Why Marriott Thinks It Could Fare Better Than in Previous Recessions
25.08.2023 - 14:43
/ skift.com
/ Leeny Oberg
/ Anthony Capuano
/ Sean Oneill
Marriott International forecast that its fourth quarter would surpass 2019 in revenue per available room, a a closely watched number, underscoring the resilience of travel spending despite economic worries.
“We expect continued demand growth around the world in the fourth quarter and anticipate that global RevPAR [revenue per available room] could increase two percent to four percent compared to 2019,” said CEO Anthony Capuano on Thursday’s earnings call. Executives also highlighted why they will be stronger than in the past should a downturn hit the global economy.
The Bethesda, Maryland-based company — operator of more than 30 brands ranging from Ritz Carlton to Fairfield Inn — raised its annual profit forecast on Thursday, thanks to higher rates it has been able to charge during the global travel boom. The company predicted that its worldwide revenue per available room could come in closer to pre-pandemic levels than it had expected at between 2 and 4 percent above 2019 levels.
Forward leisure bookings for holidays, such as Thanksgiving and Christmas, look strong through year’s year — though the company’s clearest visibility is only a few weeks out.
Group bookings also look strong. Fourth-quarter full-service group revenue is currently pacing to be more than 4 percent of the comparable quarter in 2019. Relatively last-minute bookings have allowed for strong pricing so far.
Marriott believed that several factors would allow it to perform better during a possible economic downturn next year than it had done in past downturns.
“We definitely see that we could perform relatively better than we have in prior recessions,” said Leeny Oberg, chief financial officer.
Oberg noted that the company is entering a possible downturn at a time when U.S. unemployment rates are relatively low. Also, the company’s portfolio is weighted toward premium brands, and consumers with higher levels of discretionary income remain heavily motivated to travel post-pandemic and still have extra savings, on average.
“We currently think 2023 global RevPAR [revenue per available room] could increase nicely year-over-year, driven by gains in both the U.S. and Canada and internationally,” Oberg said. “Each quarter could see growth compared to this year and particularly strong growth in the first quarter due to the easier comparison, given the impact of the omicron variant in early 2022.”
Group bookings for 2023 also are pacing strongly.
“When I look deeper into what’s on the books for 2023 [for group reservations], room nights are down [from 2019 levels] in the high teens, but ADR [average daily rate is actually up close to about 10% [above 2019 levels],” Capuano said.
In the third quarter, Marriott generated $630 million in net