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Bay Watch: State of Bay Area Business Travel

As some cities experience a resurgence in business travel, reaching or exceeding pre-pandemic levels of hotel occupancy, conventions, and air travel, San Francisco and San Jose continue to struggle. This week the Bay Area Council Economic Institute investigate what’s going on with business travel in the region, and whether a glimmer of hope or continued uncertainty looms on the horizon.

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Watch CBS News

Bay Area business travel industry tries to revive after COVID collapse

By Kenny Choi

May 5, 2022 / 7:58 PM PDT / CBS San Francisco

SAN FRANCISCO (KPIX 5) -- There's a push to reignite travel and tourism to the Bay Area after two years of COVID decimating businesses and impacting the industry.

There are already plenty of signs leisurely travel will meet or even surpass pre-pandemic numbers this year. But it's business travel and the hotel industry that are still taking a major hit.

"I work right across from a hotel and very rarely do you see people going in and out of the hotels and you wonder oh they're still in business?" said Annie, who works in downtown San Francisco.

From bellhops, to doormen, to retail shops near hotels, they desperately need more guests packing rooms, to survive and thrive.

Sales have slowly picked up for Gong Cha tea shop on O'Farrell just across the street from Hotel Nikko San Francisco.

James Hatley is trying to see the cup half full instead of empty.

"I've been contacting concierges and talking to them let them know that we're still open," said Hatley.

Revenue is down about 50% despite online and delivery services. Sparse foot traffic, signs of shuttered shops, and an uncertain lease, remain their biggest threat.

"There have been a lot of closures of the retail stores on Powell street so that has definitely affected us," said Hatley.

A new report by the American Hotel and Lodging Association shows Hotels in San Francisco are on pace to see the sharpest decline in business travel revenue of all major U.S. cities, a drop of nearly 70% or nearly $1.7 billion in revenue.

"The majority of the hotels are here in the downtown core so we wanna make sure the downtown core is treated just like any other neighborhood in the city and start filling them," said San Francisco Chamber of Commerce President Rodney Fong.

"You're not seeing many commuters, not seeing a huge convention where you see a huge bunch of people and you wonder why are these people in town? I wonder what convention is here?" said Atina Burtos, who also works in downtown San Francisco.

When travelers spend $100 at a hotel, they spend more than twice that amount in the local community, directly translating to more jobs according to the association.

"Leisure travel this summer maybe the biggest on record this year but the business travel is still down significantly so we're encouraging businesses to come back into the office. Let's get those face-to-face meetings going again and fill the convention center," said Chip Rogers of the American Hotel and Lodging Association.

Experts say business travel, including government and corporate trips, is the hotel industry's largest source of revenue and will take much longer to recover.

For retailers like James, they're still waiting but keenly aware, time is ticking before making a decision to keep pouring, or close up shop.

"I'm not holding my breath right now but hopefully things get better," said Hatley.  

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The rising dark side of business travel ceos need to pay attention to.

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It's time for companies to rethink their approach to business travel.

The business landscape has rapidly changed since the pandemic, with remote work and hybrid models becoming more prominent. Despite these workforce shifts, one aspect remains constant: business travel.

Business travel is back in full force following an expected dip during the pandemic. Corporate travel budgets are returning to pre-pandemic levels, and more companies are planning budget expansions. A Morgan Stanley survey revealed that over two-thirds of companies with under $1 billion in annual revenue anticipated increased travel budgets in the coming year.

The Impact of Frequently Flying

Frequent travel can significantly impact an individual's physical, emotional, and mental well-being . While companies prioritize conventional risk management areas, they often overlook the personal well-being of their travelers. From maintaining a healthy diet to proper sleep and various emotional components such as loneliness and separation, business travelers encounter numerous potential long-term health disruptions that non-traveling employees don't face.

Business travelers had higher claims than non-travelers for all health conditions across the board, along with a higher likelihood of stress-related disorders, as reported in the Harvard Business Review . Lastly, as shared in the Journal of Occupational and Environmental Medicine , frequent business travel adversely affects overall body composition, leading to risks of obesity and various other ailments if left unmanaged, such as heart disease and diabetes.

More and more companies are prioritizing workplace wellness due to factors such as obesity's $400 billion impact on companies . Corporate travel wellness programs are a necessary part of the equation as well. As you look to implement a modern and more robust travel wellness program, start with these two areas:

Google Issues Critical Chrome Update For All Windows Users

New ios 18 ai security move changes the game for all iphone users, world war i tactics make a comeback as a ukrainian gunner in the back of a propeller plane shoots down a russian drone, embrace bleisure travel.

When attracting and retaining the best people, more and more employees choose lifestyle over salary . It's not out of laziness. It's out of a desire for work-life integration. With this in mind, organizations can embrace employees' desires through bleisure . Organizations can promote work-life integration and rejuvenation by allowing employees to combine business trips with leisure activities.

Implementing flexible travel policies that enable team members to extend their trips on the back end is a way to improve employee satisfaction, productivity, and retention rates. Research shows that 89% of business travelers wanted to add a private holiday to their business trips. Traveling for work is energetically demanding, physically and mentally. A few extra days for leisure allow team members to process their trip, recharge, and return at total capacity.

Treat Your Employees Like Athletes

Just as professional athletes require careful management of their physical, emotional, and mental well-being , so do business travelers. Business travel is a stressor with a high burnout rate and decreased performance across the board. As you revamp your corporate wellness travel program, consider your approach to business travel as a sports team thinks of traveling to play an away game.

As you prepare the company playbook for healthier and more productive business traveling, consider the following:

• Providing support for handling jet lag
• Offering advice on maintaining healthy sleep and nutritional habits away from home
• Investing in business class and non-stop flights
• Providing hotels that have conducive amenities for optimal well-being
• Ensuring team members reside in centrally located hotels or apartment hotels

Business travel isn't going anywhere anytime soon, as the average business traveler takes roughly 6.8 trips per year, with business travel in the U.S. from domestic and international travelers also accounting for $387 billion in annual revenue, according to research shared over at Zippia . Incorporating travel wellness initiatives isn't merely an expense; it's an investment in employees' health and performance.

As organizations revamp their corporate travel programs, prioritizing their travelers' well-being is paramount. By implementing strategies to support travel wellness, companies can ensure that their employees remain healthy, engaged, and effective representatives of their companies.

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