Coronavirus hobbled Marriott’s 2020 momentum

Marriott International hotels bolted out of the gate this year, posting 4.6% RevPAR growth in January outside of China. But by April, the disastrous impact of COVID-19 put the brakes on any gains, slowing its pace by some 90% for the month, said President and CEO Arne Sorenson, speaking during the company’s first-quarter earnings call on Monday.

First-quarter RevPAR declined 22.5% worldwide — down 19.5% in North America and 30.4% elsewhere. About a quarter of Marriott hotels worldwide remain closed, but Sorenson said signs of a rebound are slowly materializing.

Hotels in hard-hit Greater China reached 25% occupancy in April, up from single digits in mid-February. Over a recent national holiday, those figures jumped to 45% for hotels, close to 70% for resorts.

“Looking at our occupancy and booking trends, it appears that lodging demand in most of the rest of the world has stabilized, albeit at very low levels,” Sorenson noted. The company’s North American limited-service hotels posted occupancies around 20% over the latest two weeks, he said, and as beaches reopen in the U.S., destinations like Santa Barbara, California, and Hilton Head, North Carolina, have seen occupancy nearing 50%.

As travel picks up, hotels in China and U.S., where domestic travelers represent the lion’s share of demand, are arguably best positioned to recover more quickly than regions like Europe, which depend more on air travel, he added.

It’s no surprise that Marriott plans to reach out to Bonvoy members to fuel demand. Sorenson said a gift card promotion offering a 20% discount as incentive for a future stay is in the works.  

For the quarter, Marriott reported income of US$112 million, off from US$510 million during the same period a year ago. Net income was US$31 million, down from US$375 million in 2019.

Marriott’s available liquidity has grown to US$4.3 billion, including US$3.9 billion in cash on hand.

The company added 4.4% more rooms in the past 12 months, 14,500 of them during the first quarter. The pipeline stood at almost 3,050 projects and 516,000 rooms, with 230,000-plus under construction as of March 31. Sorenson said there have not been signs of deals fizzling during the pandemic, but the pace of deals has slowed.

As for net unit growth in 2020, Sorenson said some hotels that might have opened already have been hampered by COVID-19-related supply line glitches or state bans on construction work. He said it’s too early to say how much impact those problems will have on the total. 

Sorenson also announced several key personnel changes, including the news that board chairman Bill Marriott plans to step down and transition to the role of chair emeritus in 2022. He added that David Marriott is expected to join the board of directors next year and leave his executive post at Marriott.

David Grissen, group president of the Americas, will retire from Marriott in the first quarter of 2021 after 36 years with the company, 11 in his current position. The company’s lodging operations will be reorganized under two veteran leaders: Liam Brown, now EMEA group president, will take on the role of group president, North America; Craig Smith, Asia/Pacific group president, will take over as group president, international, a role that will include all regions outside of North America.