Founder & CEO Dreamscape Companies.
The Covid-19 pandemic has been enormously transformational, and the property development industry has been no exception. The past two years have wreaked havoc and brought widespread disruption to the hospitality industry. But at the same time, a new paradigm as to how and why we move around has been formulated. Going forward, I anticipate the line between domestic business and leisure travel will be blurred—and the two categories will be more closely bonded than ever before.
For example, somebody visiting Nashville or Charleston for work may be more likely to add a weekend component to their trip. Arrive Thursday morning, get two days of work done, then enjoy the city until Sunday afternoon. This person may fly in their significant other, their family or their friends.
Even prior to the pandemic, hybrid business-leisure trips, in which extra days are tacked onto a business trip for leisure enjoyment, increased 60% across five countries surveyed between 2016 and 2018. Today, experts anticipate a sharp uptick in trip planning soon as delayed and canceled plans caused by the pandemic have consumers longing for “revenge travel.”
Getting The Most Out Of Travel
The wall between a work trip and a trip for fun will be dismantled (though not entirely) due to one main determinate: If one must travel, many are increasingly wont to wonder, why not make the most of it?
It may be some time before the airlines staff up and fully train their new hires, and it may be a while before we’re living in a totally restriction-free reality. Frankly, Covid-19 will likely continue to pose some travel risk as it shifts to endemic status. Traveling is largely safe at the moment (especially for the vaccinated), but people may still not be so quick to hop on a plane, say, two, three or four times a week. A trip has to be made to feel… well, worth it.
Effects On Domestic And International Travel
This trend will only continue as opportunities for international travel continue to open up. At the moment, travel patterns are still in flux. On one hand, domestic leisure travel is strong. With the Omicron variant diminishing, domestic U.S. flights hit a record high this past February, and robust summer travel is predicted (assuming the cost of gas does not create a problem).
However, we’ve got a ways to go with international leisure and work travel, with numbers improving since the United States lifted its foreign entry ban in November. Once we do, I anticipate seeing even more mixing of business and leisure travel as people try to get the most value out of expensive long-distance travel investments.
Matters Of Market And Location
When it comes to selling hotel rooms, the traditional breakdown has been grouped into three categories: leisure-focused, business- and corporate-focused, and group- and convention-focused. Leisure is performing at or better than 2019 levels, though the rise of the Delta variant dented that a bit. On the investing side of things, there’s not much concern about hotels that satisfy leisure demand. However, to acquire a new space—for example, in Key West or Charleston—there’s a question of value: You won’t be getting a Covid-19 discount in these locations.
Business, however, is more of a gray area. “Am I going to Zoom into a meeting?” people will now be asking themselves, “Or am I going to get back on the road?” Again, I think we are going to see more and more of a hybrid in which, when you go somewhere for work, you may be more inclined to tack on a few leisure days. I should also say, my own company is not currently super bullish on buying hotels that were predominantly known for relying on business travel alone.
Then there are groups and conventions. I think markets like Las Vegas and Orlando, for instance, are going to be fine. People are going to go to conventions when they feel it’s safe to do so. Large group gatherings could actually benefit more from a hybrid work and leisure model if people feel that it’s important to get out and go to a convention once or twice a year, especially when these summits have been largely absent of late.
The Future Of Business And Leisure Travel
All of this being said, I anticipate we are going to continue seeing a fusion as domestic, business and leisure travel continue to gel together. This should also apply as international travel continues to open up. Whatever the future holds, the nature of this new paradigm is something on which both investors and developers should continue to keep a very, very close eye.