Marriott International’s first-quarter U.S. business temporal demand gained momentum, rising significantly with the March recovery, the company said during an earnings call on Wednesday. According to CEO Anthony Capuano, Marriott’s small- and medium-sized clients have recovered the entire amount of travel compared to the first quarter of 2019, but larger clients are lagging behind.
“The demand of the big companies is still to climb some hills to get back to where we were, pre-epidemic,” Capuano said. “[But] As more employees return to office, demand is improving faster. ”
The first-quarter U.S. and Canadian business fleet surpassed other regions, but was 10 percent to 15 percent lower in March than in the same period in 2019. The room was down about 30 percent overnight, ”Capuano said.
The company noted changes in the type of travel, including mixed vacation and business travel as an ongoing trend. In the United States and Canada in particular, Capuano said, “Occupancy dropped from mid-teens to Monday, Wednesday. [but] On shoulder days, Thursday and Sunday occupancy was lower in single digits and Friday and Saturday occupancy was almost consistent with March 2019. “
Executives also point to the promising trend of group business, with group size increasing compared to the first quarter of 2019. The length of stay for group bookings was 26 percent longer than that [Q1] 2019, “says Lynne Oberg, CFO and EVP Business Operations.
One trend, however, Marriott says has prevented it from providing more aggressive financial direction for Q3 and Q4 is the introduction of short group booking windows, which could challenge meeting organizers if the volume continues to accelerate.
“Our visibility is much lower in Q3 and Q4, because the booking windows are getting smaller, usually, and then the trend towards smaller group bookings intensifies,” said Capuano. “We’ve talked to you a little bit about the fact that we’ve seen really strong group numbers at the end of the first quarter. We’re feeling good about the last three quarters. That blur of visibility in the last half of the year has made our forecasts less bullish. “
Strong group demand, small booking windows and strong leisure travel volumes will also put upward pressure on the pricing of business and pricing of group rates as the year progresses. Like Hilton, Marriott focused on strong rate increases throughout the first quarter, especially for group bookings.
“April was the eighth month in a row that group bookings for the year exceeded the 2019 level,” Capuano said. “Importantly, our sales teams are focused on driving [average daily rate], Which continues to grow for new bookings. The ADR for hotel bookings conducted in January was above 3 percent of the 2019 level, while the ADR for bookings made in March rose to 12 percent above the pre-epidemic level. “
A trend that could have an impact on corporate demand, especially in the European market, is the pressure on companies to show more sustainable travel practices. Capuano cited a recent meeting with 30 European travel managers where participants expressed concern about both the cost of travel and being aware of the carbon footprint. Capuano said, however, that recent numbers “suggest the need to take advantage of personal interactions or start winning somewhat in that tug-of-war.”
Q1 2022 Performance Highlights
The company reported net income of $ 377 million in the first quarter of 2022, compared to a net loss of $ 11 million in the first quarter of 2021.
The first-quarter comparable systemwide constant-dollar revPAR grew 96.5 percent globally and 99.1 percent in the United States and Canada, and 88.5 percent in the international market. However, compared to the first quarter of 2019, the comparable systemwide constant-dollar RevPAR declined 19.4 percent worldwide, 14.5 percent in the United States and Canada, and 31.7 percent in the international market.
The company added 75 properties and about 11,800 rooms worldwide in the first quarter, including about 5,300 rooms in the international market and a total of more than 2,500 conversion rooms. At the same time, 16 property systems comprising 3,494 rooms have exited the system.
By the end of the first quarter, Marriott’s global development pipeline had a total of about 2,900 properties and more than 489,000 rooms, of which about 20,800 rooms were approved but not yet under the signed agreement. About 201,400 rooms were under construction in the pipeline. Marriott’s global lodging system has a total of more than 8,000 properties, including about 1.5 million rooms.