Marriott International and Hyatt Hotels Corp. each reported
sluggish group business during the first quarter, although both companies said
long-term group bookings are showing strength.
Hyatt president and CEO Mark Hoplamazian said group
business—which makes up just under half the room revenue for Hyatt-managed
full-service hotels in the United States—was below expectations during the
quarter. First-quarter group revenue declined 6 percent year over year,
including a 20 percent decline in March. Group bookings in the quarter for the
quarter were down 12 percent, and bookings in the quarter for the year were
down 8 percent, he said.
Much of the decline stemmed from renovations at properties
in San Diego, Dallas and Washington, D.C., as well as the Easter holiday falling
in March this year, Hoplamazian said.
For Marriott, group revenue per available room was up but
only by 1 percent, president and CEO Arne Sorenson said. As with Hyatt, Easter
was a factor, he said, noting that the year’s group RevPAR through April was up
6 percent.
Both chief executives said slowing U.S. government business
also was a factor.
"Government-related group demand has been particularly
weak," Hoplamazian said. "Although government-related group business
represented less than 2 percent of overall group business in the first quarter,
it was down 50 percent relative to 2012 and represented over half the decline
of in-the-quarter, for-the-year bookings."
Sorenson said government travel cutbacks have affected both
group and transient demand at Marriott, as that business in 2012 made up about
5 percent of room nights across the company's brands. While the U.S. federal
sequester spending cuts that took effect March 1 are only partially caused the
decline, a political resolution would be beneficial to the hotel industry, he
said.
"Better results will flow with the economy if a
thoughtful, bipartisan deal can replace the blunt instrument of the sequester,"
Sorenson said.
In the long term, however, group demand looks stronger. Hoplamazian
said bookings for 2014 and beyond are up 13 percent compared with last year,
noting a "significant dichotomy between short-term bookings and
longer-term bookings." Similarly, Sorenson said corporate group bookings
made in the first quarter for next year were up 22 percent compared with last
year.
Both companies also reported strong transient demand.
"The overall business climate in the United States,
with strength in manufacturing, technology, housing and other sectors, supports
robust transient demand levels," Hoplamazian said. "We expect group
demand to improve relative to what we saw in the first quarter, but we still
expect transient business to be a stronger driver of improving results this
year."