Marriott's North America revenue per available room
increased just 0.2 percent year over year in the fourth quarter. Labor strikes
in big markets like Boston, San Francisco and Honolulu contributed by shaving
half a point from growth, according to president and CEO Arne Sorenson. He also
said weaker-than-expected transient demand led to a "lighter-than-we-anticipated"
fourth quarter.
Occupancy fell 0.7 percentage points year over year in the
fourth quarter to 70.2 percent, and average daily rate increased 2.2 percent to
$159.15. Revenue per available room rose 1.3 percent to $117.37. For the full
year, occupancy grew 0.4 percentage points to 73.2 percent, while ADR rose 2
percent to $160.37. RevPAR grew 2.6 percent to $117.37.
Sorenson said he is "a touch more optimistic"
about Marriott's 2019 than he was a quarter ago. North American RevPAR grew 0.5
percent in January despite the government shutdown, and Marriott expects
worldwide and North American RevPAR each to grow between 1 and 3 percent and
net rooms to grow 5.5 percent this year.
Marriott added more than 80,000 rooms in 2018 and signed a
record 125,000 rooms to its worldwide development pipeline, equivalent to
almost 10 percent of its existing portfolio. Marriott's total pipeline stood at
478,000 rooms at the end of the year.
Adjusted net income increased 23 percent year over year in
the fourth quarter to $497 million and rose 38 percent for the full year to $2.2
billion.
Updates: Data Breach,
Loyalty Program & Expedia Contract
In late November, Marriott
disclosed a data
breach that had occurred in Starwood Hotels & Resorts'
reservation database before Marriott acquired the company. On its earnings call
Friday, Marriott reported that the call centers it established to field data
breach complaints logged 40,000 calls in December, 6,000 calls in January and
less than 3,000 calls in February. The company claims to have added security
measures to its own system to protect against future breaches. It said the
breach won't have any "material RevPAR impact." Baird equity research
analyst Michael Bellisario told BTN the data breach did not drive loyalty
members away either. "It was probably more an annoyance than an, 'Oh my
gosh, I have to defect from my Marriott loyalty and go somewhere else,'"
he said. "When the dust settles here—let's say in 24 months, 12 months—the
data breach is going to be insignificant."
That's good news for Marriott. Sorenson characterized the
rewards program, now called Bonvoy,
as the most important brand under the Marriott umbrella "because that's
what binds our relationship with our customers across the entire
portfolio," he said. Bonvoy totaled 125 million members at the end of
2018.
Marriott rolled out Bonvoy in January after unifying
The Ritz-Carlton Rewards, Starwood Preferred Guest and Marriott Rewards
programs in August. The company reported that reward redemptions increased 8
percent in 2018 compared with the combined 2017 performance of the preceding
rewards programs, and rooms nights sold through the loyalty program increased 6
percent, both setting records. Half Marriott's room nights were booked by loyalty
members in 2018. "We believe the cost of our loyalty program is the lowest
among our competitors in the hotel business while delivering the highest value to
guests," Sorenson said. The company is adding 1.5 million loyalty members
a month, the company reported. Sorenson said it's not just about the total
number, however, and that Marriott is focused on signing up people who will
become consistent users of Bonvoy.
Entering the new year, Marriott was thick in distribution
negotiations with online travel agency Expedia after an agreement in
December extended the partners' contract while they work out details. Sorenson
said Friday they are making "good progress." While the terms of that
negotiation have not and will not become public, Sorenson offered a window into
the hotelier's strength: Room nights booked directly on Marriott websites and
through the app increased 11 percent, totaling 28 percent of all bookings for
the year, while OTAs' share remained flat. The report did not include what
percent of Marriott room nights are currently booked through OTAs.
RELATED: Marriott Q3 earnings