Premium brands bleisure

Leisure and business travel have both bounced back strongly post-pandemic, with the emphasis on higher quality experience. But it’s the intermediate, hybrid form of travel that is really taking off: bleisure. It’s an inelegant name for an increasingly popular way to integrate work and private life. This sort of blended travel usually comes in two forms: business travellers extending their work trip at either or both ends to combine it with holiday time; sometimes family or friends accompanying the business traveller.

The bleisure market is expected to reach USD732 billion in 2034 compared with USD315 billion in 2022.Societe Generale report on corporate travel, March 2024 via S Escarrer It’s a market dominated by North American travel, which accounted for 31 per cent of the global total in 2022, but demand is also substantial elsewhere.

According to a poll by the Global Business Travel Association conducted in 2022, some 41 per cent of business travel managers reported that their employees wanted more blended travel opportunities. And the American Hotel & Lodging Association reports that 76 per cent of business travellers have already combined leisure to their trips, with 89 per cent hoping to add leisure to their next business trip. On the flip side, work from home is being stretched to work from holiday.

The industry shift towards bleisure overlaps with another tourism trend: the shift towards premium services and accommodation. Two years after economies re-opened, international travel is expected to finally exceed pre-pandemic levels, according to the UN World Tourism Organisation.  But hotel occupancy is still falling short in Europe – even as revenue per available room has been growing by 6 per cent, according to SG Research.

One reason is that hoteliers aren’t primarily aiming at maximum occupancy. They’ve been able to increase prices by raising the standards of their rooms, such as shifting from four to five stars, to appeal to the higher end traveller. In part, that's because there’s been a squeeze on supply, for which there are a number of root causes. 

First, the Covid pandemic put many hotel construction projects on ice, so there’s a dearth of new rooms. And to appeal to cross-over travellers, they’ve been adding the best of business facilities into resorts and vice versa. 

Second, labour markets are tight, making it hard for hotels to hire enough staff – instead of raising wages further, some hotels have accepted lower occupancy rates, maximising customer experience but at the price of higher rates. With inflation still running hotter than central bank targets, this shift by hoteliers allows them to lower their operating costs. Furthermore, hotels are learning lessons from the airline industry by adopting variable pricing models to maximise revenue and yield.

And finally, city governments have been cracking down on short-term rentals like AirBnB, further restricting room availability. Governments across Europe are limiting the number of days properties can be rented out on short-term lets and by imposing restrictive licencing measures. 

As a result, people have been moving from private rentals to hotels – booking intentions for the latter have risen from 48 to 51 per cent between 2021 to 2023, while falling from 30 to 22 per cent for private rentals over the same period.Deloitte, February 2024 via S Escarrer

Business travellers have tended to demand higher standards of services and facilities. Leisure travellers are seeking the same, prompted, in part, by the trend towards bleisure.

As the work-life balance becomes increasingly muddied, work from holiday and holiday around work could well become as much the norm as work from home. That is likely to push up demand for longer hotel stays and higher end services, not least quality accommodation – and hoteliers are responding.