While it may take years for the hospitality industry to fully recover from the effects of the coronavirus pandemic, Hilton (HLT) CEO Chris Nassetta remains very optimistic about the future.
“We’ve seen a very, very steady recovery,” Nassetta told Yahoo Finance Live at the All Markets Summit (video above). “So I would say we are at the beginning of what I believe will be a new ‘Golden Age of Travel’.”
Nassetta highlighted “bleisure” travel — as he calls the combination of business and leisure travel — as an important part of Hilton’s recovery.
“A little more free time, a little more bleisure … stay a little longer … we have a little more,” he said. “There’s nothing out of the ordinary to suggest that any of the brands that we have in our family of brands today aren’t really appealing to consumers.”
U.S. air passenger numbers have improved significantly since COVID began, with around 2.35 million travelers passing through TSA checkpoints on October 17, the highest since 2019.
“People need to travel for all sorts of reasons,” Nassetta explained. “They want to travel because they want to see people in places. You have to travel for business reasons. They have to travel to gather for meetings and events for all sorts of reasons… and they do.”
According to the American Hotel and Lodging Association (AHLA), hotel occupancy is trending up from historic lows in 2020, averaging 63.4% for the year, while revenue from hotel rooms is expected to return close to pre-pandemic levels in 2022.
“We’ve seen a very strong recovery in all segments of the business — led by the leisure business — but a very strong recovery in business travel, a very strong recovery in meetings and events,” Nassetta said. “And it’s continued throughout the summer and into the fall. I would say we are in the middle of a very strong upleg coming out [a] Depression for hospitality in ’20 and ’21.”
‘People who are more on the move … is very good for business’
Another part of the travel story is how many virtual workers can get their work done from almost anywhere.
The number of people who work primarily from home tripled to 27.6 million people from 2019 to 2021, according to data from the US Census Bureau. The virtual workforce has creatively transitioned working from “home” to “virtual” and therefore “virtual” to anywhere with a stable internet connection.
“The reality is that COVID has accelerated this process in which the office environment is changing,” Nassetta said. “The way everyone works is changing in a way that I think people will be on the move more. People who are more on the go and more mobile are very good for our business.”
The virtual workforce represents an addition to these companies’ growth strategies as more available rooms are either under development or brought online and competition is accelerating to be wherever quasi-corporate customers wish to stay for an extended period of time.
Airbnb (ABNB) announced in a recent conference call that nearly half of its business comes from guest stays longer than seven days, and stays longer than 28 days account for nearly one-fifth of its business.
The wave of companies codifying policies for remote work is prompting companies like Hilton to refresh their aesthetics and even consider new brands to appeal to long-term travelers interested in lifestyle conveniences.
Hilton currently operates a portfolio of hotels and resorts, including Waldorf Astoria, Embassy Suites, DoubleTree, Hampton and the well-known namesake Hilton. The company also recently launched its newest brand, Tempo, and weeks later partnered with Peloton (PTON) to bring the connected device to all of its 5,400 Hilton-branded hotels.
“I won’t get ahead of myself, but we’re definitely thinking about some of the things that have changed during COVID,” Nassetta said. “Are you suggesting that there might be opportunities to serve a broader customer base? Watch over the next 6 or 12 months, I think you’ll see some things from us that address that.”
Brad Smith is an anchor at Yahoo Finance. Follow him on Twitter @thebradsmith.
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