Excerpt from CoStar
Group, Corporate Demand Recovery Accelerates
On business trips to visit hotel associates through Europe, the Caribbean, Latin America and the U.S., Marriott International CEO Tony Capuano said he saw the strong desire people have to travel.
During the company’s third quarter earnings call, he said the strong global revenue per available room recovery momentum in the spring continued into the summer “thanks to sustained robust leisure demand and impressive average daily rates.”
“It's been wonderful to see so many people traveling again and to witness firsthand the resilience of global travel,” he said.
Marriott worldwide RevPAR in July reached a new peak since the start of the pandemic, down just 23% from 2019 levels. Occupancy rose to 61% in July, an increase of more than 500 basis points from the month before. ADR was down only 3% compared to July 2019.
Global demand softened in August because of the COVID-19 delta variant and the resulting delay in many companies’ return to office plans, he said. Demand stabilized in September before growing in October, but recovery trajectories remain varied by region.
Third quarter RevPAR in the U.S. and Canada improved across all of Marriott’s brand tiers and market segments, he said.
“While primary markets are still the most challenged, these markets saw the largest RevPAR gains during the quarter as demand in gateway cities like New York continued to rise,” he said.
Group, Business Demand
Group demand accelerated during the quarter in the U.S. and Canada, with group room revenue for the quarter down 46% compared to the third quarter of 2019, Capuano said. That’s a significant improvement compared to a 76% year-over-year decline in the second quarter, he added.
Group business on the books has increased, as bookings made in the year for the year in the U.S. beat 2019 levels for each of the past five months through October, with the pandemic shortening event booking windows. Group ADR continued to rise, and full-year 2022 is currently pacing almost 4% above pre-pandemic levels.
In the U.S. and Canada, the delta variant affected the special corporate guest segment the most during the quarter because it delayed plans for return to office, he said. Special corporate is the segment of business transient customers who book at pre-negotiated rates. The company estimated this segment accounts for almost half of its business transient room nights.
“Special corporate bookings showed steady recovery each month this year until we saw a slight pullback in the back half of the third quarter,” he said. “The gradual upward trajectory returned in October with bookings versus 2019 growing each week during the month. Special corporate bookings are currently down less than 40% compared to the same time frame in 2019.”
The recovery of business transient will continue gradually as more workers return to the office, guest visitation policies ease and more employees are allowed to travel again, he said. Additionally, the company expects the traditional business trip will continue to evolve with the blurring of the lines between business and leisure travel.
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