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Skift Take
The U.S. business travel recovery has been uneven. New York City? Thriving. San Francisco? Not so much. But the hotel manager giant Highgate sees signs for optimism.
Highgate manages over 560 hotels with about 86,000 rooms, claiming to be the second-largest U.S. hotel management company after Marriott.
Most of the manager’s 86,000 rooms are select-service roadside and full-service urban properties. So Highgate can serve as something of a proxy for how the recovery in business travel is progressing, mirroring what its close rivals Marriott, Aimbridge Hospitality, and MCR Hotels are seeing.
Highgate also runs luxury properties: It bought lifestyle brand Viceroy Hotels & Resorts in late 2022, and expanded into Europe last year by acquiring a leisure portfolio of almost 3,000 rooms in Portugal.
Skift got an update on Highgate’s performance from Ankur Randev, chief commercial officer.
New York City Strength
Highgate says it’s the largest hotel operator in New York City, with about 35 hotels. Randev says the city’s business travel demand is in good shape.
“We see some gap in the volume, but it’s 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 Weakness
San Francisco hotels are underperforming due to perceptions of a lack of safety, many workers in the tech industry only partly returning to offices, and convention losses to Las Vegas. But Randev said some of the “ground-level realities” that had been discouraging visitation to San Francisco are “improving on a daily basis.”
Hawaii’s Mixed Signals
Highgate has 19 hotels in Hawaii.
“The market has been impacted by the slow return of Japanese travelers, who historically made up about half of international visitors, because of the weakness of the yen to the dollar,” Randev said.
However, North American travelers have largely made up for the lack of Asian visitors in Hawaii.
Adjusting Sales Tactics
Highgate has recently been emphasizing account servicing and negotiations at the local level rather than talking at the regional level.
“We’ve realized that locally negotiated is key,” Randev said. If a company has a lot of its employees visiting a market, we definitely want to have one of our people talking to their local travel manager at all times.
“We continue to get business from the big spending corporates naturally through usual channels like travel management companies. But for all the other players, which make up a majority of business travel by company count, we’ve created a robust playbook on backyard, or local, servicing of accounts that’s really helped in conversion and penetration.”
Targeting “Lifetime Value”
Corporate travel budgets face a post-pandemic reckoning. With attendance at in-person events surging, companies must balance cost control and employee demand.
Highgate has been trying to court accounts with potentially the largest lifetime value rather than producing a series of one-off sales that may be quick wins.
Randev said the old strategy of simply negotiating lower hotel rates is outdated. Instead, firms will likely enforce stricter compliance policies to rein in spending. Highgate has been adjusting its sales tactics to respond to these shifting trends.
Corporate Interest in Sustainability
Travel managers at high-value corporate clients are increasingly interested in hunting for the lowest rates and volume discounts to ensure that employees comply with their policies.
Increased efforts to comply with sustainability targets have meant travel managers want data on the impact of carbon emissions that may be emitted from stays at particular hotels. Highgate’s vice president of sustainability works to ensure that the hotel manager can provide the necessary data so that its clients can stay in compliance with their carbon reduction goals, Randev said.
Optimism for 2025
Randev expressed confidence in Highgate’s ability to navigate potential market softening or recession due to its revenue management capabilities and commercial strategies.
The company has invested heavily in technology and in standardizing best practices across its portfolio since 2021, when Highgate appointed Arash Azarbarzin as CEO.
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
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