Marriott International’s temporary demand in the United States in the first quarter picked up, and the March recovery had a remarkable increase, the company reported on Wednesday during a earnings call. Marriott’s small and medium-sized customers recovered to full travel volumes compared to the first quarter of 2019, according to CEO Anthony Capuano, but larger customers continued to lag.
“Demand from larger companies still has a bit of a hill to climb to get back to where we were, pre-pandemic,” Capuano said. “[But] As a larger number of employees return to the office, demand has rapidly improved. “
Preliminary room nights in the US and Canada in the first quarter performed better than other regions, but remained 10 percent to 15 percent down in March compared to the same period in 2019. “It’s obviously a very meaningful improvement over what we saw in the fourth. quarter where business was transient room nights fell by about 30 percent, ”Capuano said.
The company noted shifts in travel patterns, including mixed leisure and business travel, as a continuing trend. Particularly in the United States and Canada, Capuano said, “Monday through Wednesday, the occupancy rate was down in the mid-teens, [but] the occupancy during the shoulder days, Thursday and Sunday, was down to the single digit, and the occupancy on Fridays and Saturdays was almost in line with March 2019. “
Directors also highlighted promising trends in group business, including increased group sizes compared to the first quarter of 2019. The length of stay for group bookings was “up 26 percent compared to [Q1] 2019, “said CFO and EVP business operations Leeny Oberg.
One trend, as Marriott said, however, prevented it from providing more aggressive financial guidance for Q3 and Q4, was the proliferation of short group booking windows, which could also challenge meeting organizers if volumes continue to accelerate.
“We have much less visibility in Q3 and Q4 because the booking windows have generally become shorter, and then the trend towards shorter group bookings is even more acute,” Capuano said. “We’ve talked to you a bit about the fact that we saw really strong group numbers at the end of the first quarter. We’re fine with the last three quarters. But again, we’re dealing with fairly short booking windows. And the same is true. “The case of business transient. I think it’s the dark visibility in the back half of the year that makes us no longer bullish in terms of forecasts.”
Strong group demand, short booking windows and strong leisure travel volume will also put upward pressure on prices for business and group prices as the year progresses. Like Hilton, Marriott emphasized strong rate growth, especially for group bookings, throughout the first quarter.
“April was the eighth month in a row that in-year, for-year group bookings exceeded 2019 levels,” Capuano said. “It’s important that our sales team stays focused on driving [average daily rate], which has continued to rise for new bookings. ADR for managed hotel reservations made in January was 3 percent above 2019 levels, while ADR for reservations made in March had risen to 12 percent above pre-pandemic levels. “
A trend that may put a damper 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 tour guides, in which participants expressed concerns about both limiting travel costs and being aware of CO2 footprints, fighting for priority over the “absolute desire to collaborate with colleagues, meet with customers, immerse new employees in corporate cultures, ”Capuano said. But he added that recent figures suggested “the appetite for the benefits of personal interaction or starting to win that tug of war a bit.”
Q1 2022 Performance Highlights
The company reported net income for the first quarter of 2022 of $ 377 million compared to a net loss of $ 11 million in the first quarter of 2021.
Comparable system-wide constant-dollar RevPAR in the first quarter rose 96.5 percent worldwide year over year, rising 99.1 percent in the United States and Canada and 88.5 percent in international markets. However, compared to the first quarter of 2019, comparable system-wide constant-dollar RevPAR fell 19.4 percent globally, 14.5 percent in the United States and Canada, and 31.7 percent in international markets.
The company added 75 properties and approximately 11,800 rooms globally during the first quarter, including approximately 5,300 rooms in international markets and a total of more than 2,500 remodeling rooms. During the same period, the system left 16 properties comprising 3,494 rooms.
At the end of the first quarter, Marriott’s worldwide development pipeline comprised nearly 2,900 properties and more than 489,000 rooms, including about 20,800 approved but not yet signed contracts. Approximately 201,400 rooms in the pipeline were under construction. Marriott’s global lodging system included more than 8,000 properties with nearly 1.5 million rooms.