How Emerging Segments of Travelers Will Affect Hotel Forecasting

Since the beginning of time up until about three years ago, the most important information you needed to know about your guests to run a more effective hotel is whether they were booking for leisure or business travel. Now, the waters have muddied for several reasons, and one could argue that this step in segmentation is no longer applicable.

First, as we all know, the work-from-anywhere culture has untethered many from their desks, enticing businesspeople to tack on a few extra days to their business trip for a mini vacation. For example, Nicole Tomasso, Director of Revenue Strategy at Dragonfly Strategists, cited a major bank planning their annual corporate outing and requesting additional rooms and roomnights for family members (at the corporate rate). 

This is only one situation that would skew your business vs. leisure data. Many commercial leaders report incomplete booking data often provides segmentation challenges. Until recently, hotels were able to analyze the segments by booking source – business travelers would book using a corporate account or through a travel booking service, and leisure guests would book direct or through an OTA. But amid COVID, OTAs became a larger source of business for both, and now many business travelers will use Expedia, for example, to find lower rates than the corporate account. 

“One of the reasons I believe this to be the case is that companies haven’t been very strict on the travel procurement process,” says Raul Moronta, Chief Commercial Officer at Remington Hotels. “Before, companies would tell their employees they could only book this rate through this channel. Post pandemic, travel teams have changed and oftentimes they need to save money and permit employees to search for the lowest rate.”

In addition, most hotels now have implemented some type of dynamic pricing for their corporate accounts.

Traveler Intent Data

Despite the increasingly muddy data, it’s still critical to understand your potential guests’ purpose of travel. For a more clearer picture, Moronta suggests moving away from rate and booking source and instead looking at day of week. 

“We have seen the shoulder dates come back a lot stronger. Saturday is the day of the week that has come back the fastest. Monday, which we believe happens to be the office day, is slower to return,” Moronta says. “We do believe that is a factor of this new bleisure type of demand.”

For heavy group hotels, which have been slower to recover, accurately forecasting your group business will require re-examining the type of groups you expect in 2023. Large convention center hotels will continue to struggle, but hotels that can accommodate bringing the remote and hybrid workers together with flexible meeting space and an enjoyable working environment should capitalize.

“We are seeing small and medium groups returning faster for two main reasons: People who need to travel for business – they’re job depends on selling and visiting clients; and mandated travel – companies that have gone fully remote and therefore require an in-person meeting every quarter,” Moronta says. “These meetings seem to be a lot shorter in lead time – a travel planner might say I need 40-50 rooms in 2-3 weeks, for example.”

Finally, Moronta notes that Remington has observed a noticeable shift in traveler behavior from purchasing product to purchasing experiences: “Travelers want to have unique experiences, and we believe that is here to stay.” 

This means the quicker rebound seen in secondary and tertiary markets might be lasting. “There are a lot of unique areas that were not travel destinations before – not the central business districts – that continue to attract and outperform,” Moronta says.