Leisure, sports travel fuel hotel occupancy uptick after pandemic decline

Hospitality executives see positive signs of leisure travel activity increasing across West Michigan, though corporate travel still lags pre-pandemic levels.

“For leisure travel, there is a lot of pent-up demand and we’ve been experiencing that,” said Peter Beukema, founder of 6PM Hospitality Partners LLC who formerly served as CEO of Suburban Inns. “Last summer, travel was really off the charts, and staffing levels made it really challenging, but it was good. This winter and fall were better than expected, but definitely not where it was (pre-pandemic).”

Hotel occupancy across the country is expected to continue trending upward and is forecasted to average 63.4 percent this year — nearing the 66 percent occupancy rate in 2019, according to data from STR Inc. and Oxford Economics. The average national occupancy rate was 44 percent in 2020 and 57.6 percent  in 2021.

Room revenue decreased by almost 50 percent in 2020 but is expected to nearly return to 2019 levels in 2022, though non-room spending on meeting rentals, events and food purchases is expected to lag, according to an American Hotel & Lodging Association 2022 State of the Hotel Industry report.

Hospitality leaders in Grand Rapids, Holland and Kalamazoo expect to see travel trends from last year continue in 2022. Though business travel continues to lag, pent-up demand has made leisure travelers the primary driver of hotel occupancy rates. 

“The missing piece is corporate travel,” said Experience Grand Rapids Executive Director Doug Small. “That is missing and has been really slow to come back. I’m not sure it will ever fully come back.”

Some companies adapted to field work via web conferencing during the pandemic, which cuts down on expenses, Small explained. Group travel for business is expected to return quicker because of the difficulty of holding hybrid meetings, while leisure travel has had the strongest showing among types of travel over the past year, Small said. 

“Weekend travel has been every bit as good as it was in 2019,” Small said. “Weekends have been really solid since the summer of 2021 all the way through now. That’s people with pent-up demand saying, ‘I need to get out.’”

When weekend travel picked up at the back half of 2021, occupancy rates for Kent County hotel rooms ranged from about 72 to 90 percent. 

Like in many other industries, hospitality continues to grapple with hiring and retaining employees.

“Destination marketing agencies like ourselves have never had to get involved in workforce development before, but now we’re focused on that for hotels and restaurants to try to attract and build a bigger pool of talent for our stakeholders,” Small said. “Hotels are staggering trying to keep up. They’re going to have to learn how to work with leaner teams.”

In an October 2021 American Hotel & Lodging Association member survey, 94 percent of respondents said their hotels were understaffed, while 47 percent said they were severely understaffed.

The average occupancy rate for hotel rooms across Kent County was at 46 percent during the first two months of 2022, an increase from 31.7 percent during the same period in 2021 though still below the 57.7-percent rate in 2019.

“I’m cautiously optimistic we can be back to pre-pandemic numbers next year in 2023, and we are seeing signs that projection will happen,” Small said. “As much as we’re excited about our growth, we’ve still got work to do.”

Travel in the Holland area should pick up this summer with the full return of the Tulip Time Festival after it was significantly scaled back in 2021. The hotel assessment district in the area comprises the city of Holland and Holland, Park and Zeeland townships. Occupancy rates were just below the national average last year at 55.7 percent and largely consisted of leisure travel, said Linda Hart, executive director of the Holland Area Convention and Visitors Bureau

“Corporate travel has lagged and we knew that was coming, but we are seeing an uptick in outdoor sports tournaments like softball, which has always been very popular in our community,” Hart said. “We’re hoping to bring in Zig Zag Ultimate Frisbee tournaments to Holland, which would be a great opportunity for us.”

The CityFlatsHotel in Holland, which is managed by 6PM Hospitality, had record months for occupancy in January and February of 2021, Beukema said. He credits the successful months to the hotel’s rebranding as a Tapestry Collection by Hilton.

“Every single month in 2021 we were below our 2019 occupancy levels except for December when we were higher than 2019 levels,” Hart said. “We chalk that up to a very comprehensive digital marketing campaign we switched to once the pandemic hit. We had a good fourth quarter.”

Discover Kalamazoo President and CEO Jane Ghosh echoed Small and Hart about a successful travel season toward the end of 2021. 

“The hotel room night demand for the whole year (of 2021) was up 59 percent from 2020 in Kalamazoo,” Ghosh said. “That’s the best of all the markets in Michigan that we look at. We feel very good about our recovery.”

The number of Kalamazoo County hotel rooms also increased by 7-percent from 2020 to 2021 as three new hotels opened in the area, Ghosh said. 

“For us, sporting events have led the way. We’re hosting all kinds of sporting events and we have groups here all the time with families and venues doing it safely,” Ghosh said. “There is also pent-up demand — people are just anxious to get out and Kalamazoo is a great market for that because we’re a smaller town with lots to do.”