Hoteliers with accommodations in major U.S. convention markets are not seeing the usual fall demand pickup and are unlikely to keep up with pre-pandemic performance given ongoing travel restrictions and immunization requirements.
The hotel markets in cities like San Francisco, New York, and Chicago are facing major challenges due to vaccination and entry restrictions, as well as delays in returning international travel.
Warm weather cities where state COVID restrictions are relatively lenient, such as Orlando, are likely to perform relatively better this fall, as planners have the option to hold outdoor meetings.
Still, the number of fall conventions in traditional U.S. meeting destinations may decrease by 50 to 75% as many companies and associations have chosen to postpone annual events until 2022.
“We have literally five conventions from now to the end of the year and we won’t be picking up much more,” said Nicole Rogers, chief sales officer for the San Francisco Travel Association, last month. She estimates that the city’s Moscone Center hosts more than 30 events in the second half of a typical year. “We’re one of the few cities with a mandate to vaccinate gatherings of more than 1,000 people, so this definitely limits the number of people.”
The combination of travel restrictions, vaccination requirements, and caution from both private companies and associations continues to limit convention spending in Orlando, Chicago, New York, and San Francisco. Overall, North American conventions generated $ 381 billion in direct spending in 2017, according to a 2021 study by the Events Industry Council and Oxford Economics.
Because of this demand, investments in expansion and capital improvement projects in convention centers will now take longer to pay off.
The Moscone Center in San Francisco completed a four-year expansion project of $ 551 million in 2019, while New York’s Javits Convention Center completed a $ 1.5 billion project this spring that increased the Manhattan facility by 1.2 Expanded million square feet.
Not all convention destinations will experience the same pain.
New York and San Francisco markets were particularly hindered because direct flight routes from Europe and Asia were restricted, making these cities attractive to overseas convention planners, according to Jan Freitag, national director for hospitality market analytics at CoStar.
Earlier this month, the White House announced that vaccinated international travelers would be allowed to travel to the US from November 8th.
“I can envision a scenario where the first few waves (of international travelers) will be staying with friends and family and certainly not going to city-wide events as it takes years to plan,” Friday said. “The surge in international group travel, which is driving visitor numbers in large convention centers, will be a story in 2022.”
In comparison, Orlando continues to attract more domestic group travel. While the Florida government has effectively banned vaccination and mask mandates, Nadia Vanderhoof, marketing and communications manager at the Orange County Convention Center (OCCC) in Orlando, notes that the convention center was the first in the world to be reaccredited by the Global Biorisk Advisory Council (GBAC).
“The OCCC has hosted more than 100 personal live events since the beginning of the COVID-19 pandemic,” said Vanderhoof. “No other convention center has hosted so many events with a widespread GBAC recertification strategy.”
So far, early fall hotel room demand numbers have reflected the differences in travel recreation between US cities.
While Orlando hotel revenue per available room was 14% lower in September 2019, Chicago’s RevPAR was down 32% from two years earlier, and New York and San Francisco were down 48% and 63, respectively % STR, CoStar’s hospitality analytics firm.
According to Vanderhoof, 133 events with around 977,000 participants will take place in Orlando’s convention center, which before the pandemic took place every year 200 events with more than 1.5 million participants.
US Congress and tourism officials hope security protocols and pent-up demand will accelerate the business travel recovery.
Choose Chicago, the city’s sales and marketing division, and by early September estimated that the city’s hotel room inventory was 98% of its previous high. Elect Chicago spokeswoman Michelle Gonzalez said all employees, contractors, subcontractors and vendors of the Metropolitan Pier and the city’s Exhibitions Board must be vaccinated by the end of November.
Meanwhile, New York’s Javits Center, which hosted around 175 events a year before the pandemic, will host more than 40 events between the facility reopening in August and the end of the year, according to Tony Sclafani, New Yorker’s chief communications officer Javits Center.
“While some events have shrunk in size, demand is growing, especially given the high vaccination rates in New York State and the easing of international travel restrictions,” said Sclafani. “We assume that international business will increase in the near future, especially since New York City is one of the safest cities in the country with such a high vaccination rate among adults.”
For 2022, Freitag predicts that the demand for congresses will accelerate to the level before the pandemic due to the pent-up demand and a newly gained appreciation of personal events.
“Every year the clubs get a large part of their income from congresses, so they need these congresses to survive. They will do everything in their power to get conventions going, ”Friday said. “Zoom is efficient when you have a clear agenda and people already know each other, but it’s not efficient for team building, onboarding new people, or brainstorming.”
Still, Rogers of the San Francisco Travel Association was measured more by their optimism.
“Before the [COVID] Delta variant raising its ugly head, we started to see leads spiked and tourism returned. We look forward to almost all the tech firms here in California and the banks saying they’ll reopen their offices no later than January or February, and that’s a good sign for business travel, ”she said. “But every time we say it looks good, we bewitch ourselves, and I don’t want that.”
