Economic uncertainty has not stifled demand at Marriott
International properties, according to president and COO Arne Sorenson, who
still projects "a very high probability" that 2012 negotiated corporate
rates will increase.
While Marriott executives did not assign a number to their
corporate rate expectations, Sorenson said demand growth, coupled with sluggish
overall supply increases, will give the company negotiating leverage even in
the face of a potentially weakening recovery. For the Marriott brand, September
occupancies are on par with September 2007 levels, he said.
"We're very early in the process of these
conversations, but we can say with confidence that rates will be up,"
Sorenson said. "Pricing will vary from market to market, but we will be
able to drive rates within the accounts. Beyond that, we can yield in some
accounts that are bringing in higher rates while yielding away some special
corporate accounts that are not as strong."
In particular, Sorenson said returning group demand would
give Marriott leverage. Group revenue on the books for Marriott properties in
2012 is up 7 percent compared with last year's projections for such revenue in
2011, and group bookings for the next 12 months are up 14 percent from bookings
last year, he said. Additionally, Marriott surveyed its meeting planner
clients, and two-thirds said they expected to maintain or increase their
meeting lodging spending next year.
"That gives us the basis that there's no sign of
weakness as of yet," Sorenson said. "The way companies are acting
today, they still seem willing to commit to business going forward."
For the quarter, rates across all Marriott's brands in North
American increased by 3.3 percent on average year over year. Outside of North
America, rates were up 4.9 percent. Revenue per available room was up 8.7
percent globally in terms of dollars, including a 6.9 percent increase in North
America and a 15.8 percent increase in the rest of the world.
Sorenson projected RevPAR next year would continue to
increase even if GDP growth slowed or stalled altogether.
Marriott also is in the process of renegotiating its
contract with Expedia, which is scheduled to expire later this year. However,
Sorenson noted that only about 2 to 3 percent of Marriott's total business
comes from online travel agencies, so he did not foresee any significant
effects on Marriott's financial performance as a result.