Excerpt from CoStar

Weekday Bookings Increase in Third Quarter

Hotel executives expressed optimism in the business transient and group segments moving forward after a strong third quarter.

After a couple of years of lacking business and group demand levels compared to 2019, executives from publicly traded hotel brand companies and real estate investment trusts say they not only see the light at the end of the tunnel, but they’re already basking in the sunlight.

Here are some highlights of commentary on business transient and group travel expectations from hotel executives during the 2022 third-quarter earnings season.

Tony Capuano, CEO, Marriott International

“Fourth quarter full‐service group revenue is currently pacing up 4% but is likely to improve further given the strong last‐minute group bookings that we’ve seen all year.

“The trend towards last‐minute bookings has led to meaningful compression and pricing power, helping group ADR for new bookings rise each quarter this year. At our managed hotels in the U.S., ADR for in‐the‐year, for‐the‐year group bookings made in the third quarter rose 17% compared to same-year bookings made in the 2019 third quarter, a significant jump from the 6% increase we saw in the first quarter. ADR for group bookings made in the third quarter for 2023 outpaced 2019 third quarter bookings for events in 2020 by 24%.

“Business transient demand also continued to improve during the quarter, although it still lags 2019 levels. Third-quarter business transient room nights in the U.S. and Canada were 11% below 2019. We are currently in the midst of our special corporate negotiations for 2023 and are very pleased with how they are progressing. After two years of holding rates steady, the early results look positive for at least high-single-digit, year‐over‐year rate growth.

“Third-quarter day‐of‐the‐week trends continue to suggest that travelers are combining leisure and business trips. In fact, the average length of a transient business trip has increased meaningfully, and year to date is up more than 15% compared to 2019.”

Geoff Ballotti, President and CEO, Wyndham Hotels & Resorts

“On the business front, our weekday occupancy was the highest on record for the month of September as we continue to capture new infrastructure-related accounts. As we look beyond 2022, infrastructure bookings represent a significant tailwind for our business as more projects commence and construction ramps up on the largest public work bill signed into U.S. law in 70 years. …

“This was the third consecutive quarter where our infrastructure account spending increased double digits to 2019. It is now running over 25% year to date. To just try to size how meaningful this is for our brands and our small business owners: If you recall, if you step back and you think about us versus many of our competitors, 70% of our business is leisure, which is very strong; 30% of it is business, but that business is different.

"It’s not white-collar business travel; 70% of that 30% business mix is that infrastructure business. And those are the companies that are being contracted to repair our nation’s highways and bridges and ports. And it’s those companies who book these blue-collar workers into economy midscale lodging that is just so attractive for our brands and for our hotel owners.

"The Congressional Budget Office was estimating that only $25 billion of the incremental infrastructure spending will be spent in 2022. They are estimating that outlay is going to triple in 2023 to $75 billion and then is going to run $100 billion, $140 billion and $175 billion in ’24, ’25 and ’26. … And this $550 billion that we are all reading about of incremental authorization spending is on top of the $650 billion of the regular reauthorized legislation, which gets us to the $1.2 trillion that’s in the news.

"So, significant tailwinds for our team. We are very excited about it. We are adding more sellers to sign accounts, and we think we are going to continue to win more bids and gain more midweek domestic market share.”

Paul Edgecliffe-Johnson, Chief Financial Officer and Head of Group Strategy, IHG Hotels & Resorts

“Clearly leisure has been an important factor in our [third-quarter] numbers … but we have seen recovery across all the week. RevPAR has become flat across Monday through Wednesday, and these numbers give us confidence that there is more recovery to come.”

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