Hospitality’s Uneven Recovery: The Leisure – Business Travel Split
March 3, 2026
Key Points
- Hospitality’s recovery is uneven, not universal.
- Leisure travel has become the industry’s stabilizer.
- There is optimism around the recovery of business travel in 2026.
We’re five years out from the pandemic, but CRE is still seeing the impact in the hospitality industry.
On the surface, hotel demand is back. Planes are full. Beaches are booked. Room rates in resort markets remain stubbornly high. But beneath the topline numbers is a growing divide that’s reshaping portfolios, brand strategies, and capital allocation decisions across hospitality.
The hospitality industry didn’t rebound evenly after the pandemic, it fractured.
Many properties designed around business travel and large conventions are still struggling to regain their footing. That divide is reshaping how hotel investments are evaluated, and which ones make sense going forward.
Leisure Demand Has Become the Stabilizer
From an investment perspective, leisure travel has emerged as the most dependable demand driver in hospitality.
People delayed vacations for years and then came back eager to spend on experiences. Beach towns, mountain destinations, and drive-to getaways saw demand rebound quickly. Guests stayed longer, paid higher nightly rates, and were less price-sensitive than expected. A 2025 Deloitte study found that 40% of travelers who said they planned to raise their holiday travel budgets did so because “travel has become more important to me since the pandemic.”
For investors, this matters because leisure-focused hotels produced steadier income. These properties are less dependent on corporate travel budgets or large group bookings and more tied to individual consumer demand.
In many cases, leisure travel now carries the financial performance of an entire hotel. Within this sector, luxury hotels are leading the industry’s recovery, positioned to outperform in the near term. At the 2025 Lodging Conference, it was reported that the resort, luxury and upper-upscale segments were the only three chain scales to see increases in gross operating profit for the first half of last year.
Business Travel Returned, But Differently
Business travel did come back, but not in the predictable way investors were used to.
Many companies reduced travel permanently. Hybrid work cut down on routine trips (and hybrid events reduced travel as well). Large conferences became harder to justify. While executive travel resumed, it didn’t return at the same volume or consistency.
Hotels that relied heavily on weekday business guests or large conventions felt this shift most sharply. Even in strong cities, some properties struggled to fill rooms midweek, creating uneven cash flow and more uncertainty. According to The New York Times, even in 2024, “most of the 175 convention centers across the country [operated] at a loss.” This has created “intense competition” among convention centers, which has interestingly led to a rise in convention-center projects. The winners in this race could see an influx of guests, but it’s a gamble.
Still, industry insiders are optimistic this year. According to the latest poll from the Global Business Travel Association, one-third of travel buyers (35%) expect the number of business trips taken at their company to increase in 2026. And PwC predicts that (RevPAR) – the sector’s primary performance benchmark, combining occupancy and average daily rate – is expected to rise 0.9% in 2026.
Location Still Matters, But Purpose Matters More
Where a hotel is located still plays a big role in performance, but why guests stay there matters just as much.
Hotels that clearly understand their audience have done better than those trying to appeal to everyone. Large operators like Marriott benefit from having many distinct brands, each designed for a specific type of traveler, from extended-stay guests to luxury vacationers.
For investors, that clarity reduces risk. A hotel that knows exactly who it serves can price more confidently, market more effectively, and weather changes in travel behavior more easily.
Hotels that can attract multiple types of guests, leisure on weekends, business travelers during the week, tend to feel safer. Those tied to a single type of traveler feel riskier than they did five years ago.
There’s also a new trend taking hold: “bleisure travel,” an opportunity for business travelers to combine work trips with pleasure. 83% of business travelers report that they’ve taken a bleisure trip in the past year.
Three Takeaways for Investors
What does this mean for investors? Here are three takeaways:
- Hotels with a clear identity are outperforming those without one.
- Hotels built around large conventions aren’t disappearing, but investors are more cautious. Some properties may need updates, repositioning, or even a new purpose altogether to stay competitive.
- Hotels that can pivot – capturing leisure on weekends and business midweek, or blending extended-stay with transient demand – offer downside protection.
Conclusion
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About Jack Mullen of Summer Street Advisors:
As Founder & Managing Director of Summer Street Advisors, Jack Mullen leverages decades of experience in valuation, underwriting, and risk management to lead multi-million and multi-billion dollar CRE transactions.
Previously with GE Capital and large institutional banks, he has shaped investment strategies for some of the industry’s largest deals. A recognized leader, his insights are featured in GlobeSt.com and CREFC Finance World, and he is a sought-after speaker at industry conferences and top universities.
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