Marriott International CEO Arne Sorenson said that, since the group’s third-quarter earnings, the near-term had got worse in terms of the spread of the pandemic, but news of a vaccine had meant that the medium and long term looked better.
The CEO described Europe as “among the weakest big markets in the world”, as the virus numbers increased and governments were more inclined to re-impose restrictions.
Speaking to the Morgan Stanley virtual global consumer & retail conference, Sorenson said: “We can sit here and say with a greater level of confidence than a month or two ago that sometime in 2021, we should see a shift towards the environment in which the virus is receding into the rear view mirror.”
The CEO said that, as the business moved away from the pandemic, it expected to keep some technology traits, commenting: “We’re not a tech company…but we’ve got a loyalty programme and a dotcom site and an app where we are probably one of the top 10 globally in terms of the dollars of volume we do through our site.
“There are aspects of this reliance on technology, which will remain good for us in the years ahead. I think digital check-in will be something that gets accelerated because of the pandemic that we’ve been through.”
Looking at current trading, Sorenson described China as “the brightest, big market in the world”, with the business nearing 2019 levels. He said: “One of the reasons for that is that prior outbound business from China has stayed in China. You’ve got an economy which is performing better compared to the rest of the world relative to 2019, but you’ve also got stay-at-home demand. It is a positive sign about what the rest of the world can look like when the virus gets more under control.”
Addressing business travel, the CEO said that as long as offices remained closed in the bigger cities and with the larger employers showing “dramatically higher flexibility”, there were were reasons for business travel.
He said: “Economic strength is highly correlated to lodging demand and to spending. Over time, we will see that people like to travel, they like to travel for work.”
Sorenson acknowledged that the decline of corporate travel meant growth in the share of business coming in through the OTAs, but said that direct channels had also grown. The GDS had, he said, fallen as business travel had dropped.
He said: “We certainly want to get that leisure business staying with us, so that we get more than our fair share of our business. And in a way that is what’s more clearly value add and incremental business to us from the OTAs than would sometimes appear to be the case. We’re glad to have that business.”
When asked about the Airbnb IPO and Marriott International’s approach to alternate accommodation, Sorenson said: “We’ve never been the business of providing the cheapest place for people to stay with. We’ve been in the business of providing quality and predictability and luxury.
But, there was another business here, a whole-home product, which was quite different from a hotel room. And we thought with the loyalty programme and the continued shift towards leisure, this would be a good place for us to be.”
Insight: It’s not often when the long-term view brings universal happiness to anyone other than the insanely optimistic, busy running through wheat fields in the sunshine, at least in the business world. But here in the world of the pandemic all of us lucky enough to have thus far avoided contact with the virus are instead trapped in a yawning chasm of arch predictability. And if you’re a hotel, that predictability is not the good kind. It’s the kind where you get the ‘death’ card and squeak “but that means change, right?”.
And change it does. The sector is now looking to the rollout of various vaccines with two heads: the one which tells it that there are still some months to get through yet and the one which is able to stick a head above a parapet and wonder how the world will look when we start moving around again.
Technology has been a universal factor in the sector, with hotels finally listening to what guests having been telling them for years: technology means better, not worse service. Owners are now hoping that, as more familiar service is resumed, the brands will remember that technology has been good for keeping costs down and not start piling unwanted technology into brand standards. One lesson owners is hoping will stick.