Marriott: Enough liquidity to adapt through crisis

Marriott International announced plans for a US$1.5 billion, 364-day revolving credit facility commitment and leverage covenant waiver for existing revolving credit facility. The credit facility continues to provide for US$4.5 billion of effective aggregate bank commitments, which have been fully drawn down.

As a result of the operating and financial strategies Marriott has implemented, the company “strongly believes that it has sufficient liquidity and will continue to be able to successfully adapt as the situation evolves,” according to a statement.

The company also said it expects to report that global systemwide RevPAR declined approximately 23% in Q1 2020, with North American RevPAR down 20% during that time. Currently, roughly 25% of Marriott’s more than 7,300 hotels are temporarily closed.

While the company is still seeing historically high levels of cancellations for stays through the first half of this year, as well as low levels of bookings, many group customers are tentatively rebooking for later this year and group cancellations for 2021 related to COVID-19 have not been significant.

At the property level, Marriott has reduced by 50% the cost of and offered delayed payment for certain systemwide programs and services charges for April and May.

Marriott expects to eliminate or defer around 40% of its February 19, 2020 yearly investment spending forecast of US$700 million to US$800 million, compared to the expected reduction of at least one-third disclosed on March 18. Marriott will continue to review its investment spending plans for 2020 and could see additional reductions, particularly in funding obligations related to new unit openings that may be delayed until 2021. Finally, as previously announced on March 18, 2020, Marriott suspended share repurchases and cash dividends.

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