In Marriott International's first earnings call after the death of president and CEO Arne Sorenson earlier this week, the company reported significant year-over-year declines in key performance metrics in the fourth quarter and for full-year 2020, but it also highlighted some "green shoots," including increased demand for corporate transient bookings and improving group lead volume in the United States and Canada.
"In January, we had a very strong month for group bookings in 2022 and beyond," said Marriott group president for consumer operations, technology and emerging businesses Stephanie Linnartz. "Additionally, this business was booked at average daily rates 11 percent higher than business booked in January 2020 for stays in 2021 and beyond. These are encouraging signs that there is a strong demand for travel in future years once real progress has been made in containing the virus."
At the end of 2020, Marriott's group booking pace for 2021 was down 57 percent year over year, but the second half of the year was down just 25 percent to 30 percent, Linnartz added. Cancellations also have slowed for the second half of 2021 and are at normal levels for 2022. Further, the company is beginning to see "more normal types of groups," such as some incentive meetings for the fourth quarter of 2021.
Q4 and Full-Year 2020 Metrics
Marriott's fourth-quarter comparable systemwide revenue per available room on a constant-dollar basis declined 64.1 percent globally year over year, 64.6 percent in the U.S. and Canada, and 62.7 percent elsewhere.
Its worldwide occupancy rate was down 35.6 percentage points to 34.9 percent, a drop of 35.6 percentage points. Occupancy averaged 35.1 percent in the U.S. and Canada, and 34.2 percent outside the U.S. and Canada. Average daily rate dropped 27.4 percent systemwide. In the U.S. and Canada, it was down 29.4 percent. Elsewhere, it declined 22.3 percent.
Of the international regions, Europe struggled the most amid a new wave of Covid-19 cases coupled with re-imposed restrictions and lockdowns. RevPAR was down 86.1 percent year over year for the quarter and occupancy reached just 14.5 percent.
For the full year, the numbers looked similar. RevPAR was down 60.2 percent year over year, occupancy was down 37.1 percentage points to 35.5 percent, and ADR dropped 18.5 percent.
Marriott added nearly 63,000 rooms globally during 2020 and saw net rooms grow 3.1 percent year over year. By Dec. 31, the company's global development pipeline totaled nearly 2,900 properties and more than 498,000 rooms, including about 20,000 rooms approved but not yet subject to signed contracts. More than 229,000 rooms in the pipeline were under construction as of the end of 2020.
Earlier in February, the company announced an agreement with Sunwing Travel Group that will add 19 all-inclusive resorts, or about 7,000 rooms, to its portfolio in the Caribbean, Central America and Mexico. The majority are expected to be converted into Marriott's Autograph Collection by mid-2021.
Though the company did not provide much guidance due to the uncertain nature of the environment due to the pandemic, it does expect for full-year 2021, "assuming progress is made containing the virus, gross rooms growth to accelerate to approximately 6 percent" said group president of global development, design and operations services Tony Capuano. "We also expect to see a meaningful impact from conversions this year." In the fourth quarter, 21 percent of signings were conversions, which was the highest percentage contribution from conversions the company has seen since the first quarter of 2019, he added.
Marriott reported a net loss of $164 million for the fourth quarter, and a loss of $267 million for full-year 2020.
China Continues to Lead the Recovery
In mainland China, occupancy reached 60 percent in July and remained above that level through the end of 2020, and fourth-quarter RevPAR was down only 12 percent year over year, according to Linnartz. But with new restrictions and shutdowns in 2021, occupancy fell to around 40 percent year-to-date for the region.
"The good news is that once these temporary shutdowns are lifted, we have seen demand return quickly," she said. "For example, occupancy in Chengdu and Qingdao recently jumped from around 20 percent to over 60 percent in just two weeks after their local governments announced the virus outbreaks were under control and removed travel restrictions."
Though leisure is the strongest driver of the recovery in China, like elsewhere around the globe, business transient group demand continued to rebound in the fourth quarter, said SVP and CFO Leeny Oberg. "Group stays comprised around 20 percent of overall room nights in the fourth quarter, back in line with 2019 distribution."
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