Marriott International is adding sales resources to boost
large group sales at its largest hotels as demand growth continues to lag
transient growth, president and CEO Arne Sorenson said in the company's
second-quarter earnings conference call on Thursday.
In line with other major hotel companies that have announced
second-quarter results in the past two weeks, Sorenson noted that U.S. group
demand during the quarter was weak, while transient business was "very
strong." Revenue per available room from group business in April was 17
percent higher year over year, in part because of the timing of Easter, but it
was down 1 percent in May and down 5 percent in June, he said.
Government group travel in particular is down significantly.
In 2010, it accounted for 5 percent of Marriott's group business, but this
year, it accounts for only 2 percent, Sorenson said.
"The only good news about how weak it is, is there's
not much left to give up," he said.
As one countermeasure, Marriott is adding to its sales team,
particularly people focused on group sales at its largest hotels. Several years
ago, Marriott began an initiative, then called Sales Force One, in which
corporate and group sales personnel were moved out of individual hotels and
into regional centers. That initiative was completed about two years ago.
Since then, Sorenson said Marriott's group index—the
measurement of its group performance versus its competitors—has been "fabulously
strong," and the hotels getting the additional sales support largely have
maintained their on-property sales teams amid the sales reorganization.
"The sales offices have really dealt with group
business, which is 300 nights peak or lower, and anything that has been above
that has stayed with the big hotel team all the time," Sorenson said. "When
we talk about adding a few folks in these big hotels, that's just saying we
have to make sure we've got sufficient resources on the hotel where they have always
been located going after the biggest groups that are out there."
At the same time, Sorenson said that he did not view weak
group demand as "systemic." While second-quarter group bookings for
the rest of this year were up only 0.6 percent year over year, second-quarter
group bookings for all future periods were up 12.9 percent. Additionally, with
strong transient bookings pushing occupancy at company-operated Marriott hotels
to an average of 78 percent in the quarter, Sorenson said that "we are
turning away groups at some hotels, either because of lack of availability or
because we are attracting higher-rated transient customers."
Specifically, hotels in Houston, Chicago, San Francisco and
the California desert significantly boosted room rates by increasing their
transient mix in the quarter, he said.