Despite a challenging year-end period, Marriott International reported several encouraging signs of recovery during its fourth-quarter earnings call.I
Despite a challenging year-end period, Marriott International reported several encouraging signs of recovery during its fourth-quarter earnings call.
It cited a strong Presidents Day weekend performance, promising movement on the group-bookings front and solid demand for its growing Homes & Villas by Marriott International portfolio of vacation rentals.
The Thursday earnings event was the first for the company following the death of its CEO, Arne Sorenson, earlier this week.
In his stead, the call was jointly led by Marriott’s CFO, Leeny Oberg, as well as Stephanie Linnartz, group president for consumer operations, technology and emerging businesses, and Tony Capuano, group president for global development, design and operations services.
Linnartz and Capuano are currently overseeing day-to-day operations at Marriott and will continue until the company’s board names a CEO sometime in the next two weeks.
“With spikes in Covid cases in many markets around the world, we saw the global pace of recovery flattened in the fourth quarter and in the first few weeks of 2021,” Linnartz told investors. “Many countries around the world reinstituted strict, temporary limitations on traveling and gathering to combat rising virus cases.”
For the quarter, Marriott saw systemwide RevPAR decline 64.1%.
Although Linnartz said that around 94% of Marriott’s global portfolio is up and running, roughly one-third of the group’s hotels in Europe — where many markets returned to lockdown throughout the winter — were temporarily closed in the fourth quarter.
By comparison, only 3% of Marriott’s hotels remain closed in the U.S. and Canada, while 11% in the Caribbean and Latin American are temporarily shuttered.
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Marriott saw its strongest recovery trends in mainland China, where occupancy hovered above 60% through the end of 2020 and RevPAR remained down only 12% year over year. Although several markets in China reimposed lockdowns in early January due to Covid-19 outbreaks, Linnartz said the company expects demand to “return quickly” as soon as those restrictions lift.
In the U.S. and Canada, Linnartz reported “small green shoots of increased demand” for both corporate and leisure bookings so far in 2021, with North American occupancy over Presidents Day weekend marking the strongest long weekend Marriott has seen since the beginning of the pandemic, led by the leisure segment.
Linnartz added that January turned out to be “a very strong month” for group bookings for 2022 and beyond. Notably, that month’s group business was booked at an average daily rate that was 11% higher than group business booked in January 2020 for stays in 2021 and beyond.
“We’re also seeing some positive some positive trends as it relates to group cancels,” said Linnartz. “They’ve really slowed for the second half of 2021.”
Meanwhile, Marriott’s Homes & Villas arm has emerged as a bright spot. The vacation rental platform launched in 2019 with around 2,000 professionally managed, whole-home accommodations and has since been expanded to comprise 25,000 globally.
Although the Homes & Villas business hasn’t yet had a “material” impact “from a financial perspective,” said Linnartz, the division has proven valuable to the company’s Marriott Bonvoy loyalty program, with over 90% of total Homes & Villas room nights booked by Bonvoy members in 2020.
“One of the most important things about [Homes & Villas] is you can earn loyalty points and burn loyalty points there,” said Linnartz. “Also, 30% of the bookings are redemptions. And we saw the business do well, particularly during last summer, because people wanted a whole home. We’re excited about the about the offering and we see it as complementary to our core business.”
For the fourth quarter, Marriott saw total revenue drop nearly 60%, to $2.17 billion.
The company reported a net loss of $164 million for the quarter, compared to net income of $279 million for the same quarter in 2019.