Excerpt from CoStar

Hoteliers are more than happy with the pace of leisure travel and signs of life from group and corporate travelers so far this summer, but finding the staff to service that demand remains a struggle.

U.S. hoteliers went into this summer expecting a massive wave of leisure travel, and so far those expectations have been exceeded. Still, in an industry with the scar tissue of a years-long global pandemic, experts are still behind the eight ball in trying to figure out how to best service that demand.

Across the board, hotel operators who spoke with Hotel News Now expressed excitement about the pace of travel since Memorial Day weekend, the informal kick-off to summer travel season, and expressed continued hope based on bookings through the next few months.

Rob Smith, executive vice president of full service, luxury and resorts at Aimbridge Hospitality, said hotel operators entered the season cautiously optimistic, with omicron-related disruptions from earlier in the year still fresh in their minds and growing concerns about the costs of gas and airfare potentially impacting travel plans.

But so far, so good.

"It seems like people locked in their travel plans earlier this year, and through August, our summer bookings look fantastic," he said.

John Kattato, senior vice president of operations at Essex Hotel Management, said the hotel booking pace this summer has been "extremely strong, above expectations," driven not just by overall demand but by continued strong rates.

Erica Lipscomb, senior vice president for commercial strategy at Crescent Hotels & Resorts, said that despite a good start to the summer travel season, she's been exceedingly cautious in looking for signs that another downturn might be looming.

"One of the sad things COVID has done to us is now we get anxious when we see a day or week drop off, and everyone was leery about the two-week drop ahead of Memorial Day," she said.

She said while her team is keeping a close eye on macroeconomic indicators and signs of weakness, there is plenty of optimism, driven by the combination of high demand and strong rate growth.

"Our assumptions are still for a very strong summer," she said.

Gilbert Arredondo, divisional vice president of revenue strategy, said he's been surprised how broad-based the recovery has been, with signs of life even in lagging urban markets such as Washington, D.C.

"D.C. was devastated, especially after omicron," he said. "It was starting to ramp up, but then got floored in January and February. Our thought process was it'd take forever to come back, but we've been really happy with how well those eastern gateway cities have rebounded."

A Shifting Demand Mix

Even in a typical year, the summer season is driven primarily by leisure travelers, but sources said one of the most encouraging signs is the return of group business at hotels.

Steve Contos, executive vice president of Davidson Resorts, said that across-the-board pick up is what has him excited.

"Group is better than it has been, and better than last year. Business travel is seeing an uptick, and we're still really driven by leisure at this point," he said.

Arredondo said that not only is business travel coming back, but there are more signs of blended business and leisure travel.

"People have more job flexibility to work from anywhere, so they do, or they'll start their weekend early or extend a weekend and work from a hotel on Friday or Monday," he said. "That's probably here to stay. I don't think that's going away."

Bryan DeCort, chief operating officer for Hotel Equities, agreed that bleisure travel is boosting the outlook for hoteliers.

"We've continued to see that strong weekend travel patterns, but what we're really starting to see is green shoots for early and midweek travel coming back," he said.

Lipscomb said Crescent has kept a close eye on business transient data across its portfolio and has identified that 7% of the total demand mix is the "magic number" indicating a rebound in this travel segment at a property. She said most of the company's hotels stabilized at around 4% business transient demand in 2021 and into early this year.

"It wasn't until early March and April that we started to see business travel in high demand markets inch up to that 7% mark," she said. "It's exciting to see, but it's not across the board."

Hoteliers also were encouraged not just by the overall demand for group business, but the different types of groups that are now booking.

Arredondo said the return of groups in 2021 was driven by weddings, other social events and traveling sports teams. In 2022, it seems to be more broad.

"You're seeing engineers coming back to places like Silicon Valley, and conventions are starting to come back in major markets. They're smaller but they're starting to come back," he said. "What we're still missing from the group mix, though, is that medium-sized meeting that we all used to get — 30 to 45 people in a room with breakouts, training and onboarding. That hasn't come back yet."

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