It seems like a hundred years ago, but everything suddenly stopped. There were travel bans. Pro sports canceled entire seasons. A travel ban grounded airlines and shut global borders.
That was early March. Since then, the U.S. hotel business assumed a survival mentality as occupancies dropped to single digits. We didn’t know when or if normalcy would resume.
That kind of uncertainty bred raw and wild speculation. It was the information void that led prognosticators to write off corporate travel, an entire category and multibillion-dollar universe, practically in its entirety. We were told that corporations would close offices, run scared from big conferences, opt for Zoom boom over face-to-face business trips. Overnight, those pundits dumped corporate travel into the clearance bin next to Tower Records and Blockbuster.
Yet this one-dimensional thinking, oh-so-linear (and lazy), is looking less prescient and more premature every day. Analyze the situation instead. If we break down corporate travel into layers, a very different picture emerges. In fact, travel analysts are starting to see that, when great pandemic finally passes the crisis stage, business travel will be massively different—but what will be different is actually going to be better, and stronger, than before.
Consider these reasons why:
1. As workforces become more distributed, internal travel will get busier. Have you noticed the migration of knowledge workers from major cities to places like Florida and Texas? When employees can work from anywhere, many will pack up and move to places with attractions or a lower cost of living, or both. But people in businesses and networks crave socialization, collaboration and face time. They will want and need to visit the headquarters periodically, staying in hotels during their trip. Even more so, consider how salespeople are competitive creatures with high EQ. The best producers in sales have two essential traits: ego drive and social intelligence. Have you ever tried irony on Zoom? Sympathetic consolation on Teams? These platforms are tone-deaf, and we’re left feeling awkward, misinterpreted and unsure. Plus companies losing business on Zoom are requiring in-person meetings instead.
2. Business operations are becoming more distributed and lean. Not just the pandemic but also public policy are accelerating the hub-and-spoke office model and so-called China-plus-one (U.S.) supply chains. American companies have been challenged with hiring skilled workers due to restrictions, such as H-1B visa restrictions. It all adds up to decentralized facilities, which demand greater attention to human resources, IT, finance operations, legal review, and even labs and factory visits. These internal departments need to move, and that means more travel and hotel visits. New offers focus on the resulting remote workers who benefit from fixed-rate stay options with a choice of locations.
3. Hotels are already replacing offices as startups go remote-flexible. Build an awesome office and talent will come. They will work better and even longer hours. This outmoded way of thinking, that tricked-out offices equal increased productivity, spurred on Airbnb, Square and Uber, all startups from the last recession. The future will be different: The new generation of founders will adapt to a remote-flexible mindset, meaning they deliver the workplace to the talent for even better results and productivity. (Not only that, remote work is now the No. 1 most-sought-after benefit among job applicants. That said, corporate culture happens interpersonally, not remotely, so we’ll see more teams flying to hotels for biweekly sprints and monthly off-site collaborations. Silicon Valley is already doing this. And related to that, expect bleisure and workcations to begin rising, as lengths of stays quickly increase. The best organizations will tout work/life balance, more family time and less guilty aftereffects from too much time on the road. Responding to both of these trends, ideas like a corporate subscription target companies seeking state-of-the-art amenities and flexibility. They get unlimited use for a period of all the amenities, meeting rooms and foodservice and entertainment options they need.
4. The market for mini-conferences is on the rise. Now the fastest-growing segment in meetings and events, mini-conferences and mini-expos of 200 to 500 people seem small but they’re happening more frequently. The formats make networking far more valuable and attainable than before. As one colleague described it, “Picture the San Francisco venture capitalist who used to have drinks or dinner every week. During coronavirus, she moved permanently to Lake Tahoe. Rather than driving hours for one-off meetings, today she’s planning three-day trips, and these ongoing visits are the crux of her strategy of catching up with as many founders and colleagues as possible on a single swing through an area.”
5. Group travel will recover slowly but will outperform many others. Technology simply isn’t a substitute for conventions, but inventive event planners have ideas to make them even better. Imagine the NAB Show or CES as a different and decentralized expo. Instead of the massive confab in Vegas we know so well, they will stage 10 medium-sized conferences—all happening at the same time in different cities with a virtual bridge. Keynotes are broadcast simultaneously, with each city hosting unique panels and programming. It’s already happening—and hotel bookings, while less concentrated, are even more accessible. Some say this potentially entices larger and more diverse crowds.
6. If demand falls short somewhere, supply steps in. We’re seeing many hotels converting to other uses, some going to new end-users such as the wave of investors, local governments and universities who have started buying and leasing hotel properties to address different needs. States like California have converted hotels into shelters, New York University is planning to adapt them as dorms, while others create residences and private clubs. These tend to be properties located on the peripheries of market area, and the shifting supply scenario is helping boost demand in better business districts. It also swings demand toward undersupplied areas. Related to this is how the stifling of future supply pipelines will benefit current players. The pandemic is tending to deepen the socioeconomic divide we see in many cities. As a result, more anti-development and anti-tech sentiment have emerged and may continue. This would make new projects more difficult to develop and short-term rental supply more regulated. While this may cripple cities that have been hoping to create jobs and tax revenue, if you’ve ever been to a city council hearing it’s not the first item on the agenda.
7. New needs for corporate travel are being discovered every day. The pandemic has given rise to many new reasons for corporate travel to continue and grow. Education startups have taken over hotels for new schooling formats. Doctors are now using hotels to establish hybrid practices that blend office visits and telemedicine. Online e-retailers are banding together in alliances that pop up in ballrooms as instant department stores. Even more so, the best organizations need face-to-face, in-person interaction for success, and they won’t settle for anything less.
For leaders in the hospitality industries, this kind of detailed examination is essential. Talk to your biggest customers and your most loyal business guests. If you scrutinize every purpose for traveling and the expected second-order and third-order effects of each motivation, you’ll reach the same conclusions we have.
Planning for the next phase will still be difficult. Overall, the future is as bright as it is uncertain. While there’s no going back to normal, we’ve seen how the next normal seems to be even better.
Ernest Lee is managing director of development & investments, Americas at citizenM, based in New York; and Lennert De Jong is chief commercial officer at citizenM in the Netherlands.
Let us know what you think. To comment on this opinion piece, or to voice your own opinion, please email Christina Trauthwein at [email protected].