Hotels Embrace Blue-Collar Workers to Prop Up Sagging Business Travel

Leisure travel has been thriving since Covid-19 pandemic restrictions eased. Pent-up demand exploded over the past two years and lifted resort rates to a record-high average daily rate of $275.58 in 2022, according to hotel data-and-analytics firm STR. Business travel, however, continues to lag behind activity seen in 2019, initially because of infection concerns and more recently amid layoffs and a looming recession. 

But the gap is closing. In the third quarter this past year, business travel reached 71% of prepandemic levels, according to data from American Express Global Business Travel. That is up from 35% during the same quarter in 2021. 

Small and medium-size businesses are driving the recovery. Transactions by this segment reached 80% of prepandemic levels in the third quarter, according to Amex GBT. Travel by global and multinational firms, by contrast, is back to only 61% of prepandemic levels.

“There’s a pretty healthy gap,” said Evan Konwiser, chief marketing and strategy officer for Amex GBT. “That’s been pretty consistent really since the early days of the recovery.” 

Individual business travel and small internal meetings by companies bringing remote workers together represent the fastest-growing forms of business travel coming out of the pandemic, according to Amex GBT. Hotels are upgrading their food and beverage offerings and adding or expanding on-premise workspaces as they compete to host these small meetings, Mr. Konwiser said.

Travel from blue-collar crews and small businesses has especially boosted demand for hotels in smaller cities across the U.S., lodging executives said. Those kinds of guests can range from sales teams looking to get face time with regional customers to specialized construction crews getting put up near a job site that would otherwise be too far to commute to each day. Those travelers tend to favor extended-stay hotels that cater to those visiting for at least a week and other hotels that offer lower- and mid-priced rates. 

An influx of federal spending, including the $1 trillion infrastructure bill signed into law in 2021, and this past year’s $280 billion funding allocation by Congress for U.S. semiconductor production will help boost workforce business travel for years. 

“This surge is real,” said

Choice Hotels International Inc.’s

Chief Executive

Pat Pacious.

“Middle class, small business, construction, logistics—those industry verticals—that’s going to continue to expand.”

Choice Hotels’ sales team that focuses on securing workforce travel contracts has seen a 52% jump in the number of accounts it is servicing since 2019, Mr. Pacious said. 

About two-thirds of

Hilton Worldwide Holdings Inc.’s

business guests drove to their hotels rather than flying in the past year, Chief Executive

Chris Nassetta

said. That marks a reversal from prepandemic travel patterns and is a sign that bigger companies were slower to resume travel while small and medium-size businesses are hitting the road more often.

Hoteliers are looking to retain and boost bookings by these guests through a variety of measures that appeal more to blue-collar workers, executives for several major hotel chains said.

Ryan Bushby, 41 years old, noticed these sorts of changes at the Best Western in Milpitas, Calif., where he has been staying most weeknights while working at a construction site in the Bay Area.

The hotel bar, previously stocked with IPAs and craft beers, now serves Coors Light on tap. The kitchen has changed its hours to accommodate guests who work the night shift. 

“From the way this hotel really puts everything together, you can tell, they honestly cater to us, skilled labor or craft-type people,” said Mr. Bushby, from Ukiah, Calif., who stays at the hotel during the week while working for

Granite Construction Inc.

Hotels like the Best Western Plus Brookside Inn in Milpitas, Calif., are moving kitchen hours to accommodate shift workers and changing up offerings at the bar amid a boom in blue-collar business travel.

BWH Hotel Group, parent company of Best Western, is focused on expanding its major workforce travel accounts and retaining the bump in demand it got from traveling medical personnel during the pandemic, Chief Executive Larry Cuculic said. 

About 10 years ago, BWH established a sales team dedicated to strengthening relationships with companies that often need worker housing, from utility providers to railroad companies and trucking firms, Mr. Cuculic said. When there is a natural disaster or emergency, BWH’s sales team gets in touch with companies that might be responding by sending workers, he said.

Spending from three major accounts in the company’s workforce-travel segment grew 15% the past year from 2021, he said. 

Choice Hotels started buying and building brands that cater to skilled workers five years ago. In 2018, the company acquired the WoodSpring Suites brand, a move that Mr. Pacious said was in response to growing demand for midscale business travel. 

The company also signed a 21-hotel development deal this past year to expand its Everhome Suites brand, which was launched in 2020 to cater to the midscale business traveler, he said.

