Marriott International reported better-than-expected demand
from group and business transient segments in North America and Europe during
the first quarter.
In North America, group revenue per available room increased
7.7 percent year over year. Group RevPAR at select-service hotels increased 10
percent. While hotels in this tier don't typically attract large volumes of
group travel, CEO Arne Sorenson said high group occupancy is leading to more
bookings down segment. The inauguration and marches in Washington during the
month of January, as well as the shift of Easter to the second quarter, also
benefited hotels.
Sorenson said North American transient demand "exceeded
our expectations" and the company "improved the mix of transient
revenue drawing more high-rated retail and corporate customers and reducing
discounts." He said: "We feel a bit more encouraged by corporate
travel this quarter than we did a quarter ago. But let's be careful about
throwing all caution to the wind here. … We see companies that are reporting
better corporate profits and as a consequence, we feel a bit better, based both
on the actual results in Q1—which to be sure was benefited by Easter—but also
by [the] tenor in the marketplace."
In Europe, RevPAR grew 7 percent year over year, fueled by
strong transient and group demand, as well as inbound travel from international
markets. "European room nights sold to U.S. travelers alone increased at a
mid-teens rate in the first quarter," Sorenson said. Corporate business
also provided a boost to the Asia/Pacific region, which saw RevPAR increase 5
percent.
Systemwide occupancy rose 1.7 percentage points to 69.3
percent, while average daily rate increased 0.6 percent to $157.13. All the statistics Marriott used to
calculate year-over-year changes from 2016 to 2017 assume that Marriott's
acquisition of Starwood Hotels & Resorts and Starwood's sale of its
timeshare business closed on Jan. 1, 2015. The company's first-quarter 2017
adjusted net income, which excludes merger-related costs, increased 36 percent to
$395 million.
The positive
first-quarter results led Marriott to change its full-year guidance for RevPAR growth
from a range of 0 to 2 percent growth to a range of 1 to 3 percent, putting
Marriott's outlook in line with Hilton's and ahead of Hyatt's.
Marriott added more than 17,000 rooms across 103 properties to its
portfolio during the quarter, more than a third of those rooms outside the U.S.
As of March 31, Marriott's pipeline totaled 430,000 rooms.