Marriott CEO believes the worst is over

Marriott sign
Photo Credit: Andrea Delbo/Shutterstock

While Marriott International’s global revenue per available room (RevPAR) plummeted 90% in April, Marriott CEO Arne Sorenson said the company takes solace that “negative trends appear to have bottomed in most regions around the world.”

“Not just in terms of RevPAR, but also in terms of hotel closings, April seems to have defined the bottom,” said Sorenson during Marriott’s Q1 earnings call on Monday. “As we see demand crawl back as restrictions are released, the trend line is now toward more openings, not more closings.”

Worldwide, around 25% of Marriott’s hotels remain closed. In North America, 16% of hotels are shuttered while in Europe, more than two-thirds of Marriott’s properties are closed.

Sorenson highlighted several other bright spots, including improving trends in China, where domestic travel is driving a rebound. Marriott’s hotel occupancy in China is currently hovering at around 30% versus a low of less than 10% in mid-February.

“We have seen examples of demand starting to come back in other areas around the world,” added Sorenson, citing solid business on the books in some U.S. resort markets where beaches have recently reopened. He pointed to the Ritz-Carlton Bacara in Santa Barbara, Calif., and Marriott’s properties in Hilton Head, South Carolina, which hit roughly 50% occupancy over the weekend.

To drive additional bookings, Marriott is betting big on its Marriott Bonvoy loyalty program, which Sorenson called the “principle tool” in the company’s post-Covid-19 marketing toolkit.

Starting May 11, Marriott is running a weeklong Marriott Bonvoy gift card promotion, offering a 20% discount on all online gift card purchases. The gift cards can be used toward future stays at any Marriott property, excluding those under the Bulgari, Design Hotels, Ritz-Carlton Residences and Homes and Villas brands.

Meanwhile, Sorenson said he is bullish on recovery in both China and the U.S. His outlook for Europe is somewhat less optimistic.

“Europe, unlike China and the U.S., is meaningfully more dependent on long-haul travel,” said Sorenson. “Because it is dependent on air and long-haul, I suspect it probably will be the slowest to get back to the kind of levels that we enjoyed before Covid-19. The advantages of China and U.S. are they’re both domestic markets. Even in the best of times, the U.S. is about 95% to 96% [domestic] travel, with only 4% to 5% in total dependent on inbound travel from the rest of the world.”

For the first quarter, Marriott said systemwide RevPAR dropped 22.5%. Total revenue was down 7%, to $4.68 billion, while net income fell 92%, to $31 million.


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