Marriott International now is selling to corporate customers in the United States twice as many nights and booking twice as many nights than it was in April and May, Marriott SVP and CFO Leeny Oberg said Monday during the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum 2020.
"That's clearly an example where there is more comfort in traveling," she said. "It's still definitely higher on the drive-to [markets] than on the flying, but it is steadily improving demand."
Additionally, the Covid-19 pandemic might not have the substantial effect on 2021 corporate hotel negotiations as might be expected, she added.
"Clearly, there will be pockets where demand is so low that there it's going to result in a different special corporate rate next year," Oberg said. "But I would say in general that what you're seeing toward the upper end is that rates have held in relatively better than you might expect given the incredible drop in [revenue per available room].
"So, in many respects, you will see that the rate negotiations reflect 'steady as she goes,' but also the reality that if a hotel has super-low occupancy, that the corporate customers are going to benefit from that."
Negotiations now are centered more on room night volume than room rate, Oberg said. Further, she said corporate clients have told her that their travelers are at different levels of comfort with the pandemic.
"They've got a number of [internal] clients where they're not back in their offices yet, and they don't really want people to come see them," Oberg said. "You've got others that actually are starting to be in the offices more. In talking to colleagues around Marriott, I'm starting to hear of a few business trips where they are wanting our people out there. So, I think it's kind of steadily moving in the right direction. It's just starting from an incredibly low point."
When asked about group business, Oberg explained that Marriott's group business is comprised roughly of 40 percent association, 40 percent corporate and 20 percent social events, like weddings. Many associations hold annual conference as a critical revenue raiser, and as such are waiting as long as possible before canceling those events, she said. Marriott has seen a few such cancellations for the first half of 2021, but not for the back half of the year or beyond, she said.
Corporate group demand, on the other hand, will depend more on the state of the economy, she said, and "we need the economy to stay fairly healthy for corporate America to continue to generate a lot of this demand." Still, she thinks there is pent-up corporate demand on the part of corporations, but it will be tempered by some companies' financial state.
"But fundamentally, in terms of the reality that the group demand is still there, we feel really good, Oberg said. "I think there's actually the possibility of additional corporate demand from remote work and the fact they want to get their folks together, who are now working more remotely, so we feel really good about it."
Meanwhile, Greater China continues to recover, with August occupancy of 65 percent, Oberg said. In addition, in the Asia/Pacific region the company is up 30 percent in room signings compared with a year ago, which she called "pretty extraordinary."