Founder and CEO Dreamscape Companies†
The Covid-19 pandemic has gone through a massive transformation and the real estate industry is no exception. The past two years have wreaked havoc and disrupted the hospitality industry on a massive scale. But at the same time, a new paradigm has been formulated about how and why we move. In the future, I expect the line between home affairs and leisure travel to blur – and the two categories to be more closely linked than ever before.
For example, someone visiting Nashville or Charleston for work is more likely to add a weekend component to their trip. Arrive Thursday morning, work for two days and then enjoy the city until Sunday afternoon. This person can fly into their significant other, their family or their friends.
Even before the pandemic, hybrid business-leisure travel, adding extra days to a business trip for recreational pleasure, was on the rise 60% in five countries surveyed between 2016 and 2018. Today, experts expect a surge in travel planning once consumers crave postponed and canceled plans due to the pandemic “revenge travel.”
Make the most of traveling
The wall between a business trip and a trip for fun will be broken down (though not completely) because of one key stipulation: If someone has to travel, many are increasingly asking, why not make the most of it?
It may take some time for airline staff to fully train and fully train their new hires, and it may be a while before we live in a completely restriction-free reality. In all fairness, Covid-19 will likely continue to pose some travel risk as it shifts to endemic status. Travel is currently largely safe (especially for the vaccinated), but people may still not be hopping on planes as quickly, say two, three or four times a week. A journey has to be made to feel… well, worth it.
Effects on Domestic and International Travel
This trend will only continue as opportunities for international travel continue to develop. At the moment, travel patterns are still in flux. On the one hand, domestic leisure traffic is strong. With the Omicron variant declining, domestic US flights hit an all-time high last February, and summer travel is robust predicted (assuming the cost of gas is not an issue).
However, we have a long way to go in international leisure and work travel, with numbers improving since the United States lifted its foreign travel ban in November. Once we do that, I expect to see an even more mix of business and leisure travel as people try to get the most out of expensive long-haul investments.
Market and location issues
When it comes to selling hotel rooms, the traditional categorization is grouped into three categories: leisure-oriented, business and corporate-oriented, and group- and conference-oriented. Leisure performs at or better than 2019 levels, although the rise of the Delta variant dented that a bit. On the investment side, there is not much concern about hotels meeting the leisure demand. However, if you’re looking to acquire a new space, say in Key West or Charleston, there’s a question of value: you won’t get a Covid-19 discount in these locations.
However, business is more of a gray area. “Am I going to zoom in on a meeting?” people will now be wondering, “Or am I going to hit the road again?” Again, I think we’re going to see more and more of a hybrid where if you’re going to work somewhere you might be more inclined to cross over on a few days off. I must also say that my own company is not currently super optimistic about buying hotels that were known to rely mainly on business travel.
Then there are groups and conventions. I think markets like Las Vegas and Orlando will do well. People go to conventions when they think it’s safe to do so. Large group gatherings could benefit even more from a hybrid work and leisure model if people consider it important to attend a convention once or twice a year, especially when these summits have been largely absent lately.
The future of business and leisure travel
Having said all that, I expect we will continue to see a merger as domestic, business and leisure travel continue to merge. This should also apply as international travel opens up further. Whatever the future holds, the nature of this new paradigm is something that investors and developers alike should keep a close eye on.