It is not all doom and gloom, but hotels that can face-up to the pending storm will stand a better chance in the long term. Be under no illusions, tough times are coming – many will not survive and those that do will have to significantly adjust to the way they work.




Business Travel will come back – but you may not recognise it

People will still travel for business, but a significant chunk is going to be taken online. It’s a given that it is now socially acceptable to meet via Zoom. With many companies also moving to hybrid working models, there will be a reduction in business footfall in office locations as well as general business travel. How much? It will vary of course but if 50% of your room’s revenue is business bookings and they drop by 20%, you have a 10% dent in your business!

“Yes, but what about companies like Goldman Sachs?”, I hear you cry, “they are insisting on everyone being in the office.” Let’s see how long that lasts. Five years down the line, how many people want to work for them given the choices of a more flexible employer. They will come round.

Whatever side of the argument you are on – you will agree there will be some significant impact and change that can wreak havoc in the hotel industry.

Don’t be lulled into a false sense of security by the media hype surrounding new builds and openings, or new management contracts being agreed. Nobody is announcing their closures. Hotel groups aren’t rushing to declare how many hotels they have that have been shut since the start of the pandemic with no plans to reopen. The industry has spent years talking up their gains whilst hiding their losses behind restructures and property deals.

While the hotel industry plods along, it may be other players that come and steal their thunder. Short-term lets? Flexible apartment choices that are now in abundance? And all those offices that are only half full? What of them? Watch out for new apartment and hotel accommodation options that will be spawned. Those businesses want to survive too – keep an eye on the creativity we may see in this space.




Be the Place to Meet

You have to start with thinking about the customer. No really…. Think about the customer. Don’t focus on what your meeting product is. Don’t focus on how you look after them. They are secondary thoughts once you understand what their needs are. That takes a stretch – because it’s hard to put aside how you have looked after them in the past.

Hotels need to think about becoming a place to meet and sell rooms off the back of that, rather than overnight stay locations where you can also meet.

Perhaps with the downfall of the ‘office space’ there is a real opportunity for hotels to position themselves as places to come together. If teams are more and more remote, they will need connection points and places to periodically bond. I’ve yet to see a hotel grab hold of this principle yet - I’m hoping they will.

Think about how you would get a team together? What would you need? How can you create an environment that maximises those lost ‘water-cooler moments’?

Some hotels – especially adjacent to motorways have done this well in the past, but don’t be tempted to just re-hash a hotel model. Look beyond that as to the purposes of people getting together. Things have changed!




Repurpose your Spaces

Do you really need 100 rooms? If the changes in society mean that you may only ever breach 80% occupancy a handful of times a year, then maybe it’s time to re-evaluate what your rooms are used for.

Now we have to be careful here – the hotel valuation market (much like the housing market) uses room numbers as a key valuation driver. However, this is a matter of survival – perhaps re-purposing some rooms will be a positive idea? Go crazy… create spaces that the local community will use. Parent/Toddler groups? Yoga Classes…? Why not go even further and make some of them free-of charge! Be part of your community. You most likely will have spare space that you may never use – and you might be amazed how much you can make in terms of a few coffees after the sessions!



It is highly likely that office space providers like Regis or Workspace will repurpose their businesses with more sociable and public spaces – they will make their ‘lobby offer’ more attractive – they will adapt faster than hotels. Look at their models - can you claim a slice of that industry in your local market with space that you already have?

Remember, you have a head start! It’s more likely that as a hotel you are already in a better location with better facilities and nicer décor.