Less Time in the Office Leads to a Decline in Hotel Occupancy
There’s synergy between the two real estate sectors but summer travel at least may boost hotel stays.
Think there’s no or little correlation between office leasing rates and full-service hotels that view business travelers as part of their bread and butter?
Time to revise your thinking. Few businesses operate completely on their own or without affecting another.
And as many companies lease less square footage and allow staff to work at home all or some of the time, they don’t have the same office footprints and, by extension, business travel needs.
Fewer workers are traveling these days, which has had an impact on hotels that specialize in this category, according to CoStar Group’s May 2023 Real Estate Data Update.
Meanwhile leisure travel shows every sign of remaining healthy this summer, according to AAA. The association’s current projections are that the number of Americans who will purchase airline tickets will be the largest since before the pandemic, according to a report by ABC affiliate WSET.
“Bookings for international trips are up 200% at our AAA offices this year. In talking with the TSA, they say they think travel numbers at the airports this summer will be comfortably above pre-pandemic numbers,” said Morgan Dean, Spokesperson, AAA Mid-Atlantic.
Dean attributes the strong rise to this year being the first full year that there haven’t been pandemic restrictions since 2020. Other factors encouraging Americans to get and go, he said, are gas prices being more than a dollar less than they were a year ago, as well as WHO declaring the global health emergency of the pandemic being over. Dean also said that summer travel by car should be up this year.
Other travel observers expect similar results. According to the “Summer Travel Survey & Trends 2023” report by The Vacationer, 85% of Americans plan to travel this summer. Almost half plan to travel more this summer than they did last year.
All of this travel—whether by airplane or car and abroad or in this country—will surely have a positive effect on hotel occupancy. For now, it may be due to vacation or leisure travelers rather than business travelers but that may change before more ask, “Are we there yet?”