While Covid cases may have decreased and people are becoming more comfortable with traveling again, one area is lagging: business travel. Tight corporate budgets and video conferencing are among the factors why business travel has not rebounded as quickly as other types of travel.
“Corporate travel is still depressed,” said Robert Feist, vice president at Newport Beach-based Atlas Hospitality Group. “Companies are not spending as much on travel, opting for online meetings and fewer conferences.”
Prospective business travelers recently cited several reasons they’re not booking business trips, according to a poll for the U.S. Travel Association based on first-quarter data. Almost a quarter of the respondents cited “too much work to justify travel,” while 20% expressed health concerns related to Covid, flu or RSV. Restrictive company travel policies were another concern, with 16% of business travelers citing that as an issue.
However, according to the hotel booking index from the American Hotel and Lodging Association, most adults whose jobs involve travel are likely to book trips in the next three months.
And in an attempt to reboot their business-travel income, hotels and cities are attacking the problem with re-envisioned spaces and new advertising to bring business travelers back with new incentives.
Bringing people in
As in other places, hotel owners and cities within Los Angeles County have had to put strategies in place to woo customers back to in-person conferences and meetings.
“We’re not back in occupancy, but the average daily rate is still strong,” said James Stockdale, managing director at Jones Lang LaSalle Inc.’s Hotels & Hospitality Group. “We’re not at 2019 levels, but the business customer is coming back.”
Stockdale noted that he had not seen hotels discounting stays in the area; instead, they are relying on organic growth.
Part of that growth is the focus on “blended travel,” or “bleisure trips,” combining a business trip with a vacation or leisure component.
A recent report from the Global Business Travel Association said that 40% of travel managers polled reported seeing a rise in requests for blended travel from employees.
That makes parts of Los Angeles an easier sell to travelers from distant locations.
“Santa Monica is an easy sell to groups from the Midwest,” said Stockdale. “And the city has been building an excellent nightlife and restaurant culture.”
Other cities in L.A. County may not immediately come to mind when planning a blended travel stay, but their council members are working hard to change that perception. The city of El Segundo contains 15 hotels and 2,600 rooms and has been positioning itself as an ideal spot to merge a business trip with everything else the city has to offer.
The city launched a “Start Here” campaign in February 2022 to encourage travelers to begin their travels in Los Angeles and greater California in El Segundo, which is adjacent to LAX. The campaign initially targeted football fans coming for Super Bowl LVII at SoFi Stadium and is now a part of the city’s overarching tourism and hospitality marketing.
“We’re close to the airport and 45 minutes away from everything,” said Carol Pirsztuk, an El Segundo City Council member. “That includes Disneyland and Universal Studios, and we’re only 10 minutes from SoFi Stadium.”
Pirsztuk and Barbara Voss, deputy city manager for El Segundo, have been running a digital campaign aimed at business travelers that uses banner ads, travel sites and social media.
They noted that occupancy rates in El Segundo are at 86% of pre-pandemic levels.
“We have a strong chamber of commerce, all of our hotels are members,” said Pirsztuk.
Updates
In addition, hotel owners and operators are also working to construct and update spaces to accommodate the modern business traveler’s needs.
“The corporate traveler has become more reluctant,” said Ahmed Elassy, general manager at the AC Hotel Los Angeles South Bay. “But overall, we’re seeing a healthy market.”
Elassy noted that because many travel managers were furloughed during the pandemic, making sure his property had online visibility was critical since many business travelers would now be booking their own trips. Now that pandemic restrictions have eased, Elassy has also seen booking windows narrow considerably.
“We’re seeing 30-day booking windows, when it used to be 90 days,” said Elassy. “There are a lot of last-minute corporate bookings.”
The hotel has also doubled its sales staff, from two to four individuals.
“We have to respond to customers much faster,” said Jasmine Schubert, director of sales, marketing and corporate strategy at the AC Hotel.
Schubert said the property is also catering more to the “bleisure” travelers with rooftop lounges and craft cocktails.
“Local companies are even coming to us more for happy hours to lure people back to the office,” said Schubert.
In addition to targeting corporate travel with amenities, some hotels are renovating to repurpose existing spaces for more face-to-face time.
“Indoor pools are underutilized, and you see a lot of existing properties infilling and repurposing those spaces,” said Alex Kuby, associate principal at Long Beach-based architecture firm RDC.
“They are turning them into social-space opportunities,” Kuby noted. “Hotels are really leaning into nooks and places to have sidebar conversations along with food and beverage service.”
Kuby added that these upgrades in hospitality makes a big difference when business travelers are deciding whether to attend a conference, meeting or event versus participating from the office or at home.
“People are remembering the joys of hospitality, a lot of those moments of hospitality are starting to re-emerge,” said Kuby. “Gift giving, food and beverage can really be part of the appeal of a destination.”
While some hotels focus on the intimate details, other larger Los Angeles-based hotels are undergoing major renovations to accommodate convention, business and leisure visitors.
“We’re seeing brands wanting to create a unique experience,” said Stockdale. “It’s hard to get excited about a plain vanilla box.”
The J.W. Marriott in downtown Los Angeles is undergoing a $500 million upgrade that will add a 37-story tower with an additional 861 rooms at 900 W. Olympic Blvd. Other hotels planned for the area include Fig & Pico, a two-tower hotel project at the corner of Figueroa Street and Pico Boulevard with more than 1,000 rooms; the long-delayed Oceanwide Plaza project, which is expected to have more than 180 rooms; and Olympic Tower, a 57-story mixed-use project at 813 W. Olympic Blvd. that will boast 373 hotel rooms.
Those properties are just a portion of the more than 7,000 hotel rooms proposed for downtown and the more than 2,000 under construction, according to data from the Downtown Center Business Improvement District.
Downtown looks like a good bet for many of these hotel operators. Revenue per room available rose 100% from May 2021 to the same period in 2022 in the Los Angeles Central Business District.
“We’re getting to a more normalized market,” said Feist.
“It’s headed in the right direction,” agreed Stockdale.
