Marriott International’s fourth-quarter business transient demand reached nearly 90 percent recovery, with average daily rate and revenue per available room each increasing 3 percent from 2019 levels, president and CEO Anthony Capuano said Tuesday during a quarterly earnings call. Momentum is continuing in 2023, executives said.
Meanwhile, the company’s negotiated corporate rate growth for 2023 is "in the high single digits after holding these rates steady the last two years,” Capuano said.
Leeny Oberg, Marriott CFO and executive VP of business operations, attributed the company’s continuing momentum in the first quarter to rising cross-border travel and strong group revenues due to demand and ADR gains, adding that “business transient revenues are benefiting from higher volumes and our successful special corporate rate negotiations." January global RevPAR increased 52 percent from omicron-hobbled January 2022, while U.S. and Canada RevPAR increased 43 percent, she said.
Capuano added that the company’s “day-of-the-week trends in the U.S. and Canada continue to point to the blending of business and leisure trips in the fourth quarter [while] midweek occupancy was still down mid-single-digit percentage points versus 2019.”
Additionally, the average length of a business transient trip in the U.S. has increased by more than 20 percent compared with 2019, according to Marriott executives.
While the company finished the year on a “real high note” for RevPAR, reporting a 7 percent increase in December from 2019 and seeing “sequential improvement" each quarter "in global occupancy and ADR compared to 2019,” Marriott ended the year with fourth-quarter occupancy down 5.1 percentage points, to 64.5 percent.
Worldwide RevPAR in the fourth quarter grew 4.6 percent compared with 2019 levels to $113.83, which was driven by a 12.8 percent increase in ADR to $176.46, according to Capuano. In the company’s largest region of the U.S. and Canada, Q4 RevPAR increased 5 percent over 2019, driven by an 11 percent increase in ADR, Capuano added.
Additionally, group business proved to be a “bright spot” for Marriott in Q4, Capuano said. The sector experienced the “most meaningful improvement in 2022 in the U.S. and Canada” as fourth-quarter group revenues increased 10 percent over the same quarter in 2019, Capuano said.
Looking Ahead amid Executive Changes
The bright spot continues to shine, according to Capuano, as group revenue for 2023 is pacing up 20 percent year over year, with “room nights and rate gains each quarter.” Marriott executives expect group revenues to strengthen further this year thanks to “strong lead generation and increased rate quotes.”
Group president of international Craig Smith will retire “later this month,” following a 35-year career with Marriott, Capuano said.
The news follows former president Stephanie Linnartz’s move to Under Armour as president and CEO effective Feb. 24, announced in December. Capuano will take the title of president upon her departure.
As for economic concerns, Marriott executives foresee a “relatively steady global economic picture throughout 2023 with continued resilience of travel demand across customer segments and markets,” Oberg said, adding that Marriott projects “a meaningful softening of the global economy beginning in the second quarter.”
Executives on the call also shared optimistic outlooks surrounding demand, expecting it to grow in 2023 as China’s reopening begins to materialize. Additionally, Marriott executives said hiring challenges have moderated and the number of open positions in the U.S. are currently below 2019 levels. The company also instituted “modified housekeeping protocols by quality tier,” according to Capuano.
Additional Q4 Metrics
During Q4, Marriott added 145 properties and nearly 22,600 guest rooms to its worldwide lodging portfolio, according to the company. By the end of 2022, Marriott’s global lodging system totaled nearly 8,300 properties and more than 1,525,000 guest rooms. The company leads in development with the greatest number of projects and rooms among top hotel companies. Gross room growth for the company was 5.5 percent year over year.
Marriott reported fourth-quarter operating income of $996 million, up from $635 million on year prior. Net income for the company totaled $673 million, up from $468 million in the fourth quarter of 2021.
Marriott reported Q4 worldwide RevPAR increased 28.8 percent year over year. RevPAR in the U.S. and Canada increased 23.6 percent and RevPAR in international markets increased 45.1 percent.
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