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
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."