Hospitality industry adapting to changes in short-term business travel
Wednesday, November 14, 2012
Although many executives take longer business travel trips to maximize their productivity, especially when venturing to foreign countries, domestic corporate travel often requires a different approach. Some businesses are realigning their policies to reduce the amount of time that executives spend on the road, and the popularity of one- or two-day business trips has increased in recent years. Serviced apartments and corporate housing are ideal solutions for this kind of specialized business travel, but according to CNN, some hotel chains are adjusting their business model to cater to this emerging section of the market.
While day-rate accommodations have long been associated with dwellings not commonly associated with business travel, such as bed and breakfasts and hostels, the changing face of the corporate travel sector has had a profound effect on how hotel chains attract new guests. The news source reports that luxury hotel brands around the world, particularly in Europe, are beginning to offer executive suites for one or two nights, eliminating the need for business travelers to book lengthy stays to secure reasonable rates.
Since implementing the new policies, many boutique hotels have reported an increase in occupancy of up to 10 percent. The relative ease with which executives can travel around Europe and the centralized nature of the continent's economy have been seen as two potential factors for the increased popularity of short-term luxury accommodations.
"Most of the time, it's for business guests," Nassar Khalil, director of sales and marketing for an upscale hotel in London, told the news source. "Many of them might have an early meeting, and they want a place to get themselves ready and have a shower. Others have a late flight, and they want some place to leave their bag, and maybe have a drink at the bar or have some tea before heading to the airport."
While the popularity of this business model may gain traction in the European travel market, corporate apartments have been offering this kind of service at competitive rates for years. Although the hospitality industry is changing to meet the needs of 21st-century executives, the value, comfort and convenience of serviced apartments is unlikely to be challenged by this emerging business model.
Looking to tomorrow
There is little doubt that the corporate travel sector is changing rapidly in light of the fluctuations in the global economy. However, while hotel chains may be trying to capitalize on the changing face of international executive travel, a recent report published by Pegasus Solutions suggests that the bottom line is still the dominant consideration for corporate travel managers.
Business Travel News reports that hotel bookings made through global distribution systems (GDSs) decreased in September after several months of growth. In the U.S. alone, reservations made through GDSs dropped by more than 8 percent in September. Similarly, outside of North America, GDS bookings declined by 7.3 percent during the same period.
The average daily rate at hotel chains around the world remained largely unchanged for much of the year, and many experts agree that demand for global business travel services is unlikely to decline in the near future.
"Forward-looking global rates evidence that business travel demand has not waned," reads the Pegasus report, as quoted by the news source. "Reservations will continue to improve as economic uncertainties, like the conclusion of the U.S. election, ease and corporations gain more confidence in making both short-term and long-term decisions."
While strong demand may be good news for hotel chains, the uncertain future of global economic stability and the need for companies to maximize their return on investment means that serviced apartments and corporate housing will remain a competitive and attractive option for budget-conscious business travelers.