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Business travel continues to recover in San Antonio

Business conferences and meetings have continued a steady return to San Antonio, but rosy expectations for the fall have been dampened by the delta variant of the coronavirus and by corporations’ growing comfort with Zoom meetings.

Though eclipsed by the vast crowds of vacationing tourists, business conventions bring throngs of high-rolling spenders that help tide the travel industry over when leisure travel ebbs during weekdays and through the long school season. The incremental return of large-scale business gatherings, after nearly vanishing last year at the onset of the pandemic, has been welcome relief to battered downtown hotels and restaurants.

Last week a small but symbolically significant gathering took place at The St. Anthony luxury hotel downtown. Southwest Airlines Vice President David Harvey, in charge of the airline’s business travel division, met with 40 corporate clients who help book and manage business travel. The choice of venue was intentional, as the airline’s origin story holds that it was conceived half a century ago at the hotel’s bar.

Seated outside that bar, Harvey gave a 30,000-foot view of business travel from the perspective of bookings at Southwest Airlines, the leading carrier in San Antonio.

Business travel began to climb slowly in March, Harvey said, continuing its gradual ascent until late July, when COVID-19 cases spiked amid the delta variant. Business travel didn’t stop, he said, but it flatlined for a bit. Now it’s rising again, he said.

“It’s nothing like the business [flight] renaissance that people were predicting before the fourth wave, but we are starting to see some positive momentum, some positive green shoots, in the last few weeks,” Harvey said. But COVID-19 is still a wild card, prompting some companies to take a wait-and-see approach for the fall.

Revenue from managed business bookings was 64% lower in August compared to August 2019, according to Southwest’s recent stock filing.

Another measure of business travel more specific to San Antonio comes from event bookings at the Henry B. González Convention Center, which hosts many of these gatherings alongside other venues like JW Marriot San Antonio Hill Country Resort & Spa and La Cantera Resort & Spa. The convention center has hosted 68 events this year, said Patricia Muzquiz Cantor, director of the city’s Convention & Sports Facilities Department.

The Texas High School Coaches Association in July welcomed a record attendance of more than 14,000, delivering an estimated $101 million in economic impact, Visit San Antonio reported at the time.

With 41 events still booked for the rest of the year at the convention center, the year’s total will come out lower than the pre-pandemic annual average of 300 reported by Cantor, but it’s vastly more than last year — and new bookings continue to be made.

That’s not to say there aren’t warning signs that could threaten the recovery.

Over this past weekend, the Cystic Fibrosis Foundation was slated to bring nearly 5,000 attendees to San Antonio, with hotel reservations and restaurant bookings, among other spending, that were expected to inject an estimated $5.3 million into the city, according to Visit San Antonio’s projections . But it didn’t happen.

The foundation’s website cited rising cases of COVID-19 for the cancellation of the in-person conference and its replacement with an all-virtual meeting.

Four other conventions recently canceled their bookings at the convention center, Cantor confirmed, making a total of 193 cancellations since the beginning of the pandemic. Most of those occurred last year.

Another warning sign for the travel industry is that attendance at these conventions is not always living up to the volumes promised by registration numbers.

Robert Thrailkill, general manager of the Hotel Palacio del Rio and vice president of operations for Zachry Hospitality, said he has experienced that shortfall in hotel room reservations for large events, although small events are going as expected.

“For now, it looks as though the fall will not be as robust as we hoped it would be this time,” he said.

The gap between 2019’s hotel performance and 2021’s narrowed over the summer, but in August, it grew wider. According to Smith Travel Research, August’s hotel occupancy rate — when about 6 out of 10 hotel rooms were booked on average — was 9.8 percentage points behind August 2019. Compare that to a month earlier, when July 2021 hotel occupancy was just 3.8 percentage points behind July 2019.

Rising coronavirus case numbers due to the delta variant have delayed the full return cautious of corporations to travel. Look no further than San Antonio’s own big corporate employers.

NuStar Energy told the San Antonio Report it allows only “essential business travel for vaccinated employees.” USAA said travel was reviewed on a “case-by-case basis.”

Frost Bank, after cutting all business travel at the beginning of the pandemic, allows travel only when “there is a clear business need and with supervisor approval,” a spokesman said. “A lot of in-person travel has been made unnecessary with the adoption of applications like Zoom or Teams that allow virtual communications.”

Growing comfort with Zoom and other telecommunication may cut the amount of business travel permanently. Bill Gates recently quipped that more than half of all business travel would vanish after the pandemic. More moderately, an analysis by the Wall Street Journal and industry veterans pegs the estimated cuts at 19% to 36% fewer trips.

Despite those predictions, many in San Antonio’s travel industry are cautiously optimistic about the future. To these observers, as the pandemic wanes — and accompanying supply chain problems lessen their pressure on corporate budgets — a pent-up demand for business travel could uncork just as leisure travel did over the summer, when some tourist attractions reported their best revenue ever.

And some would even remove “cautious” from that optimism.

“The worst is behind us,” said Bill Brendel, who took over as the new CEO of the San Antonio Visitor Alliance on Friday. “We’re going to chop these two years out of our history and get back on track.”

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