Marriott International reported third-quarter softness in the key North America market, where revenue per available room (RevPAR) was flat, hampered largely by U.S. sluggishness in that category in the month of September.

The company's overall earnings for the quarter dipped slightly, with net income of $483 million versus $485 million for the same period last year.

"The surprise and disappointment for us in the third quarter was purely about U.S. RevPAR performance in September," which was down 1% for the month, said Marriott president and CEO Arne Sorenson during a call with analysts on Tuesday. "It had an impact on third-quarter RevPAR [in North America], and it does affect our expectations for the fourth quarter." 

Marriott saw global RevPAR grow 1.9% overall in the quarter ending on Sept. 30. By comparison, North American RevPAR was up just 0.6% over those three months.

Sorenson said that Marriott's U.S. performance "was, by and large, reassuring" for October, while emphasizing that the company does not expect challenges in 2018's third and fourth quarters to impact early projections for 2019.

"The sky is not falling, notwithstanding the weak September," said Sorenson. "When we look at our first quarter [2019], we see fairly good group bookings on the books, and that tells us that we can expect a sort of 'steady as she goes' for the overall year in 2018 and as we head into 2019." 

Looking beyond North America, Marriott saw solid 6% third-quarter RevPAR growth in the Asia-Pacific; Latin America and Caribbean; and European markets for the three-month period, with European growth driven by strong results in France, Turkey and Russia. In the Middle East and Africa, however, third-quarter RevPAR was largely flat.

For the fourth quarter, Marriott expects global RevPAR to increase roughly 2%, with North American RevPAR likely to continue to lag, at approximately 1% growth.

During the earnings call, Sorenson addressed the recent Marriott hotel worker strikes occurring at 21 properties across six North American cities, stating that the company has been "negotiating in good faith for many months and making progress." Over the past weekend, he added, Marriott reached contract settlements with its associates in Oakland, Calif., and Detroit.

He also took time to tout the success of the Aug. 18 merger of the company's Marriott Rewards and Starwood Preferred Guest loyalty programs, crediting the move with helping to drive direct bookings for the quarter.

"Post-program integration data reveals accelerated bookings from loyalty members, higher luxury redemptions and a growing proportion of bookings from our direct digital channels," he reported, adding that direct bookings now account for close to 30% of Marriott's total business. "We will continue to see direct digital grow in the next year."

The company is also reporting early success for its Tribute Portfolio Homes homesharing pilot program. Launched in London in partnership with management group Hostmaker earlier this year, Marriott extended the platform to Paris, Rome and Lisbon in October.

"We've been very pleased with the pilot so far; we saw really good results," said Sorenson. "For example, 85% of the folks that booked were our loyalty members. It was also accretive to our total business in the market, with good synergy with hotel bookings. We saw people that would look at our homesharing units, and ultimately many would book with those, but many would book hotel rooms instead, because they were looking at, essentially, both portfolios." 

JDS Travel News JDS Viewpoints JDS Africa/MI