What trends are influencing business and leisure travel in the wake of the pandemic?
Members of ULI’s travel-oriented product councils discuss the continued fallout from the pandemic; ways the hospitality industry is renovating, repositioning, and reflagging properties in response to COVID-related changes; the rising interest in environmental, social, and governance (ESG) issues; innovations in hospitality and travel experiences; and other trends.
Given the changes and the uncertainty resulting from COVID, what will business and leisure travelers be looking for from their travel experiences in the next few years?
Chris Fair: I think everyone has confidence that leisure travel has already recovered or in many cases exceeded pre-pandemic conditions, as people look to make up for lost time, but the return of business travel is the real question mark. There’s going to be a lag for some time. The leading indicator of how much people will travel for business is whether they return to the office or not, and office occupancy is also well below pre-pandemic levels and may never return, as people incorporate more flexible or remote work options. There is some conjecture that companies will need to have more off-site meetings, retreats, et cetera, to bring their remote workers together periodically, which could be a shift in how business travel is organized. But we haven’t seen that yet.
Eduardo Abreu: In Europe, the leisure travel market is recovering very well, with strong demand from March 2022 onward. We don’t know yet whether the price of plane tickets will go up because of the Ukrainian/Russian events, which may have an impact on leisure travel. It’s still a big question mark as to whether large corporations will change their policies on business travel. We believe there will be fewer corporate travelers, at least in the next one or two years. With the economy not growing so much, and with inflation high, corporate travel budgets will be lower.
Dan Voellm: People are eager to get together face to face. All this Zooming is exhausting. The United States and Europe, to some extent, are probably ahead of the curve compared to Asia, where things are still on a slow gradient to normalization, certainly in China, with the latest outbreak of Omicron. Business travel will be back, if maybe not at the same scale as before COVID. For MICE [meetings, incentives, conferences, and exhibitions], it depends on the frequency and the scale of events. I don’t think you can replace a 500-person meeting or even a 30-person meeting easily on Zoom. Business trips may last longer, when they are really needed, or they may be virtual. But to negotiate a $10 million contract, or anything else that needs a personal touch, is tough to do on Zoom. On the leisure side, people still want to travel, even more so than before COVID, because they realize what they’ve been missing. In the long run, concerns about reducing our carbon footprint may recalibrate the way we all travel.
Becky Zimmermann: The pandemic was the impetus for hotels to curate the outdoor guest experience. Because of safety concerns and capacity limitations, hotels and resorts were—in some ways—forced to operate outdoors. And guests have quickly become accustomed to it. Part of it is certainly outdoor dining—that’s the easy one. But we have been seeing resorts and hotels rethink outdoor spaces to accommodate more power outlets because of remote working options. Guests want to know, where do I charge my laptop? What’s the wi-fi capability outdoors? If I’m turning my webcam on in this outdoor space, what’s the cool thing that’s going to be behind me?
How are hospitality developers and operators refocusing to meet the new normal?
Abreu: Some leisure destinations might make an effort to provide outside areas where people can feel comfortable, but it’s not easy to transform buildings in the middle of the city and add exterior areas. So the large hospitality brands and investors might put more attention on exterior areas in new hotels, but not much can be done to maximize outdoor spaces in existing hotels. Some of the hotels that were very focused on individual corporate travelers or conferences are working to attract leisure travelers by investing in spa areas, changing their image and look to appeal more to leisure travelers, providing play areas for families with small children, or lowering prices on the weekends.
Fair: There’s going to be a repositioning of some assets. Some hotels that primarily catered to business travelers are going to reflag themselves with more lifestyle-oriented brands that appeal to leisure travelers. For example, we are working with GFI Capital Resources Group and Elliott Management Corporation on a hotel in New York City in Midtown. It used to be the Parker New York Hotel, primarily catering to corporate travelers. It has recently been renovated and reflagged as the Thompson Central Park, a much more lifestyle-oriented brand that appeals to leisure travelers. Some hotels that cater to business travelers will be converted into other uses entirely and be removed from the hotel supply.
Voellm: There is a trend toward co-living here in Hong Kong, where there is low demand for hotel rooms and the owners want to exit their holdings because of the costs associated with them. So the co-living operators can pick it up at a fair price, and because the service level is lower than with a hotel, they have a lower overhead. Hong Kong–based Weave Living, one of the largest co-living operators outside China, just announced its first deal in Singapore.
