Marriott International executives reported a "broad optimism" among their corporate clients, which has contributed to a rebound in group business, they said during the company's first-quarter earnings call on Wednesday.
During the first quarter, group revenue per available room at Marriott's managed North American properties increased 8 percent year over year, and average group room rates were up 3 percent, according to Marriott CFO Carl Berquist. Group catering spending increased 11 percent year over year. Although the later timing of Easter this year helped with year-over-year comparisons, Berquist noted that "group attendance exceeded expectations, and cancellations were below trend," an observation shared by Hyatt Hotels Corp. executives who reported earnings the same day.
Marriott president and CEO Arne Sorenson said corporate clients in general are more optimistic about the economy and thus more willing to spend on business travel.
"It's a view that the economic recovery is broad and steady and ought to continue," Sorenson said. "We see corporate customers who are not throwing caution to the wind by any stretch but are prepared to invest in their business and do the things that can be accomplished through meetings, whether those are focused on internal strategy, partners' meetings or customer relationships."
Government travel demand also seemed to stabilize during the quarter, although Marriott now is "intentionally reducing government occupancy" amid strong demand for higher-yielding transient and group stays, Berquist said.
Among all North American properties, Marriott's average daily rate increased 3.3 percent year over year to $141.66 during the first quarter. Full-service ADR increased 3.6 percent to $182.24, and limited-service ADR increased 3.1 percent to $116.82. ADR was up across all Marriott brands in North America, most strongly at Autograph Collection properties (up 10.7 percent to $230.70).
Marriott's occupancy rate in North America increased by 2 percentage points to 69.6 percent and also was up across all brands.
Elsewhere in the world, Marriott's occupancy increased across all regions during the first quarter, and ADR increased across all regions except the Middle East and Africa (down 0.5 percent to $196.10). The Caribbean and Latin America had the largest year-over-year quarterly ADR increase, up 6.2 percent to $248.27.