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The recovery in US business travel is uneven. New York City? is thriving. San Francisco? not so much. But hotel giant Highgate sees signs of optimism.
Sean O’Neill
Highgate manages over 560 hotels with approximately 86,000 rooms and claims to be the second largest U.S. hotel management company after Marriott.
Most of the manager’s 86,000 rooms are select-service roadside hotels and full-service city hotels, so Highgate can serve as something of an indicator of how the business travel recovery is shaping up, mirroring the performance of its close competitors Marriott, Aimbridge Hospitality and MCR Hotels.
Highgate also operates luxury properties: in late 2022 it bought the lifestyle brand Viceroy Hotels & Resorts and last year expanded into Europe by acquiring a leisure portfolio of nearly 3,000 rooms in Portugal.
Skift received an update on Highgate’s performance from Ankur Randev, Chief Commercial Officer.
The strength of New York City
Highgate says it is the largest hotel operator in New York City with around 35 hotels. Randev says demand for business travel in the city is good.
“We see some gap in volume, but it is already at 95% of 2019 levels,” Randev said. “We expect a full recovery next year, if not by the end of this year.”
San Francisco’s weakness
San Francisco hotels are faring poorly due to a lack of security, the only partial return of many tech workers to their offices and the loss of conventions in Las Vegas. But Randev said some of the “fundamentals” that deterred visitors to San Francisco are “improving daily.”
Hawaii’s mixed signals
Highgate has 19 hotels in Hawaii.
“The market has been impacted by the slow return of Japanese travelers, who historically accounted for about half of international visitors, due to the weakness of the yen against the dollar,” Randev said.
However, North American travelers have largely made up for the lack of Asian visitors to Hawaii.
Adapt sales tactics
Highgate has recently placed an emphasis on local accounting and negotiation rather than regional discussions.
“We realized that on-the-ground negotiations are key,” Randev said. When many employees of a company visit a market, we definitely want one of our employees to always speak to the local travel manager.
“We continue to get business from the large companies who of course spend through the usual channels like travel management companies. But for all the other players who make up the majority of business travel by company number, we’ve built a robust playbook for servicing local customers that has really helped with conversion and penetration.”
“Lifetime Value” in focus
Corporate travel budgets face a reckoning post-pandemic. As attendance at in-person events soars, companies must balance cost control with employee demand.
Highgate has sought to acquire the accounts with the greatest potential lifetime value rather than making a series of one-off sales that might provide quick wins.
Randev said the old strategy of simply negotiating lower hotel rates is outdated. Instead, companies will likely enforce stricter compliance policies to rein in spending. Highgate has adapted its sales tactics to respond to these changing trends.
Corporate interest in sustainability
Travel managers at major corporate accounts are increasingly interested in finding the best fares and volume discounts to ensure employees comply with their policies.
Increased efforts to meet sustainability goals have led travel managers to want data on the carbon emissions impact that can be generated by stays at certain hotels. Highgate’s vice president of sustainability is working to ensure the hotel manager can provide the necessary data to help its clients meet their carbon reduction goals, Randev said.
Optimism for 2025
Randev expressed confidence in Highgate’s ability to weather any potential market downturn or recession thanks to its revenue management skills and business strategies.
Since Highgate appointed Arash Azarbarzin as CEO in 2021, the company has invested heavily in technology and in standardizing best practices across its portfolio.
Development of the stock index for the accommodation sector since the beginning of the year
What do I see? The performance of stocks from the hotel and short-term rental sector in the ST200. The index includes companies publicly traded on global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations and timeshare.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies valued at over $1 trillion into a single number. Learn more about financial performance in the hotel and short-term rental sector.
Read the full methodology behind the Skift Travel 200.
