Hotels Struggle To Return To Pre-Pandemic Levels As Business Travel Slowly Recovers

The hotel and lodging industry is projected to lose the most revenue this year, compared to pre-pandemic levels, because the business travel industry has been slow to recover.

However, the hotel industry expected revenue from leisure travel to reach full recovery by the end of 2022, which could bring in a larger percentage of the revenue that the hotel and lodging industry will see this year.

A recent analysis from the American Hotel and Lodging Association (AHLA) and Kalibri Labs estimates that the hotel industry will end 2022 down $20 billion on business travel, specifically compared to pre-pandemic levels.

A hit to business travel is especially critical for hotels, as it made up around 52.5% of lodging industry revenue in 2019. In 2022, AHLA expects the revenue from business travel for hotels to drop to 43.6%. And that's after the travel industries lost $108 billion in 2020 and 2021 combined.

The lack of business travel primarily affected urban areas, which relied on conventions, group meetings and other special events as a much larger source of revenue than leisure travel. However, leisure travel is recovering at a much faster rate.

The AHLA expects leisure travel to return to pre-pandemic levels in 2022 as any remaining waves of COVID-19 or its variants become less impactful on people's decisions to travel. The lifting of restrictions on mass transit is also expected to increase leisure travel.

The forecast says leisure travel will play a much larger role in hotel and lodging industry revenues from now until 2024, when the business travel industry is expected to make a full recovery, the AHLA predicts.

"Dwindling COVID-19 case counts and relaxed CDC guidelines are providing a sense of optimism for reigniting travel," said Chip Rogers, the president and CEO of AHLA.

However, other factors like rising inflation, airfare prices and gas prices could hinder the recovery, which many travelers noted as a concern. Still, travelers are feeling more optimistic for 2022 than in the past two years of the pandemic.

A report earlier in the year by AHLA highlighted the emergence of a new kind of traveler that combine business and leisure, what the report describes as “bleisure” travel. With the growth in remote work, more travelers are mixing business with pleasure.

“Globally, 89% of business travelers report wanting to add a private holiday to their business trips,” the report read.