The hospitality industry has experienced significant changes in recent years, driven by rising interest rates, a decline in discretionary spending, the pandemic, and the shift to remote work. Initially, it was expected that all travel sectors would fully recover. However, the reality has been more complex. Leisure travel has remained strong, while business travel, once a key part of the industry, has struggled to return to pre-pandemic levels, particularly in cities where remote work has become the standard.
New global economic and political factors may further affect the hotel industry, especially in popular leisure destinations, while business travel continues to lag in many urban areas. During the pandemic, restrictions and corporate policy changes led to a sharp decline in business travel. Meanwhile, leisure travel surged as people, eager to travel again, favored open-air destinations. Ski resorts, coastal regions, national parks, and other outdoor destinations saw strong demand and rising room rates. This trend has persisted despite fluctuating economic conditions, changing how the hospitality industry operates.
The slow recovery of business travel continues to have a major impact. Many companies have permanently reduced their travel budgets and turned to virtual meetings instead. Conferences and conventions, vital for filling hotels in city centers, have not fully bounced back, especially in cities that relied heavily on business visitors before the pandemic. Cities like Seattle, San Francisco, and Chicago are still struggling to regain the business traveler demand they once had. The gap in hotel occupancy compared to 2019 is largely due to the slow recovery of the corporate travel segment.
