Consistent with the recently reported effects of the coronavirus pandemic on other hotel companies, Marriott International on Monday reported a 22.5 percent year-over-year decline in systemwide first-quarter revenue per available room. It was down 19.5 percent in North America, and down 30.4 percent in the rest of the world.
About one-quarter of the company's hotels worldwide are closed—including 16 percent of North American hotels and about three-quarters of European hotels—and RevPAR and occupancy figures include those properties, said president and CEO Arne Sorenson on a Monday earnings call. For the three months ending March 31, occupancy declined 14.5 percentage points year over year to 53.6 percent. Average daily rate declined 1.5 percent to $157.55.
Excluding Greater China, where the pandemic first was reported, worldwide RevPAR in January had been up 4.6 percent, and in February, excluding the Asia-Pacific region, it was up 3.2 percent. "As the pandemic moved around the world, we saw global RevPAR fall sharply, and in April worldwide RevPAR declined approximately 90 percent," Sorenson said.
Still, the company is beginning to see a rebound in Greater China, with occupancy reaching 24.6 percent for the quarter, up from less than 10 percent in mid-February. RevPAR there was down 67 percent year over year for April, compared with an 85 percent decline in February, according to Sorenson. He added that there was strong demand for a five-day Chinese holiday in early May, with overall occupancy up to 45 percent, and close to 70 percent in resort markets.
"The news is overall that the negative trends appear to have bottomed in most regions," Sorenson said. "Looking at our occupancy and booking trends, it appears that lodging demand in most of the rest of the world has stabilized, albeit at very low levels. Occupancy was around 20 percent over the past two weeks in North America limited-service hotels, benefitting from leisure and drive-to demand."
Sorenson added that as some beaches reopened, the company expected last weekend's occupancy at properties in Santa Barbara, Calif., and Hilton Head, S.C., to reach 50 percent based on reservations on the books.
Marriott reported first-quarter net income of $31 million, compared with $375 million for the quarter ending March 31, 2019. The company in April 2020 issued $1.6 billion of senior notes and in early May raised $920 million in additional liquidity through amendments to its co-branded credit card agreements. The company's net liquidity as of May 8 has increased to approximately $4.3 billion.
The company added more than 14,500 rooms globally during the first quarter, up 4.4 percent year over year. Nearly 2,100 rooms came from conversions and approximately 7,200 rooms were in international markets. As of March 31, Marriott's development pipeline totaled nearly 516,000 rooms across nearly 3,050 hotels. More than 230,000 rooms in the pipeline were under construction as of the end of the first quarter, or about 45 percent.
The company expects that the effects of Covid-19 will include fewer new room openings in 2020 than had been budgeted, but it is seeing an uptick in owner interest in discussing conversions to Marriott brands.
Sorenson also announced that on Monday, Marriott would introduce a new promotion for guests to buy gift cards at a 20 percent discount for future stays.
Grissen to Retire in 2021
Marriott announced that group president for the Americas Dave Grissen will retire in the first quarter in 2021 after 36 years with the company. Liam Brown, current head of Europe, the Middle East and Africa, then will take on the role of group president of North America, and Craig Smith, who currently oversees the Asia/Pacific region, will become group president of international.
Further, J.W. Marriott, Jr., known as Bill, will transition to the role of chairman emeritus in 2022. In anticipation of that event, David Marriott plans to join the board of directors in 2021. Should that happen, he will step down from his executive position of president of U.S. full-service properties managed by Marriott at that time.
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