Marriott “quite bullish” on outlook for hospitality

Tokyo

Marriott International, the hotel owner and franchise operator, says there are “green shoots” appearing amid the palls of gloom surrounding the company and its industry.

Stephanie Linnartz, group president, consumer operations, technology and emerging businesses, said: “While no one can know how long this pandemic will last, we are seeing some small, early signs that the acceleration of vaccine rollouts around the world will help drive a significant rebound in travel and lodging demand,” she said.

The company is “quite bullish about the overall outlook” she added.

Ms Linnartz is one of two lieutenants sharing responsibility at Marriott following the illness and death of Arne Sorenson, Marriott’s president and chief executive officer. Mr Sorenson died with pancreatic cancer on 15 February, three days before the latest earnings figures were posted.

The observations about recovery came as Marriott became the latest company to report dire figures for 2020 and say that business pressures continued into the fourth quarter.

Ms Linnartz said: “With the global pandemic, 2020 was the most challenging year in our 93‐year history. In April, we experienced the sharpest worldwide RevPAR decline on record, down 90% year over year with just 12% occupancy.”

Marriott’s net loss was $164 million in the last three months of 2020 against net income of $279 million in the same period of 2019. The performance was weaker than in the third quarter but substantially better than in the second three months of 2020.

RevPAR declined 64% worldwide. Occupancy was 35% in the fourth quarter, about the same as the third quarter, but well above the numbers recorded in April.

As seen in results from Hilton Worldwide published on 17 February, Marriott’s European assets did noticeably worse in terms of occupancy and RevPAR than its US or other international properties. Occupancy and RevPAR figures for China were notably stronger in the fourth quarter, however.

The net loss in the full year was $267 million against $1.3 billion of income in 2019. Diluted loss per share was 82 cents compared to earnings per share last time of $3.80.

Ms Linnatz said: “Demand around the world improved from this trough at varying rates, with China leading the way. RevPAR in mainland China saw a meaningful rebound through the year and was down less than 10 percent year over year in December.”

As of 31 December 2020, Marriott’s portfolio consisted of around 7,600 properties and timeshare resorts and nearly one and a half million rooms. The company added 109 new properties and 17,780 rooms to its worldwide total during the 2020 fourth quarter, including roughly 2,600 rooms converted from competitor brands and approximately 9,000 rooms in international markets. Forty‐six properties (8,011 rooms) were taken out of the Marriott system during the quarter.

It added nearly 63,000 rooms in all during 2020, growth of 3.1% percent from year-end 2019.

The company said there were another 2,881 properties with more than 498,000 rooms in its development pipeline. There were, it said, 1,187 properties, with more than 229,000 rooms, under construction and 119 properties with roughly 20,000 rooms approved for development but not yet subject to signed contracts.

The company operates under thirty brands including JW Marriott, Sheraton, Le Méridien and Ritz-Carlton in 134 countries and territories. Marriott operates and franchises hotels and licenses vacation-ownership.

The company suspended dividend payments and share buybacks as the pandemic hit early last year.

Insight

The death of Arne Sorenson cast a sad shadow over Marriott’s full year and fourth quarter results. On top of the ordeal brought by the COVID pandemic, Mr Sorenson’s passing is hard to bear for anyone even remotely associated with the company he led from 2012.

Tributes to Mr Sorenson came from the company, of course. He was remembered warmly by colleagues and analysts and other companies, by Hilton and Choice Hotels for instance, and from executives he knew outside the hospitality industry.

One of the most telling qualities of leadership comes in the assessment of the strengths of a company – or any organisation – after they leave. It may be too early to come to definitive conclusions about Mr Sorenson’s legacy: the opacity goes from hard to virtually impossible given Covid.

But there is one observation we can make. In 2013, close to the beginning of Mr Sorenson’s tenure, there was no mention of China in the full year earnings release. This week, China merited its own entries in financials, the only Asia Pacific nation to be singled out.

Making sure Marriott had a sizeable business in the world’s most exciting economy? For Mr Sorenson, that is an enduring achievement in itself.