National revenues expected to be 23% below pre-pandemic levels
Virginia hotel revenue from business travel this year is projected to be down 28.3% from pre-pandemic levels, or about $674 million less than the $2.39 billion the lodging industry took in during 2019, according to a report released Tuesday by the American Hotel & Lodging Association and Kalibri Labs.
Nationally, the associations forecasts a 23% drop in business travel lodging revenue, a decline of more than $20 billion compared with 2019.
Business travel, which includes corporate, group, government and other commercial categories, isn’t likely to fully recover until 2024, according to the report.
“As we get out of COVID-19 — hopefully we do — it is going to take time for business travel to come back to what it calls pre-pandemic levels. It may actually never come back to pre-pandemic levels,” said Vinod Agarwal, the deputy director of Old Dominion University’s Dragas Center for Economic Analysis and Policy.
In a statement, AHLA President and CEO Chip Rogers said, “While dwindling COVID-19 case counts and relaxed CDC guidelines are providing a sense of optimism for reigniting travel, this report underscores how tough it will be for many hotels and hotel employees to recover from years of lost revenue. The good news is that after two years of virtual work arrangements, Americans recognize the unmatched value of face-to-face meetings.”
Agarwal is skeptical, however, noting that businesses have adapted to online meetings and software platforms. “As COVID-19 effects start to lessen, some business travel will be back and has been back, actually,” Agarwal said. “People have started to travel, but I do not think they will travel as much as they used to, simply because they found efficiencies in being able to conduct business without being in a face-to-face environment.”
Urban markets tend to rely heavily on business from events and group meetings. For the metro Washington, D.C., area, the report projects business travel revenue will be down 54.5%, or almost $1.5 billion, compared with 2019 revenue of $2.75 billion. In March, hotel revenue in Northern Virginia was 31% lower than in March 2019, according to data from STR Inc., a division of Washington, D.C.-based CoStar Group Inc. that provides market data on the U.S. hospitality industry.
“Wherever you have concentrations of hotels, especially downtown hotels in most large markets, it will take some time for them to recover fully,” so the report isn’t surprising, Agarwal said.
The study anticipates the Virginia Beach market will be down 11.5%, or $54.66 million, from its 2019 revenue of $476.64 million. In March, revenues in Hampton Roads were 19% higher than March 2019 revenues, according to STR Inc. data. Revenue from leisure travel more than compensated for declines in business travel, Agarwal said.