Write to Will Feuer at [email protected] and Kate King at [email protected]

Leisure travel has been thriving since Covid-19 pandemic restrictions eased. Pent-up demand exploded over the past two years and lifted resort rates to a record-high average daily rate of $275.58 in 2022, according to hotel data-and-analytics firm STR. Business travel, however, continues to lag behind activity seen in 2019, initially because of infection concerns and more recently amid layoffs and a looming recession. 

But the gap is closing. In the third quarter this past year, business travel reached 71% of prepandemic levels, according to data from American Express Global Business Travel. That is up from 35% during the same quarter in 2021. 

Small and medium-size businesses are driving the recovery. Transactions by this segment reached 80% of prepandemic levels in the third quarter, according to Amex GBT. Travel by global and multinational firms, by contrast, is back to only 61% of prepandemic levels.

“There’s a pretty healthy gap,” said Evan Konwiser, chief marketing and strategy officer for Amex GBT. “That’s been pretty consistent really since the early days of the recovery.” 

Individual business travel and small internal meetings by companies bringing remote workers together represent the fastest-growing forms of business travel coming out of the pandemic, according to Amex GBT. Hotels are upgrading their food and beverage offerings and adding or expanding on-premise workspaces as they compete to host these small meetings, Mr. Konwiser said.

Travel from blue-collar crews and small businesses has especially boosted demand for hotels in smaller cities across the U.S., lodging executives said. Those kinds of guests can range from sales teams looking to get face time with regional customers to specialized construction crews getting put up near a job site that would otherwise be too far to commute to each day. Those travelers tend to favor extended-stay hotels that cater to those visiting for at least a week and other hotels that offer lower- and mid-priced rates. 

An influx of federal spending, including the $1 trillion infrastructure bill signed into law in 2021, and this past year’s $280 billion funding allocation by Congress for U.S. semiconductor production will help boost workforce business travel for years. 

“This surge is real,” said

Choice Hotels International Inc.’s

Chief Executive

Pat Pacious.

“Middle class, small business, construction, logistics—those industry verticals—that’s going to continue to expand.”

Choice Hotels’ sales team that focuses on securing workforce travel contracts has seen a 52% jump in the number of accounts it is servicing since 2019, Mr. Pacious said. 

About two-thirds of

Hilton Worldwide Holdings Inc.’s

business guests drove to their hotels rather than flying in the past year, Chief Executive

Chris Nassetta

said. That marks a reversal from prepandemic travel patterns and is a sign that bigger companies were slower to resume travel while small and medium-size businesses are hitting the road more often.

Hoteliers are looking to retain and boost bookings by these guests through a variety of measures that appeal more to blue-collar workers, executives for several major hotel chains said.

Ryan Bushby, 41 years old, noticed these sorts of changes at the Best Western in Milpitas, Calif., where he has been staying most weeknights while working at a construction site in the Bay Area.

The hotel bar, previously stocked with IPAs and craft beers, now serves Coors Light on tap. The kitchen has changed its hours to accommodate guests who work the night shift. 

“From the way this hotel really puts everything together, you can tell, they honestly cater to us, skilled labor or craft-type people,” said Mr. Bushby, from Ukiah, Calif., who stays at the hotel during the week while working for

Granite Construction Inc.

Hotels like the Best Western Plus Brookside Inn in Milpitas, Calif., are moving kitchen hours to accommodate shift workers and changing up offerings at the bar amid a boom in blue-collar business travel.

BWH Hotel Group, parent company of Best Western, is focused on expanding its major workforce travel accounts and retaining the bump in demand it got from traveling medical personnel during the pandemic, Chief Executive Larry Cuculic said. 

About 10 years ago, BWH established a sales team dedicated to strengthening relationships with companies that often need worker housing, from utility providers to railroad companies and trucking firms, Mr. Cuculic said. When there is a natural disaster or emergency, BWH’s sales team gets in touch with companies that might be responding by sending workers, he said.

Spending from three major accounts in the company’s workforce-travel segment grew 15% the past year from 2021, he said. 

Choice Hotels started buying and building brands that cater to skilled workers five years ago. In 2018, the company acquired the WoodSpring Suites brand, a move that Mr. Pacious said was in response to growing demand for midscale business travel. 

The company also signed a 21-hotel development deal this past year to expand its Everhome Suites brand, which was launched in 2020 to cater to the midscale business traveler, he said.

Write to Will Feuer at [email protected] and Kate King at [email protected]