The long-awaited return of corporate travel is starting to show signs of picking up in the U.S.
Corporate booking volume reached the highest level since the beginning of the pandemic at -17.5% for the week ending September 11 vs. the comparable period in 2019, per data from Bank of America. Corporate bookings had been running at around a -25% pace vs. the pre-pandemic period since April.
BofA analyst Andrew Didora noted that in the past week Delta (NYSE:DAL) cited a surge in business bookings after Labor Day, while Southwest (LUV) said September managed corporate travel would be 8% to 10% points better than August. The firm has also noted that the business travel recovery is happening in real time with mid-week hotel occupancy now higher than weekend occupancy for the first time in the pandemic.
The firm thinks the post-Labor Day booking trend is encouraging and could help support Q4 guidance across the sector. BofA expects further sequential revenue improvement of 100 basis points to 200 basis points across its U.S. airline coverage.
“We think the demand trends are driven by the uptick in corporate bookings as well as continued leisure demand even in the off peak. Bookings through OTA channels (our proxy for leisure travel) were back in line with pre-pandemic levels after tracking at 85-90% recovered over the summer.”
The bounce in corporate bookings coincides with domestic bookings holding up so far in the off-peak season and international trends called steady at 95% recovered from the pre-pandemic level.
The read on corporate airline bookings also sets up well for Marriott International (MAR), Hilton Worldwide (HLT), and Hyatt Hotels (H)
Airline stocks showed slight losses in the premarket session on Monday in line with the broad market as the S&P 500 broke through a key support level.
On Watch: American Airlines (AAL), Delta Airlines (DAL), Southwest Airlines (LUV), United Airlines (UAL), JetBlue (JBLU), Hawaiian Holdings (HA), Alaska Air Group (ALK), Allegiant Travel (ALGT), Spirit Airlines (SAVE), Mesa Airlines (MESA), SkyWest (SKYW), Sun Country Airlines (SNCY), and Frontier Group (ULCC).