Marriott CEO fears a difficult winter in Europe

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Marriott sign [Credit: Andrea Delbo/Shutterstock.com]
As of Dec. 1, less than 500 Marriott-flagged properties remain shuttered due to the pandemic worldwide, compared with around 2,000 at the height of the pandemic, according to CEO Arne Sorenson.. Photo Credit: Andrea Delbo/Shutterstock.com

As Covid-19 cases, hospitalizations and deaths continue to rise in markets across the globe, Marriott International CEO Arne Sorenson warned that the hospitality industry's near-term outlook "has gotten a little bit worse," though he added that encouraging news about vaccines has meant "the medium to long-term [outlook] has gotten a bit better."

"Optimism about a vaccine has gotten to be much stronger," said Sorenson, speaking during a Morgan Stanley Virtual Global Consumer & Retail Conference Q&A session on Tuesday. "We can sit here and say with a greater level of confidence than maybe a month or two ago that sometime in 2021, we should see a shift towards an environment in which the virus is receding into the rearview mirror."

Arne Sorenson
Arne Sorenson

Still, Sorenson emphasized that the next few months will remain rocky, with Europe in particular bracing for a challenging winter.

"With the virus numbers increasing again there and governments more inclined to reimpose restrictions, I suspect November [hotel numbers] will not look good in Europe, and the next couple months will not look great," he said. "It's probably one of the weakest big markets in the world."

Sorenson added that the largest volume of Marriott's hotel closures are currently in Europe. As of Dec. 1, the group has less than 500 Marriott-flagged properties that remain shuttered due to the pandemic worldwide, compared with around 2,000 at the height of the pandemic.

In contrast, Sorenson reported that China "continues to be the brightest big market" for Marriott globally, with business there nearing 2019 levels thanks to a relatively strong economy and a robust domestic travel sector.

Marriott International CEO Arne Sorenson reported that China "continues to be the brightest big market" for the company globally. Above,  the JW Marriott Sanya Haitang Bay Resort & Spa.
Marriott International CEO Arne Sorenson reported that China "continues to be the brightest big market" for the company globally. Above, the JW Marriott Sanya Haitang Bay Resort & Spa.

Meanwhile, Sorenson predicted that the hotel industry as a whole will likely see a wave of permanent closures in the wake of the pandemic.

"We probably will see, for the industry, more hotels that never reopen after this crisis than we have under prior crises, because of the depth of [the Covid-19 situation]," he said.

Still, with the bulk of Marriott's projects under construction still on track to open in 2021 and 2022, the company expects its gross room growth to continue over the next few years. According to Sorenson, the number of new rooms joining the Marriott system in the near term is projected to look "not that dissimilar from what we were experiencing before the pandemic."

What the industry's pipeline will look like beyond 2022 remains a question mark, however.

"You get beyond 2022 into 2023 and 2024 -- if you look at that realistically, you would have to say there will be fewer construction starts than we would have had otherwise," said Sorenson. "How many fewer and how long [that is the case] depends a little on the shape of the recovery, which we obviously can't know for certain yet. But it would suggest that gross room openings will start to taper a little bit as we get to 2023 and 2024.

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