Marriott International’s transitional and group business activities continue to show improvements as the recovery took place, but the former took a little more of a hit during the third quarter, Marriott CEO Anthony Capuano said in an earnings call. quarterly on Wednesdays.
“In the US and Canada, specialty companies were the segment most affected by the delta variant during the quarter, given the delay in return to office times,” said Capuano, explaining that the company identifies specialty companies as customers. transient business that book at pre-negotiated rates. “The [segment] gives us the best indication of business demand trends. Corporate special bookings showed a steady recovery every month this year until we saw a slight decline in the second half of the third quarter. ”
Capuano added that the segment’s upward trajectory returned in October with bookings growing from 2019 every week throughout the month, especially for some verticals. “Accounting and consulting grew 35 percent from last month and the tech business grew about 31 percent from last month,” he said. Overall, “corporate special bookings are currently down by less than 40% from the same time frame in 2019”.
Based on conversations with corporate customers, Marriott expects a transient business recovery to continue gradually as more workers return to the office, guest visit policies are loosened, and more employees are allowed to travel again.
Additionally, historically, Marriott’s transient business activities from small and medium-sized businesses accounted for approximately 60 percent of transient business revenue. During the recovery, SMEs accounted for about 75% of the company’s transitional revenue, Capuano said. As a result, some of these SME businesses have been in more secondary and tertiary markets, said Leeny Oberg, Marriott CFO. “However, during the third quarter, we saw the best improvement in our large cities in specialty businesses that we have seen since the pandemic. So, it is absolutely moving in the right direction, including those larger cities.”
Group on the rise
The Group’s business, meanwhile, “accelerated well” during the quarter in the US and Canada. “Group theaters revenue for the quarter was down 46% from Q3 2019, a significant improvement from Q2’s decline of 76% from the same period in 2019,” Capuano said, adding that groups social were particularly strong.
Additionally, U.S.-managed group bookings surpassed 2019 levels for each of the last five months through October, as event booking windows shortened during the pandemic, he said. “Bookings in the quarter for the October quarter were higher [those] since October 2019 by more than 30 percent, which is the highest percentage increase we have seen since the start of the pandemic. ”
In line with quarterly reports from other hotel companies, the group’s average daily rates have continued to rise and “for the full year of 2022, it is currently nearly 4% above pre-pandemic levels,” Capuano said.
Key third-quarter performance metrics
Marriott’s comparable system-wide revenue per available room in Q3 2021, adjusted for currency fluctuations, increased 118% worldwide, 135% in the US and Canada, and 76% in all other markets year over year. Compared to 2019, RevPAR decreased by 26% worldwide, by 20% in the United States and Canada, and by 41% in all other markets.
Worldwide employment was 58.2 percent for the quarter, up 23.4 percentage points from 2020. The average daily rate was $ 155.21, a 30.6 percent year-over-year increase. Both employment and ADR increased compared to the first and second quarters of 2021, with ADR down only about 4.4% in the third quarter compared to the third quarter of 2019, according to a company filed with the Securities and Exchange United States Commission.
“We were very pleased to see the rate almost returned to pre-pandemic levels in just 20 months,” Oberg said. “By comparison, global ADRs have delayed the recovery of RevPAR in previous recessions, taking about five years to recover from the 2009 recession and about four years to recover after 9/11.”
The company reported revenue of over $ 3.9 billion for the quarter, up from $ 2.3 billion a year ago. It also posted a net profit of $ 220 million compared to $ 100 million in the third quarter of 2020.
Growth of guest rooms
Marriott added approximately 17,500 rooms globally during the third quarter, including more than 2,200 conversion rooms. “We have already added more conversion rooms in the first nine months of this year than in all of 2019,” said Capuano, adding that the company expects net room growth in 2021 to be around 3.5%.
As of September 30, the company’s worldwide pipeline totaled 2,769 properties with nearly 477,000 rooms. At the end of the quarter, more than 206,000 of these rooms were under construction.