Marriott CEO: Corporate Accounts To Become Smaller Piece Of Revenue Pie - Business Travel News

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Marriott CEO: Corporate Accounts To Become Smaller Piece Of Revenue Pie

October 31, 2013 - 03:55 PM ET

By Michael B. Baker

Marriott International plans to more aggressively weed out "low-rated" corporate accounts amid high occupancies and improving corporate group demand, executives said on Thursday during the company's third-quarter earnings call.

President and CEO Arne Sorenson noted that third-quarter occupancies in North America were "nearly at record levels" and "well ahead of industry averages" and that the company during the quarter was able to replace some lower-yielding business, such as government travel, with travelers paying higher rates. As the company negotiates corporate accounts for 2014, it plans to continue that strategy.

"We're looking at how we can shift more and more of that transient business towards higher-rated segments in the hotels," Sorenson said. "We'll continue to see that our special corporate accounts shrink in terms of volume contribution to the U.S. hotels as we try to yield out some of the weaker accounts and push them more toward rack-rated business."

Occupancy at the company's upper upscale and luxury properties in North America increased by 0.8 percentage points to 73.3 percent and was above 70 percent at all Marriott brands in those tiers. Occupancy at Marriott's Autograph Collection hotels increased by 2.3 percentage points to 77.8 percent, the highest increase at any Marriott brand.

Average daily rate at Marriott's upper upscale and luxury properties in North America increased by 4.5 percent year over year to $167.17. Ritz-Carlton ADR increased by 7.4 percent to $308.96.

Occupancy and rate growth during the quarter was particularly strong in San Francisco, Houston, Miami and Atlanta, CFO Carl Berquist said.

In line with what Hyatt Hotels Corp. reported on Wednesday, Marriott executives noted its outlook on group travel has improved. The group booking pace at Marriott hotels picked up during the quarter, and the number of such bookings made in the third quarter for 2014 was 14 percent higher than the previous year, Sorenson said.

"We're seeing more corporate business, such as training, meetings and new product launches," he said. "Sixty percent of our 2014 group business is already on the books."

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