Business travel should return to 70% to 75% of 2019 levels by the end of the year, according to Hilton’s chief financial officer. That’s somewhat in contrast to recent comments by Airbnb Chief Executive Officer Brian Chesky, who said future business travel will look different than it has in the past, with a higher bar to get on the road for work.
“We’re not huge believers in a new normal,” Hilton’s Kevin Jacobs, who is also president of global development, told Yahoo Finance Live in an interview. He said business travel is currently running at half of 2019 levels, with a build to the end of 2021 and beyond. “It’s been a leisure-led recovery so far, but business will be a fast follow.”
Hilton expects its business broadly to gain momentum in the second half of the year. The hotelier earlier this month reported first-quarter earnings that missed estimates, with particular weakness in a key metric, revenue per available room.
In geographic areas where reopening was further along in the first quarter, there was a commensurate boost to business travel, Hilton CEO Christopher Nassetta said on the company’s earnings call.
Chesky of Airbnb told Yahoo Finance he thinks the nature of business travel will change: “I think you’re going to have this huge hub-and-spoke where people are going to be more selective about the trips they make for business, but when they make trips, they’re going to make them longer. And I think longer stays would benefit Airbnb.”
“Brian is a smart guy, he has built a nice business. I guess we’ll see who ends up being right,” said Jacobs.
That said, Jacobs does think there will be some adaptations to how businesses think about travel. While “lower-value” trips might be eliminated in favor of video conferences, “every one of those trips, if not more, will be replaced with higher value — maybe you spend more time prospecting for new business. There’s no substitute for real human interaction, people getting together, collaborating, driving their business forward.”
Recent forecasts for “nonresidential fixed investment” — i.e. capital expenditures — have been encouraging, and are an indication that business spending, including for travel, will pick up, said Jacobs.
Hilton shares have risen almost 13% this year, compared with 9% for Marriott and 5% for Hyatt. Airbnb, meanwhile, closed Friday at $140.40 a share, up sharply from its December IPO price of $68 but below the closing price of $144.71 on its first day of trading on Dec. 10, 2020.
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9am-11am ET.