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02.11.2023 - 22:55 / thepointsguy.com / Leeny Oberg / Anthony Capuano
The hotel industry's roaring recovery from the pandemic faced some headwinds in recent months amid geopolitical tension and natural disasters: the Israel-Hamas war, Hawaiian wildfires and the worst earthquake to strike Morocco in more than 60 years, to name a few.
Amid all that, Marriott International still reported a $726 million third-quarter profit. Company leaders touted strength in consumer spending, significant recovery from the Asia-Pacific region and growth in midscale brands as a driver for the strong quarter.
But they also acknowledged there is some impact felt from the ongoing Israel-Hamas war.
"We started to see some cancellations and softer demand for our five hotels in Israel as well as for the 27 hotels in Lebanon, Jordan and Egypt," Leeny Oberg, Marriott's chief financial officer and executive vice president of development, said on the company's earnings call Thursday morning.
Similar to when Marriott and other hotel companies pulled out of Russia amid sanctions levied from that country's invasion of Ukraine, the company's leaders emphasized the human tragedy of the ongoing crisis in Israel and the Palestinian territories.
"As a global company, we are keenly aware that we are living in a time of heightened geopolitical tension. We are heartbroken by the devastating loss of so many innocent lives in the Israel-Hamas conflict," Marriott CEO Anthony Capuano said. "Our thoughts are with everyone impacted by this tragic war, as well as the ongoing war in Ukraine and we remain hopeful for peace."
The impacted areas of Israel, Lebanon, Jordan and Egypt comprised less than 1% of gross fees the company made globally last year, Oberg later noted. There has not been any "meaningful impact" on the company's business and demand elsewhere in the Middle East.
"We're keeping a close eye on the situation and working closely with our teams on the ground as events unfold," Oberg said.
Marriott leadership still had plenty to talk about in terms of growth. The company's overall hotel performance is up 9% from a year ago, with a 4% increase in the U.S. and Canada and a 22% increase internationally. The ongoing hotel recovery in the Asia-Pacific region drove much of that higher international figure.
Of the 17,200 new hotel rooms Marriott added to its portfolio between the beginning of July and end of September, roughly 13,000 of those rooms were in international markets.
Global room rates are up 4% from where they were a year ago. The company still sees growth potential, largely in China; recovery in the country is showing strength event though international air capacity into the country is still only at 50% of pre-pandemic levels.
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