Coronavirus and Meetings
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Hotel company executives expect some group business to return this year, according to hospitality leaders participating in this week's Virtual CEOs Check-In Panel, a digital preview to this year's New York University International Hospitality Industry Investment Conference. But a recovery to 2019 levels of meetings business will likely be years in the making, and will require gradual stages of acceptance that traveling is safe, or even necessary.
That said, there are definite signs of recovery in overall hotel business, the CEOs participating on the Zoom call noted. "Let me provide a little bit of optimism, since I like to be optimistic," offered Hilton president and CEO Chris Nassetta. "We are double the occupancy we were at the bottom. Sadly, that's still not a very high level of occupancy — I think we bottomed out at 13 percent, and we're running 25 to 30 percent at this point. I think we ended last year at 75 percent, so obviously we have a long, long way to go. Still, trends have to start somewhere."
That trend started with leisure travel, Nassetta added, with business travel and group expected to follow, in that order.
Memorial Day weekend occupancy numbers were promising, a number of hoteliers agreed. "We learned there is tremendous pent-up demand for the leisure segment," noted David Kong, president and CEO of Best Western. "And I think that demand is going to be dominated by road trips; people prefer to drive in the safety of their cars rather than fly. And I think open-air destinations such as beaches and parks will get the lion's share of that pent-up demand.
"The business segment is far more challenged," Kong continued. "Unless there's a vaccine that's proven, big conventions will take years to recover, probably, because of social-distancing requirements and companies being conservative about what they want to do."
When Will Business Travel Be Permitted?
"I'm frustrated by the fact that many corporations are going the most conservative route," said Marriott International president and CEO Arne Sorenson, "which is to keep offices closed for a long, long period of time and sometimes to communicate travel bans that are extending many months in advance, maybe even to the end of 2020 or well into 2021.
"I don't think any of us would advocate that these corporations should put their people into harm's way and make them take risky business trips," he added. But he does think that younger employees in particular are going to push corporate America back into traveling and meeting face-to-face: "Younger employees are often at home with less square footage, and possibly trying to raise kids in the same environment. Their careers depend on being seen and being connected with folks for informal communications in the office. And I think no matter what the corporate policy is, we will see folks say, 'I want to get back to the office. I want to get back to travel, provided travel is safe. Let me get out there and do the things that turn me on about my work.'
"That's going to be about seeing customers," Sorenson continued. "It's going to be about seeing colleagues. It's going to be about having a meeting to do the things that need to get done. They will force the change on these big institutions and say, 'You don't need any longer to force me to be at home. Let me out.'"
When Will Meetings Bookings Return?
Signs point to late 2020 for an uptick in group business, a finding consistent with Northstar’s latest Pulse Survey. "I think that we'll start to see some meetings volume maybe even later this year, probably in the fourth quarter," said Mark Hoplamazian, president and CEO of Hyatt Hotels. But he and other execs are acknowledging the likelihood that not all of the meeting attendees will be physically on-site.
"We've already been in discussions with a number of association customers who depend on their annual meetings for their revenues, and we're helping them devise and design new hybrid-meeting models — where you’ve got part virtual, part physical meetings — to accommodate their needs and make sure that we can maintain social distancing and appropriate density," explained Hoplamazian. "That's really the short-term picture."
Hilton's Nassetta agreed: "We're working very closely with a lot of our customers, and people are booking group business — not certainly at the volumes that we would have seen at this time last year, but we are starting to see a meaningful uptick in activity — discussions and actual bookings that are going to occur later in this year."
What Will Hotel Meetings Look Like?
"I think when we wake up in two or three years, the group business will be back and it'll look a lot like it did a few months ago, and I think people will be congregating a lot like they did a few months ago," said Nassetta. "Between here and there, we're going to all come up with different protocols to keep them safe and secure. That's going to include the better cleaning standards and hygiene standards, different food and beverage, social distancing, using technology for hybrid meetings."
The people who are booking now, Nassetta added, are very serious about those protocols. "They want to know exactly what we are going to do in all those areas, from a hygiene point of view, cleaning protocols, how we can serve the food and beverage, how we can use technology to create the right mixture for them."
"When we wake up in two or three years, the group business will be back and it'll look a lot like it did a few months ago."
Chris Nassetta, Hilton
In the long term, however, it's going to take either an effective therapeutic treatment or a vaccine for COVID-19 for meetings business to bounce back, said Hyatt's Hoplamazian. Not until that point will the true recovery process even start. "From there it will take probably the succeeding 12 months to get back to the level that we were at in 2019," he said. "It's not going to instantaneously click back into gear — people will wait to see those events occur before they actually start planning and booking more."