While it may take years for the hospitality industry to fully recover from the effects of the coronavirus pandemic, Hilton (HLT) CEO Chris Nassetta remains very optimistic about what lies ahead.
“We’ve seen very, very steady recovery,” Nassetta told Yahoo Finance Live at the All Markets Summit (video above). “So I would say we’re at the beginning of what I think is going to be a new ‘Golden Age of Travel.'”
Nassetta highlighted “bleisure” travel — what he calls the combination of business and leisure travel — as a key part of Hilton’s rebound.
“A little bit more leisure, a little bit more bleisure… a little bit more extended stay… we have a little bit more,” he said. “Nothing off the charts that suggests that any of the brands that we have in our family of brands today isn’t really appealing to customers.”
The number of U.S. air passengers has improved significantly since the start of COVID, with roughly 2.35 million travelers going through TSA checkpoints on Oct. 17, the highest since 2019.
“People need to travel for all sorts of reasons,” Nassetta explained. “They want to travel because they want to see people in places. They need to travel for business purposes. They need to travel to congregate as part of meetings and events for all sorts of reasons … and they’re doing it.”
According to the American Hotel and Lodging Association (AHLA), hotel occupancy is trending upward from historic lows in 2020, averaging 63.4% for the year, while hotel room revenue is projected to nearly return to pre-pandemic levels in 2022.
“We’ve seen a very strong recovery in all segments of the business — led by the leisure business — but very strong recovery in business travel, very strong recovery in meetings and events,” Nassetta said. “And it continued throughout the summer, and it is continuing into the fall. I’d say we’re in the midst of a very strong rebound, coming out of [a] depression for the hospitality business in ’20 and ’21.”
‘People being on the road more … is very good for business’
Another part of the travel story is how many virtual employees can do their work from almost anywhere.
According to data from the U.S. Census Bureau, from 2019 to 2021, the amount of people working primarily from home tripled to 27.6 million people. The virtual workforce creatively transitioned working from “home” to mean “virtual”, and thus “virtual” to mean anywhere with a stable internet connection.
“The reality is COVID accelerated that process where the office environment is changing,” Nassetta said. “How everybody works is changing in a way that I think people are going to be on the road more. People being on the road more and being more mobile is very good for our business.”
The virtual workforce presents an additive to these companies’ growth strategies while more room availability is either in development or being brought online, and the competition is accelerating to be everywhere the quasi-corporate customer wants to stay for an extended period of time.
In a recent earnings call, Airbnb (ABNB) disclosed that nearly half of its business comes from guest stays that are over seven days, and stays that are over 28 days are nearly one-fifth of its business.
The wave of companies codifying remote work policies is leading companies like Hilton to refresh their aesthetic and even consider adding new brands to appeal to extended stay travelers who gravitate towards lifestyle amenities.
Hilton currently operates a portfolio of hotels and resorts including Waldorf Astoria, Embassy Suites, DoubleTree, Hampton and household namesake Hilton. It also recently launched its newest brand, Tempo, and weeks later partnered with Peloton (PTON) to bring the connected device to all of its 5,400 Hilton-branded hotels.
“I’m not going to get ahead of myself, but we’re definitely thinking about some of the things that did shift during COVID,” Nassetta said. “Do they suggest to us that there may be opportunities in terms of serving a broader customer base? Watch over the next 6 or 12 months, I think you may see some things from us that sort of address that.”
Brad Smith is an Anchor at Yahoo Finance. Follow him on Twitter @thebradsmith.