Why Marriott is bullish on leisure for 2022

Insight Comment Early signs of an impending comeback in global corporate travel have perhaps given way to jitters that nothing is ever going to be the same again. With all that in mind it makes sense that companies are focusing efforts on leisure travel, which at the moment doesn’t look like it is going to slow down.

While there’s been plenty of chatter about the return of corporate travel (at least in certain markets), leisure travel has been the real driver for hotel companies since Covid-19 pandemic restrictions began to ease earlier this year, and Marriott International believes this will continue into next year.

Asked by analysts on a call to discuss its third-quarter earnings whether the boom in holidays could be sustained into 2022, CEO Tony Capuano said Marriott continued to be “bullish about leisure.”

“We think there's lots more run room in terms of this leisure-led recovery,” he said.

Marriott has actually seen leisure travel grow at a faster rate than corporate travel since 2010, so the current performance shouldn’t be seen as surprising.

Speaking on the same call, chief financial officer Leeny Oberg listed a few reasons why Marriott was so confident: “[T]here's still some pent-up demand as well as increased savings rates, and frankly, more flexibility in travel,” she said.

Marriott’s bullishness was backed up by the performance in the third quarter with worldwide occupancy up to 58% compared with 23% in the prior year.

"Globally, leisure travel generally remained very strong throughout the quarter, while the Delta variant had the most impact on business transient demand. With the worst of the Delta variant wave now hopefully behind us, business transient demand picked up again in October, a trend we expect to continue,” Capuano said in a statement accompanying the results announcement.

As previously mentioned, Marriott has been making big investments in leisure travel even before the pandemic with resorts becoming a key growth area. The company bought Elegant Hotels, the owner of seven hotels and a beachfront restaurant in Barbados, back in 2019 and also signed a long-term agreement with Sunwing Travel Group’s hotel division, Blue Diamond Resorts, earlier this year.

Marriott isn’t the only company to target growth in this area, Hyatt made a huge investment with the recently closed acquisition of Apple Leisure Group.

All this isn’t to say that Marriott is giving up in business travel, an area that other hotel companies have talked up.

“From conversations with our corporate customers, we know that many of them, especially those with more client-facing jobs, are increasingly eager to get back on the road,” Capuano said. 

“We expect a recovery in business transient to gradually continue as more workers returned to the office, guest visitation policies are relaxed, and greater numbers of employees are permitted to travel again. We also expect the traditional business trip to continue to evolve with a blurring of the lines between business and leisure travel.”

Q3 Results

Worldwide RevPAR increased 118.4 percent compared to the 2020 third quarter but was down 25.8 percent versus 2019.

Total revenue reached $3.9 billion, up 75% on the prior year and pre-tax profit more than doubled to $278 million.