Property Perspectives

Two core demand drivers for hotel real estate.

Familiarize yourself with what we believe are the main hotel demand drivers and how they can affect performance to better understand hotel real estate.

by Office of the CIO

People demand and book hotel rooms for a variety of reasons that require them to be away from home. Generally, there are two core demand drivers for hotel bookings: leisure and business travel.

  • Leisure travel is for pleasure or during one’s free time to enjoy other places, surroundings, events, or cultures. Demand for leisure travel is generally seasonal.

For instance, hotels near a ski resort will typically attract more guests during ski season and winter months, while hotels near beaches tend to attract more guests during summer months. Similarly, tourist attractions such as theme parks (Disneyland, Universal Studios, etc.) or national parks (Yosemite, Yellowstone, etc.) have their own demand trends. 

Leisure hotels can offer different amenities based on this seasonality. For example, seasonal promotions or packages, seasonal menus in restaurants, indoor or outdoor entertainment according to the weather, or festive decor. 

Understanding seasonality may help hotel operators cater their services and rates during peak seasons to potentially optimize their revenue. 

Fun fact: Florida and New York are two of the most visited states in America.1

  • Business travel typically includes traveling to another city for business meetings, conferences, relationship building/networking, site visits, and such.

Hotels that target business clientele may strive to position their services to accommodate on-site meetings with conference rooms and event spaces, and other in-room amenities such as spacious work areas, comfortable desk chairs, high speed internet, etc.

Hotels that are located adjacent to or near convention centers, corporate campuses, and business parks can potentially benefit from their proximity by attracting business travelers who seek convenience and walkability. 

Fun Fact: Hotel operators typically rely on repeat business for their success, therefore hotels will often use loyalty programs to help retain business travelers as a consistent customer base.

Did you know? A new term has surfaced in the hotel industry: “bleisure”.2

If you haven’t already guessed, the word bleisure is a combination of the terms “business” and “leisure”. Some industry professionals aren’t fans of the term, instead suggesting  words like “bizcation,” “blended trip,” and “mullet trip”2 – the funniest term we’ve heard! 

The concept behind bleisure is professionals who are traveling for business commitments in a particular locale choose to extend their stay or arrive a bit earlier to explore the destination and enjoy leisure activities. 

Due to remote work trends following the COVID-19 pandemic, many people now have  greater flexibility with work travel, creating an upsurge in bleisure travel. It may be worth keeping an eye on this trend within the next few years to observe how business and leisure travel demand may evolve and ultimately how that will potentially affect hotel real estate.

Keep in mind that the overall economic health of a market can play a significant role in hotel real estate demand and people’s willingness to spend money on hotel bookings. Generally speaking, during periods of economic prosperity, people are usually more likely to travel for leisure or business, which can help push up occupancy rates and therefore potentially increase demand for hotel properties, while the opposite can happen during periods of economic uncertainty.

Want to learn more? Read more about the four types of hotel real estate.


1 “Most visited states by adults in the United States”, Statista, September 2022.
2 “We Need a New Word for 'Bleisure'”, Hotel News Now, CoStar, September 2022.

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