Group business already on the books for the first quarters of 2022 and 2023 at Marriott International's U.S. and Canada properties has been booked at higher average rates than similar bookings were in 2019, Marriott CEO Tony Capuano said on a Monday earnings call. The U.S. and Canada is the company's largest region, according to Capuano.
"Rates for group room nights booked in the first quarter for 2022 and 2023 are currently 6 percent and 10 percent, respectively, above pre-pandemic levels, demonstrating that we are not trading rate for occupancy," he said. "At the end of the quarter, group revenue on the books for 2022 was down less than 15 percent compared to group revenue on the books as of the end of the first quarter of 2019 for 2020."
Still, while group rates may be up, the number of group room nights on the books for the first quarter of 2022 is down 30 percent compared with 2019 bookings, said Marriott EVP and CFO Leeny Oberg, adding, "It's early days. We've only seen Q1. So, I think part of this is the uncertainty I was pointing out that people are looking for just a bit more clarity around—Is it August? Is it October?—when people are more comfortable having these large group meetings where everybody can be together."
Q1 2021 Metrics
First-quarter comparable Marriott systemwide constant-dollar revenue per available room declined 46.3 percent year over year, and 59.1 percent compared with the first quarter of 2019. Global occupancy reached 37.7 percent, down 15.3 percentage points year over year, and ADR was $121.02, off by 24.5 percent compared with a year prior. For the U.S. and Canada, RevPAR declined 46.3 percent year over year, and 57.1 percent compared with 2019.
The company, however, is seeing monthly sequential improvements in its key lodging metrics.
"In March, we saw the largest month-over-month sequential increase in global occupancy since the beginning of the pandemic," Capuano said. "Occupancy reached over 45 percent, up 9 percentage points from occupancy in February." In April, it rose to about 48 percent, he added.
Comparable systemwide RevPAR was down 53 percent in March compared with 2019, but that represented an 8 percentage point improvement over February, while April improved further, down about 50 percent from two years ago, Capuano said.
Though special corporate bookings in the U.S. and Canada remain below pre-pandemic levels, they are slowly recovering. "In March, special corporate bookings for all future stays exceeded February's bookings by 25 percent, the largest sequential monthly increase in this customer segment since the pandemic began," Capuano said. "And special corporate bookings took another nice leg up in April, improving 13 percent over March."
As for corporate rates, Oberg pointed out that most of Marriott's large clients rolled over their rates from 2020 into 2021, "so you see a pretty steady sort of pricing, while if you look at the last recession, they actually went down by 6 percent," she said. "As we get into this fall, we'll see where that goes for 2022 because that's typically when we go out and renegotiate those rates for next year. But for this year, they've held pretty steady."
Where demand has rebounded swiftly, so too have average rates, Oberg added. "In the U.S., occupancy across our 34 luxury resorts rose to 59 percent in March, leading to ADR up 26 percent over March of 2019," she said. "Similarly, certain resort properties in Caribbean destinations saw record first-quarter ADR as a result of sudden surges in occupancy."
Development Pipeline
Marriott added 134 new properties with 23,567 rooms globally during the first quarter, "which was 60 percent more than during the first quarter of 2020," said Capuano. About 7,300 of those rooms—31 percent—were added from conversions, "the highest percentage in any quarter over the last six years," he added. Nearly 12,000 rooms were added in international markets.
The company's worldwide development pipeline totaled approximately 491,000 rooms. More than 222,000 rooms in the pipeline were under construction as of March 31.
"If you look at the current pipeline today, interestingly, about 40 percent of the global pipeline is full-service, and even within that 40 percent, 25 percent of those full-service rooms are in the luxury tier, and I think that's quite encouraging for us," Capuano said.
Marriott also reported a net loss of $11 million for the quarter, compared with net income of $31 million one year ago.
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