Marriott So Far Feeling Immune to a Downturn
Photo Caption: In July, The Ritz-Carlton New York, NoMad debuted in Manhattan 50 stories above the North of Madison Square Park district. Source: Marriott International.
Skift Take
Reading between the lines, Marriott International executives suggested that their company has so many strong fundamentals that it could shrug off choppy economic waters for the rest of the year.
Hoteliers have recently sounded relaxed about any impact of inflation and a possible recession on their industry, and Marriott International executives were no exception when the company reported second-quarter results it called "outstanding" on Tuesday.
Marriott generated $678 million in net income — a measure of profit — off of $5.3 billion in revenue.
"We have yet to see signs of a slowdown in global lodging demand," said CEO Anthony Capuano. "We continue to see double-digit increases in the average daily rate for the Labor Day [September 5] holiday weekend relative to where we were pre-pandemic."
Investors are seeking recession indicators after an apparent second-quarter of contraction in the U.S. economy and stuttering economies in the European Union.
Yet the operator of brands ranging from Ritz Carlton to Courtyard said it hadn't yet encountered pockets of traveler resistance. Forward leisure bookings for holidays, such as Thanksgiving and Christmas, through the rest of the year, are "strong" and the "pace of those bookings is very encouraging."
"The pent-up demand for all types of travel, the shift of spending towards experiences versus goods, sustained high levels of employment, and the lifting of travel restrictions and opening borders in most markets around the world are fueling travel," Capuano said. "Small- and medium-sized businesses are back above 2019 levels [for business transient travel]."
Looking at Inflation, Pricing, and Labor"At the end of the second quarter, group revenue per available room for the rest of the year was pacing just a few percentage points down from 2019 levels," Capuano said. "We expect additional short-term bookings will further bolster group revenues, which could lead to second-half group revenues being even with or slightly above 2019 levels."
Investors have also been eying the toll inflation might take on hoteliers. But the company has coped with rising prices so far by hiking its room rates at a pace faster than general inflation. In the U.S. and Canada, its rates were 8 percent higher in the second quarter than in 2019, even though its occupancy was down 5 percent from the pre-pandemic level.
The company reported its U.S. and Canadian revenue per available room — or RevPar, a key industry metric — was $131.53 in the quarter, up 1.3 percent from the same quarter in 2019.
In Europe, its revenue per availabl