Zimmermann: We’re seeing a lot of sprucing up. Sometimes, a small investment can make a big impact. These investments have gotten a fairly quick ROI [return on investment] by allowing for a small room rate increase, or by driving more business through the food and beverage outlets. Some of the investments may not even be ones guests notice, but they make people want to stay longer, hanging out with their friends and spending money.
How are ESG concerns reshaping hospitality and travel?
Zimmermann: We are going to continue to see a lot of pressure on hotels and resorts to reduce their carbon footprint. In Denver, Colorado, commercial buildings over a certain size are required to reduce energy use by 30 percent by 2030. The residences at Electric Pass Lodge, which is under construction at Snowmass Base Village in Colorado, are powered by 100 percent renewable electricity. There is now a well-designed electric fireplace on the market that looks pretty much like a gas fireplace. We haven’t found a similar product for an outdoor fire pit, but I’m sure it’s coming.
Voellm: Hopefully, people will start evaluating their travel more carefully. Going to the end of the world to a remote island, by boat or plane, has a crazy carbon footprint. So, to build a new resort in a remote place may be a challenge unless you have a good strategy in place. I think sustainability is going to come more to the forefront in travelers’ decisions. COVID has been a catalyst for raising awareness about the sustainability impacts of travel.
Abreu: ESG policies and concerns have a role that they didn’t have four or five years ago. The majority of people who invest in hotels operate them for five or six years and then sell them to existent groups or more institutional investors. They are now seeing that ESG policies are something that the final investor will look for in both the construction and management of hotels. So as they see, in the long term, that final investors value ESG policies, they will integrate them from the beginning of their developments. Tourists and even tour operators are paying more attention to whether hotels comply with environmental rules as well.
What innovations in the hospitality and travel industries hold the most promise?
Fair: CitizenM has done some interesting work creating a membership-type model that allows you to access their hotels in various cities—not only to stay for business, but also just to work in. Thompson Central Park also involved converting the top nine stories into residences. We might see more of that trend as well, reducing room counts by converting some rooms into stratified condominiums. That type of pied-à-terre living is appealing for people who might now make their primary residence what would have previously been their secondary residence in a small town or resort, and their urban home becomes a secondary home with services and amenities.
Zimmermann: Some innovations resulting from the pandemic are here to stay. There is a lot more self-service. For example, Marriott’s Bonvoy mobile app, which lets you check yourself in with your smartphone and go straight to your room without having to interact with a person. Another example is the electronic kiosks at ski resorts that allow people to buy their lift tickets online, walk up to a kiosk, show the bar code on their phone, and get their ticket printed without human interaction.
What other trends do you think more people in the industry should know about?
Voellm: Getting behind social media is probably a necessity. Pre-COVID, that was something nice to do, to attract followers on Facebook, and now it has a much more important role in your marketing game. Companies with social media specialists in house, or a third-party specialist, need to pay more attention to getting that right, because advertising on social media can have a much larger reach than traditional print media, which was very expensive and cumbersome, with high production costs. Many operators curate great experiences on site, but their social media didn’t communicate them well to guests before they arrived. With social media and a little video production, a lot can be done. But you need the right person and capabilities to create them and push them to your channels. That’s particularly important for higher-end leisure travel.
Abreu: More and more we keep seeing a mix of different uses in the same building: a hotel mixed with residences or co-living or coworking spaces. Flexibility is something everybody is looking at. And more and more people are mixing leisure with travel, staying for a week or two in a resort for vacation, but needing a few days or a morning to do work, and they want to have the right space to do so.
Fair: Another interesting trend is the creation of new experiences. We all have more leisure time than we’ve ever had before. We spent a lot of it over the last few years watching Netflix while we were mostly stuck at home. But as we go back out into the world, we want new activities, experiential exhibitions like Color Factory or Museum of Ice Cream. We are also seeing the rise of electronic sports, introducing digital technologies into physical environments. There’s a company in Montreal called Moment Factory that creates night walks and storytelling experiences in forests, national parks, and urban environments. Chicken N Pickle is specializing in barbecue chicken and pickleball. It’s not just food and beverage, it’s also an activity. I think we’ll see more of these kinds of innovations that shift from passive leisure to activities.
Zimmermann: In the next two to five years, the big issue is going to be the labor shortage, for demographic reasons. That is having a bigger impact on hospitality than even the pandemic. Of course, the pandemic played a role in the labor shortage, because daily housekeeping stopped during the pandemic, and many hotels still don’t offer it. Guests were sympathetic with this during the height of COVID, but the question is, will guests lose patience? Only time will tell.
RON NYREN is a freelance architecture, urban planning, and real estate writer based in the San Francisco Bay area.
