No matter what data set you analyze, it is evident that the hospitality industry recovery in business transient and group are the missing pieces of the new normal puzzle.
Harken back to last year - March 2021 - one full year into the pandemic. COVID-19 case counts were receding after the first winter surge and the hospitality news cycle changed direction, almost on a dime, as the easy year-over-year comparisons replaced darkness with light. The rebound that followed, driven by pent-up leisure demand was swift. Today, faced with similar levels of uncertainty in the group market segment, we look ahead to the forthcoming bounce back in the events and meetings space.
- Market Segment Improves then Decelerates When analyzing Duetto group market segment data, we see a steady trajectory of improvement from September to November last year but future group bookings pulled back in December and January and remained materially lower in February, decelerating from pre-omicron levels.
- Group Wash Reverting Group wash, which is the percentage of group room blocks that never sold, reverted to the levels seen before the omicron surge during February.
- Sales Up, Peaking in June The velocity of new group sales from last month (referred to as pace) increased by double digits from April through July, and group business on-the-books (OTB) is highest in June.
But, it’s the group OTB pace relative to the same time in 2019, that is exciting news for the industry.
- A Steady Increase Group pace is on par with 2019 in June and is trending higher in each month during the fourth quarter this year, including a very healthy October when benchmarked against 2019.
While there is a lot of room-only group business, another way to assess group segment performance is to contrast properties that offer meeting space against those that do not.
- Meeting Space Growth Correlation Approximately 40% of the world’s properties have meeting space with an average of 4-5k sqft for those that do. Properties that offer meeting space report 10% YoY ADR growth for business on the books for the balance of the year. This is six percentage points higher than the 4% YoY OTB ADR growth for properties without meeting space.
Overall, consumer web searches for lodging accommodations remain highly elevated around the world, led by travelers in the US and Europe. Additionally, not all potential guests are only looking, because global bookings are up by 50%, led by Latin America. This intensified activity resulted in a 34% jump in committed occupancy for the balance of 2022 at a double-digit average daily rate increase from the prior year, which surpasses the soaring inflation rates seen for most other goods and services.
