After confirming layoffs and hotel closures this week due to the spread of Covid-19, Marriott International has pulled the 2020 guidance it provided in late February, as other hotel companies have done in the past two weeks. Marriott had anticipated first-quarter global systemwide revenue per available room to be in the range of flat to up 2 percent. Room additions were expected to be between 5 percent and 5.5 percent.
"Covid-19 is the most significant event to affect our business, including 9/11 and the crisis in 2009," said Marriott CEO Arne Sorenson on a Thursday morning investor call. He later added that there are hundreds of hotels closing or considering closing.
Except for the Asia/Pacific region, the company through February had been showing solid signs of 2020 RevPAR growth, with North America up 3.5 percent year over year and Europe up 3.2 percent. However, Asia/Pacific was down 24.7 percent for those two months, led by the decline in Greater China, where the coronavirus outbreak started, of 52.1 percent.
Today, China is in recovery, and where more than 90 hotels had been closed, there are now fewer than 30 closed, Sorenson said. Occupancies still are below 15 percent, but that number is improving. In Macau, Marriott occupancy had been 2 percent; it now is back in the 20 percent range, he said. Shanghai has a number of hotels back into the 25 percent to 30 percent occupancy range. "The country had been in the 5 percent to 6 percent range at the bottom, so that is encouraging," he added.
While there have been historically high levels of cancellations for stays through the first half of this year, Sorenson said, there have not yet been meaningful group cancellations for 2021 related to Covid-19, and many group customers are at least tentatively rebooking for later in 2020. "In the group context, it's less uniform, and generally what our sales teams are doing is working through rebooking, but some depends on the timing of the meeting, and trying to make sure we are setting ourselves up as best we can with good relationships with group customers."
Still, Sorenson added that many of the hotels looking to close are more dependent on group business. "It's hard to predict because the experiences are not the same in every single market," Sorenson said. "Think of areas in the Midwest that are drive-dependent, and not as much [dependent] on air traffic or group meetings, those hotels will perform somewhat better than big meetings boxes dependent on air travel."
That said, Sorenson added that locales with larger hotels and higher group business "have the advantage of being in well-established markets. As conditions improve, they are the ones that will reopen fairly quickly and maybe to some extent in stages as business comes back."
As for new units, both Sorenson and CFO Leeny Oberg noted that while openings and signings have slowed, they have not stopped. "Volume is lighter and the numbers will be lower than anticipated, but they won't be zero," Sorenson said.
Sorenson was part of a hospitality coalition that met at the White House on Tuesday afternoon to request relief for the industry.
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