Summary:
- Hotel closures on the horizon in Q1
- Airline travel increasing
- Slow vaccine rollout delaying widespread industry recovery
- Regional events planned in 2021
- Group travel bookings starting for 2022
The travel and hospitality industries have been hit very hard through the COVID-19 pandemic. The damage ranges from critical to dire, depending on the sector.
The American Hotel and Lodging Association warned its industry is on “the brink of collapse” in an August 31, 2020 report. Among the stark realities: urban hotels are at crippling low occupancy rates and hotels in major cities across the country are struggling to stay open. We expect to hear more about hotel closures during this first quarter of 2021 and it’s not contained just to the United States. You can read about the dire bankruptcy crisis nearly half of Switzerland’s hotels and restaurants are reportedly facing without government aid. Closer to home, late in 2020, an article in the Orlando Sentinel warned of a “tsunami” of hotel closures in Orlando and across the nation. On a positive note, some hotel chains have chosen to keep their larger locations closed based on group size restrictions and plan to reopen many of those locations after restrictions lift.
Airline travel started seeing an uptick in passengers in August, although it was still at an average of 27% of 2019 numbers. On September 27, 2020, the TSA reported screening 873,038 passengers versus 2.45 million one year earlier. That’s 35% of the 2019 passenger count. Holiday air travel did spike upwards indicating Americans are increasingly more comfortable with flying, or at least sick of staying home and away from other loved ones. Regardless, it is a positive sign for future willingness to embrace future group travel.
Airlines are quick to share their safety protocols to combat spread of COVID, like HEPA filters and that cabin air is turned over 10-12 times per hour. Included in the link above is an interesting contrast between two international flights early in the pandemic and how the use of masks affected the spread of the virus.
At Motivation Excellence, our Manager, Supplier Relations & Sourcing, Joe Reise, keeps an eye on all the latest news concerning our industry. He sees a boom in the future and he’s working with our clients now to get the best scenarios while mitigating risk. When it comes to contract negotiations, he foresees more flexibility the sooner you book. Waiting until after travel and group size restrictions lift will likely mean less wiggle room in contract language.
Looking ahead, Reise originally saw 2021 as a rebuilding year, but with fewer than expected vaccines distributed as of January 2021, he says rebuilding will be delayed. Many hotels allowed group bookings in 2020 to move to 2021, packing the year full of moved 2020 business and already existing 2021 business. As we move further into 2021, we’re seeing group travel business sliding again to later in the year.
“Once we have a vaccine, travelers will see an end game and demand will be explosive,” Reise had commented back in October of 2020. “If you wait until after the vaccine is widely administered, rates will start to be much higher. It’s still best to start looking now while there is still some flexibility with rates and availability later in 2021 and 2022.”
Companies that have maintained a healthy financial status through COVID-19 are eager to book group travel as soon as it’s deemed safe.
In light of the uncertainties we’re still experiencing, here are our recommendations on how to navigate booking future group events while limiting concerns over hotel closures, increased rates and safety:
- Avoid airport, convention and big city hotels – they are at the highest risk to close right now.
- If you want to book a hotel in 2021 choose one that’s had a positive EBITDA/room (sign of financial health) since at least July 2020.
- In 2021, still consider drivable locations for your smaller corporate gatherings, and look at resort properties outside of urban locations.
- In 2022, be prepared for higher rates the longer you wait to book.
- Whether in 2021 or 2022, get the pulse of the people you plan to gather:
- Do they feel comfortable flying?
- Are they okay following airline and destination-based mask requirements?
- Is there a group size they feel comfortable engaging with?
- Are they vaccinated for COVID-19 and do you want to require proof?
Reise says demand for non-urban resort properties will be at an all-time high in 2022.
“Especially among financially healthy companies, once group travel is a go again, there will be a flood of demand over a very short window of time.”
COVID-19 will likely affect how we look at group travel for several years to come, but with careful planning and insight into industry information, your company can begin to plan for future events. If you have any questions or concerns, or would like help planning a future travel experience for your company please contact Rhonda Brewer at r.brewer@motivation.redefinedcreative.com.
