Business travel falls farther as pandemic drags on

The U.S. hotel industry is projected to end 2021 down more than $59 billion in business travel revenue compared to 2019, according to the American Hotel & Lodging Association and Kalibri Labs.

The projected losses detailed in a report Wednesday come after the industry lost nearly $49 billion in business travel revenue in 2020.

“Hotels were already on pace to lose more business travel revenue this year than we did in 2020,” said AHLA chief executive Chip Rogers. “And now rising COVID-19 cases threaten to further reduce the main source of revenue for our industry.”

Bloomberg News

For bond-supported convention center and airport hotels that rely on business travelers, the report shows that 2021 will be another bad year.

“Business travel is critical to our industry’s viability, especially in the fall and winter months when leisure travel normally begins to decline,” Rogers said.

Despite an increase in leisure travel over the summer, the survey highlights the dim outlook for business travel and events, which account for more than half of hotel revenue and aren’t expected to return to pre-pandemic levels until 2024.

Business travel is the hotel industry’s largest source of revenue and has been slow to return since the onset of the COVID-19 pandemic. Business travel includes corporate, group, government, and other commercial categories. Business travel revenue is not expected to reach pre-pandemic levels until 2024.

A recent AHLA survey found that most business travelers are canceling, reducing, and postponing trips amid rising COVID-19 cases caused by the more contagious Delta variant.

Hotels are expected to end 2021 down nearly 500,000 jobs compared to 2019. For every 10 people directly employed on a hotel property, the hotel industry says it supports an additional 26 jobs in the community, from restaurants and retail to hotel supply companies — meaning an additional nearly 1.3 million hotel-supported jobs are also at risk.

Moody’s Investors Service this month lowered ratings on $770 million of senior debt issued by the New York Convention Center Development Corporation to A2 from A1. The rating on $220 million of subordinate debt was lowered two levels to Baa2, the second-lowest investment grade, from A3. The outlook on the bonds is negative.

“The continuing impact of the coronavirus pandemic has created severe and ongoing disruptions in the New York City travel and tourism market and therefore pledged revenue receipts,” Moody’s said in a news release. “As the world continues to grapple with new virus variants, an uncertain recovery path faces travel and tourism as well as New York City’s office occupancy and business travel.”

Debt issued for the Javits Center is payable from a $1.50 per-night fee on occupied hotel rooms in New York City and the senior bonds also get backing from a state agency that finances mortgages. The city’s convention and visitors bureau projects tourism won’t return to pre-pandemic heights of 66.6 million visitors until 2025.

In New Orleans, the Morial Convention Center has expended more than half of its $92 million of cash reserves over the past year, according to the New Orleans Times-Picayune. Cancellation of events has cast doubts on a five-year $557 million renovation project.