From the beginning of the pandemic, it was clear that group and business travel would be among the last relics of normal life to return. Now, with Covid-19 resurgent both in the U.S. and much of Europe, the hospitality industry is bracing for a potentially long winter without an opportunity to cater to travelers seeking meeting and event venues.
To recoup some of their business revenue, both Hilton and Marriott have rolled out what they’re calling “work from anywhere” products—day rates aimed at business travelers, offering a desk, internet access and a quiet room. More specifically, these programs are aimed at independent workers who might be sick of looking at their wallpaper.
It’s also a chance for a brand like Marriott to market a new product and earn a headline at a time when advertising budgets have been deeply slashed.
“If people come hang out at a Marriott, they might start saying the word more, and maybe when they book their vacation or business travel Marriott’s top of mind,” said Scott Graf, global president of meetings and events for BCD Travel, a b-to-b travel management brand. “They do it for relationship development and brand enhancement.”
While any hospitality brand would rather be operating a full hotel over a collection of underutilized guestrooms, the pandemic has offered brands an opportunity to test the waters with new products, troubleshoot the purchase path, and gauge whether there’s actually an audience for them.
“I don’t know what kind of volume we’re going to get, but we believe these all represent new demand patterns and new revenue opportunities for the hotels,” Peggy Fang Roe, Marriott’s global officer of customer experience, loyalty and new ventures, told Adweek when the products were announced.
Meeting spaces could be the next offering by these brands, according to experts, should rooms-as-offices take off.
“Maybe [hospitality brands] are thinking there are some folks that run their own business and want to get out of the house; it’s very low cost for them,” said Robert Cole, senior analyst of lodging and leisure travel at global market research firm Phocuswright. Prior to the pandemic, many brands had offered similar perks—day rates, early check-in, late checkout—a la carte.
“The group stuff is last to recover—it’s booked further in advance, and it’s going to take a while for that to come back, and hotels are just scrapping for whatever they can get,” added Cole.
In 2019, business travelers and their employers contributed $1.5 trillion to the global economy, according to the Global Business Travel Association, with more than 60% of travelers staying at an “upscale or higher” property.
On Wednesday, Hilton announced a loss of $81 million in the third quarter of 2020, dramatically better than the brand’s previous quarter loss of more than $432 million. CEO Christopher Nassetta told investors that “business travel is picking up,” accounting for about 10% of its revenues.
“The biggest issue on corporate rate negotiations is really, how many people are going to show up?” he said. “How many people are going to show up under those programs next year?”
The brand is already booking “significant business” from group travelers, though the bulk of those stays are for the second half of 2021.
“We continue to renegotiate terms with our clients throughout the pandemic. We know flexibility is important to customers given the impact the pandemic has had on the nature of business today,” said Danny Hughes, Hilton’s president of the Americas.