Marriott International reported growth in both occupancy and
average daily rate during the first quarter despite softness due to the Easter
holiday.
Systemwide first-quarter average daily rate increased 2.1
percent year over year to $177.19. Occupancy increased 0.9 percentage points to
71 percent.
Meeting planners avoided the week before and the week after
Easter, CEO Arne Sorenson said Thursday during the company's earnings call. He estimated
the shift of the holiday to March 27 this year reduced systemwide first-quarter
revenue per available room by about 1 percentage point year over year.
Group revenue pace at the company's full-service North
American hotels is up 7 percent for the remainder of the year, Sorenson said,
and he expects Marriott will drive higher transient rates due to compression
caused by those group bookings.
Marriott, like
Hilton Worldwide, reported weak corporate transient demand during the
quarter. Sorenson attributed the weakness partially to the pessimistic economic
outlook that characterized the early part of 2016, but added that he thinks the
results are "a collection of individual company dynamics" that affect
short-term transient bookings more directly than long-term group bookings.
Sorenson gave a similar prognosis for performance in North
America, where ADR grew 2.6 percent year over year to $150.15, but occupancy
dropped 0.1 percentage points to 70 percent. "The [United States] is
characterized by a number of short stories," he said. Houston was weak
because of low oil prices, whereas New York was weak because of oversupply and
the strong U.S. dollar, he said, adding that San Francisco was strong because
of the health of the technology industry, while Miami suffered from weakness in
Brazil, the city's main feeder market.
The company's systemwide revenue during the first quarter grew
7 percent year over year to $3.8 billion. Marriott added 68 hotels to its
global portfolio during the quarter, and its global development pipeline
totaled 1,705 properties with more than 275,000 rooms.
Starwood Merger
Update
Chief financial officer Leeny Oberg said Marriott expects
its deal with Starwood will close sometime after June 30. The transaction still
is waiting for regulatory approval from the European Union, China, Mexico and
Saudi Arabia.
The company previously reported it doesn't expect to join
its loyalty program with Starwood's until 2018.
Direct-Booking Push
Marriott this month began adding special member rates, and
with them amenities like free Wi-Fi, to its website to encourage guests to book
direct.
While Hilton during its first-quarter earnings call reported
growth in direct booking, Sorenson said Marriott's program is too young to
provide solid metrics, and it hasn't marketed direct booking on the same level
as its competitor. He did say 65 percent of transient room
nights come from Marriott Rewards members.