With the easing of the leisure travel phenomenon of “revenge travel,” pre-pandemic spending levels in business travel and a surge in group business in 2024, will we see a return to corporate buyer leverage and an easing of hotel rates in 2025? Not so fast, according to a diverse group of travel buyers and hospitality companies. While buyers might be enjoying stronger positions in terms of volume, most agree that hospitality industry costs will continue to bring pushback to significant discounts.
However it plays out, there is consensus that corporate travel in hotels has already returned to 2019 numbers, or will this year. The industry has “absolutely” stabilized, says Steve Reynolds, chief strategy officer for Emburse, an expense management provider, as the post-pandemic leisure surge eases and a more balanced mix of business and group travel settles in.
The undeniable momentum across multiple verticals, says Yola Marhsall, vice president, global sales, Americas, IHG Hotels & Resorts, inspired “great optimism heading into 2025,” even if the path forward looks different than in recent years. By focusing on programs tailored to small-to-medium-sized enterprises, such as IHG Business Edge, “We are well-positioned to capture this momentum and support the ongoing evolution of corporate and group travel,” says Marshall.
At Hilton, the outlook is similar, according to Frank Passanante, senior vice president and global head of sales. “We have said for some time that we expect our business transient demand to surpass 2019 levels by 2025,” Passanante says. As reported in Hilton’s most recent earnings call, he adds, “our group travel segment is also poised for strong performance, with future bookings up 10 percent for 2025.”
Chloe Carver, corporate travel practice lead, Acquis Consulting Group, expects to see group travel surpass 2019 levels in 2025. There is still pent-up demand for in-person events, she says, and companies continue to place high value on face-to-face meetings. The consultancy also continues to see an increase in internal meetings as companies bring remote workers, hybrid workers, and employees from different offices into central locations for training, team building and strategic planning, Carver says.
Despite the positive outlook, some express caution about how that translates on the ground. While the numbers might be similar to 2019, says Tim Wagner, senior vice president, procurement and supply for the HRS Group, hotel companies are “paying more for everything” – energy, staff, upgrades, training. Hotel operators have been able to absorb some of those increases, he says, adding, “There is no question that efficiencies in procurement are big on both sides.”
While the number of meetings and events is growing, says Carver, the pattern has evolved, resulting in more purposeful trips with multiple meetings condensed into fewer days. Therefore, while overall group travel volume might reach 2019 levels in 2025, she says, “it will look different in its composition and purpose.” Hotels that cater to group travel, says Carver, “may want to consider how they market their spaces in order to better support these more intensive, multi-purpose gatherings.”
Even more cautious about the strength of the recovery, Neil Hammond, a partner at travel management consultancy Goldspring, says that while volumes and pricing for the hospitality industry as a whole have now exceeded pre-pandemic levels, the business portion of that volume has not fully returned. Overall, says Hammond, the typical program is now at about 70 percent of pre-pandemic levels primarily due to several factors: Remote working that renders travel to meet clients more problematic, substitution travel by virtual meeting and other tools, and budget controls based on a neutral to negative economic outlook.
Volume = Lower Rates?
Despite the return to something resembling normalcy, corporations cannot expect to wield their volume leverage at the negotiating table easily. Buyers will also need data to back up their positions. Many hotels have advanced yield management systems, enabling them to set dynamic room rates, says Richard Johnson, vice president, solutions group, for CWT. “Buyers, therefore,” he says, “need a good handle on their hotel data in order to negotiate effectively on price.”
While corporate discounts remain a key lever in negotiations, says Johnson, “we’re not seeing a significant increase in the depth of discounts offered across the board. Instead, hotels are focusing on tailored, value-driven strategies rather than blanket percentage reductions.”
Dynamic pricing systems, says Johnson, have enabled hotels to fine-tune their rates more effectively, making it crucial for corporate buyers to bring robust data insights when negotiating. In some cases, he says, hotels may offer greater flexibility or additional perks like free upgrades, WiFi or dining credits instead of steep rate reductions.
Property and chainwide discount levels, says Reynolds, are about the same as last year and in 2019, averaging around 20 percent for property discounts and 15 percent for chainwides.
Again, Hammond is more cautious. He says corporate buyers have struggled to maintain buying leverage in the industry as the supply base increases its focus on the leisure market and the end traveler, He says hotel operators are not offering more substantial corporate discounts than in the past.
Despite these headwinds, says David Krauthamer, group vice president, global sales, Wyndham Hotels and Resorts, “pent up demand is infiltrating the market, giving corporate buyers the opportunity to secure competitive rates and giving hotels the opportunity to capture more business.”
