On Ryman Hospitality Properties' (NYSE: RHP) third-quarter 2020 call, CEO Colin Reed suggested demand for in-person events could get a tailwind from people's need for face-to-face connection in their professional lives. The logic seems to be that work from home (WFH) is isolating people to the point they'll gather professionally of their own volition.
But will this really happen? And what does this mean to real estate investors, especially those in the hospitality sector?
A dose of reality, courtesy of the HR department
Properties and locations that cater to group business travel hope to see bookings tick upward, driven by the human instinct for connection and the fact that office life doesn't provide it anymore.
This is a stretch in the short term for a few reasons. First, most companies with a corporate WFH policy strongly discourage, or have an outright ban, on business travel and events. It would be odd for the two policies to diverge, seeing how closely related they are.
Second, the scale of budget that corporations throw into corporate events is not available to individuals planning a group meetup. Third, even if everyone's most optimistic dreams come true and half the population is vaccinated by the third quarter of 2021, that still leaves the first half of the year under the cloud of a public health warning, especially for group gatherings. This will be replaced, not by an exuberant return to pre-pandemic levels of socialization, but to a psychology of uncertainty: everyone attempting to reacclimate at their own pace, while not really knowing or having the confidence to decide what "safe" is.
But gradually, people who spent the last year social distancing will certainly begin to seek normalcy again. Will they prioritize professional get-togethers the same way they do family and friends and church? This might depend on whether they view their coworkers in the same light as their friends and family. Many people do. They miss happy hours and the annual industry awards nights and the holiday 5Ks as much as they miss family reunions and monthly dinners with their in-laws.
Humans driving the return to work
But will people miss their peers so much that they push their managers to reinstate corporate trainings and quarterly presentations? This, perhaps not so much. Video conferencing has proven a popular substitute for those long, dreary days of uncomfortable conference room chairs and eight hours straight of PowerPoint presentations punctuated by coffee breaks.
But as far as events with a distinct social and celebratory component -- yes, those will come back, and it's reasonable to think that people who haven't seen colleagues except on a screen for nine months will be extra-eager to catch up in person. Most people decided after the first attempt at taking large conferences and trade shows "virtual" that the energy and experience just wasn't the same. And there's no doubt that if the event has an incentive/rewards component, it absolutely has to be a real-life experience.
How can hospitality businesses help this along?
At the moment, people's willingness to gather seems mostly hinged on one thing: Is the space airy/open enough to permit airflow and allow people to keep a "safe" distance from each other?
Of all the things venue operators have done to rearrange space post-pandemic, the most successful seems to be moving things outdoors -- or if weather/space doesn't permit, creating some sort of indoor-outdoor experience. This could be achieved through pop-up awnings and heated terraces, expanding usable space out to the sidewalk or the lawn, or setting up fans and placing screens strategically throughout a room.
Just as we're seeing holiday events fill up with people who consider those measures enough, venues might see WFH professionals who decide "I've had it with the Zoom (NASDAQ: ZM) happy hours."
The bottom line
Large-scale events are not being calendared until late summer or third quarter of 2021, but even the most careful companies are starting to consider small gatherings for early in the year. Team managers are signing off their year-end conference calls not with "Happy holidays, and see you back here in 10 days," but with "Hopefully soon we'll be able to toast getting through 2020 in person." This probably does bode well for a hospitality industry that's been prepping for months to accommodate all those long-delayed gatherings.