Though Marriott International is only a couple weeks into
its pilot of home rentals in London, CEO Arne Sorenson said during the company's
first-quarter earnings call on Wednesday that it's "off to a great start."
Sorenson said the plan for Marriott's home rentals business
is to learn as it goes, ensuring that the company is delivering a
high-quality-service experience renting out "whole homes"-- no spare
bedrooms or air mattresses here. "Within a few months, we should be able
to learn considerable lessons from what we're doing in London," Sorenson
said. "If it goes well -- and we're quite optimistic it will -- we'll be
extending that to other cities."
Marriott, along with the rest of the hotel industry, has
been keeping an eye on the home rental market during the past few years. Some,
including Choice Hotels International and Wyndham Worldwide, leveraged vacation
rentals to gain a foothold, while others like Hyatt Hotels Corp. and
AccorHotels have bought or bought into existing home rental providers. But
Sorenson said players who entered the market early, i.e., Airbnb, did so
illegally in some countries and cities. "It's one thing for a startup to
engage in a business that really does not comply with law," he said. "It'd
be another thing altogether for a 90-year-old company like Marriott to step
into a business which is fundamentally illegal."
Sorenson said that in waiting to enter the space, Marriott
has figured out how to begin renting homes in a way that complies with local
laws and regulations and doesn't skirt local taxes like occupancy tax that
hotels are required to pay.
Marriott, essentially, is entering this space after Airbnb
has spent years battling local regulators to loosen or lift laws around home
rentals and to secure the right to collect or remit occupancy taxes on behalf
of Airbnb hosts. It's worth noting that Marriott, as a prominent member of the
American Hotel & Lodging Association, also helped to make those battles
more difficult for Airbnb.
Marriott's move into home rentals also comes after Airbnb
announced plans this year to roll out category-driven portfolios and loyalty
programs. Sorenson thinks Marriott can do branding better. "As some of
these platforms have grown into millions and millions of units, there is almost
a paralyzing array of choices," Sorenson said. "The lack of branding
and the lack of attributes around quality and service of product makes this an
area where we think we can bring our brands, we can bring our service and
product focus, and deliver something that is simply a better product."
Marriott saw better-than-expected group business during the
first quarter, driven by stronger-than-anticipated attendance at group meetings
and increased group business at its select-service hotels.
Those factors kept first-quarter group revenue per available
room flat year over year despite the shift of the Easter holiday into the last
weekend of the quarter.
Asked by an analyst whether Marriott's recent cut to group
and meetings commissions, now in effect in the U.S. and Canada, were leading to
greater margins, Sorenson said the impact likely wouldn't be seen until 2019,
as the cuts don't impact group business booked prior to March 31.
Marriott's first-quarter revenue per available room (RevPAR)
grew 3.6%, driven by an average daily
rate (ADR) increase of 1.5% to $159.92 and an occupancy increase of 1.4
percentage points to 69.8%.
Hotels outside North America reported a 7.5% RevPAR gain,
while North American RevPAR grew 2%. Sorenson said a recent increase in demand
in oil and gas markets in the U.S. and Canada is a welcome about-face from the
slump of recent years.
During the quarter, the company added almost 15,000 rooms to
its portfolio, 5,800 of which were in international markets. As of March 31,
Marriott's global development pipeline totaled 465,000 rooms across 2,700
First-quarter net income increased 7% to $398 million.
Source: Business Travel News