Marriott International
reported year-over-year gains in average daily rate and occupancy during the
second quarter. Yet, ongoing softness in corporate travel drove the company to
revise guidance for full-year growth in revenue per available room down to 3
percent, from the previous range of 3 to 5 percent.
In Marriott's earnings call to
investors on Thursday, CEO Arne Sorenson said room sales for the company's
nearly 300 largest corporate customers have gradually weakened, "from 4
percent growth year over year in the fourth quarter [of 2015], to 2 percent in
the first quarter and less than 1 percent in the second quarter."
So far, Hilton Worldwide and Extended Stay America have reported similar
patterns in corporate travel for the quarter—a number of other hotel companies
are scheduled to report earnings next week.
"Obviously the
strength of the economy is the biggest question…in terms of forecasting how
we're likely to perform in the coming quarters," Sorenson said. "As
we guided a quarter ago, we had an overly rosy view about the
strength of GDP in the United States particularly." Strong group
performance and discounted leisure business "picked up the slack" for
the company in the second quarter, he said.
Also weighing on results in
the United States is the recent strengthening of the dollar. Sorenson estimated
the number of room nights occupied by international guests at hotels in New
York and Miami declined by 10 to 15 percent year over year during the quarter.
"For the U.S. as a whole, the number of international guests in our hotels
declined by roughly 3 percent," he said.
Systemwide occupancy increased
0.8 percentage points to 77.1 percent, while ADR increased 1.9 percent to
$154.25. Overall revenue increased 6 percent year over year to $3.9 billion.
Providing
an update on Marriott's acquisition of Starwood
Hotels & Resorts, Sorenson said the Chinese regulatory review is in Phase 2,
which is expected to end on August 9. He "remains optimistic" the transaction
will close in the coming weeks. After that time, integration between Marriott
and Starwood will take an anticipated two years to complete.