As is often the case, after years of volatility both sides see strong relationships as the key to going forward. Corporate buyers, says Johnson, “should focus on building strong partnerships and leveraging their total spend across brands to maximize value in this nuanced pricing landscape.”
IHG works closely with customers, says Marhsall, to identify cost-effective opportunities, leveraging tools such as need-date calendars to provide actionable insights. Ultimately, she says, “rate management will depend on collaboration between hotel operators and buyers as well as the ability to navigate market conditions creatively.”
Marshall and Krauthamer both say the business-focused programs at their respective hotel companies also provide opportunities to develop more productive supplier-buyer relationships, as well as benefits like cost savings, streamlined billing, reward points and other positive outcomes.
As leisure demand normalizes, says Carver, “there is an excellent opportunity for hotels and corporate buyers to forge stronger, more strategic partnerships.” While cost is a critical factor for both sides, she says, “approaching negotiations with a partnership mindset can reveal opportunities for mutual value creation that might be missed in purely rate-focused discussions.”
Pandemic Patterns Persist
Observers agree that some critical pandemic-driven changes in traveler pattern are likely to be around for the long-haul. Trends like lengthier trips, fewer one-night stays and bleisure travel are here to stay, says Johnson, influenced by sustainability priorities and flexible work models.
Hotels, says Johnson, may respond to changing patterns with flexible booking options, extended-stay discounts and hybrid amenities that cater to both work and leisure needs. “Buyers, in turn, must adapt sourcing strategies to secure better rates for longer stays and partner with hotels offering comprehensive services for business and leisure travelers alike,” he says.
“Corporate planners,” says Marshall, “must now account for travelers seeking flexible arrangements that accommodate both professional obligations and personal time. Hotels, in turn, are adapting by offering packages and loyalty incentives designed to appeal to this evolving audience.”
Blended travel, says Passanante, presents an opportunity within the hotel-buyer relationship as corporate buyers can gain additional leverage by quantifying and discussing their travelers’ blended travel patterns with their hotel partners. “Hotels that understand their corporate clients’ blended travel trends,” he says, “will be better positioned to capture the extended leisure portion of business trips and provide a winning customer experience for these travelers.”
The approach of combining various spending funnels is also seeing a dramatic upswing at HRS. Wagner says that convergence – coming to the negotiating table with data on all spending, including transient, group and ancillary – is exploding. On average, HRS had 16 percent of clients using convergence in 2023 and 30 percent in 2024 using it.
With the cost of meetings increasing – and often not comprehensively managed, says Wagner, “convergence offers a big potential benefit for corporates. “
AI – Here Now, Coming on Strong
No projections are possible in these times without taking AI into account. That technology’s potential for analyzing travel and expense data is significant, says Carver. Both corporate buyers and suppliers should be developing strategies to leverage AI effectively. However, Carver cautions that before corporates rush to implement AI solutions, they need to ensure their travel and expense management systems are properly configured. AI relies on good data, she says, so it is imperative that expenses are consistently coded correctly.
For their part, hotels can leverage AI to analyze corporate business patterns, such as clients’ booking patterns, length of stay trends and amenity preferences. These insights, Carver advises, can help hotels identify opportunities to better serve their key accounts, design tailored offerings, strengthen their value propositions and enable more strategic discussions during contract negotiations.
HRS, says Wagner, is continuing to plow investments into AI to build on expediting on intelligence through its HRS CoPilot. However, he warns, “It’s one thing to have access to data and another to have that data do the work and come up with recommendations.”
In the future, says Wagner, travel managers will have direct access to HRS’ AI tools. Since much of this is new to many travel managers, he says, his team now collaborates with them to achieve strategic goals and discover opportunities.
“I believe AI will have a role to play in helping buyers better manage their programs,” says Johnson. For example, he says, CWT has recently introduced advanced AI capabilities into its analytics data and reporting solution, allowing users to search for information using natural language, as well as providing insights around any changes – whether expected or unexpected – in their key performance indicators.
With all the talk around rates and technology, says Carver, “traveler experience is more critical than ever for hotels.” Building and maintaining loyalty is key, she says, and this goes beyond offering the right price or amenities. “It is about creating seamless experiences that make it easy for travelers to be productive while enjoying their stay.”
Hotel brands and individual properties that understand their travelers’ preferences, recognize the complexities of the corporate travel landscape and take a data-driven approach, can develop targeted strategies to gain market share, Carver says. “A strategic approach to traveler experience not only drives current business but builds the kind of loyalty that can provide stability through future market fluctuations.”
