Business travel demand continues to recover in Marriott International's largest markets, US and Canada, while revenue per available room (RevPAR) in Europe increased by 90.3 per cent year-over-year to reach $156.10, outpacing the global growth rate by 60 per cent.
The company reported “outstanding results” for the third quarter during an earnings call on Thursday (3 November), with global RevPAR rising nearly 2 per cent above 2019 levels, according to Marriott CEO Anthony Capuano.
Marriott’s third-quarter business transient demand in the US and Canada, the group’s largest market, increased to 11 per cent below 2019, compared with 13 per cent down in the second quarter.
Capuano said “small- and medium-sized companies, which are about 60 per cent of those [business travel] room nights are fully recovered”, but larger companies, especially those in the technology sector, remain behind 2019 demand levels.
Meanwhile, Capuano said that in-progress negotiations for 2023 herald higher corporate rates.
"After two years of holding rates steady, the early results look positive for at least high single-digit year-over-year rate growth," he said.
Group revenue on the books for 2023 is “currently pacing down about 11 per cent relative to 2019,” Capuano stated on the call, while noting “the short booking window on transient, a similarly short booking window on group.”
Still, Capuano said Q4 group bookings are “up 4 per cent, and we think that will likely improve through the quarter, given the strength of short-term bookings and the trade that many of our customers are making for flexibility and they're willing to pay a higher rate.”
Additionally, group business is being booked with short turn-around times. “About 50 per cent of the group business we've seen year-to-date in 2022 was booked in the year, for the year. That's about double what we saw pre-pandemic,” Capuano noted.
Q3 metrics
Marriott third-quarter global RevPAR increased 1.8 per cent over 2019 levels – a first since the pandemic – and the company projects an increase up to 4 per cent going in Q4.
Marriott’s third-quarter worldwide RevPAR in Q3 2022 reached $120.60, a 36.3 percent year-over-year increase.
Occupancy reached 69.2 per cent, up 10.8 percentage points year over year. Average daily rate (ADR) reached $174.19, a 15.1 per cent increase year over year – and 10 per cent above 2019 levels.
In Europe, RevPAR was 5.9 per cent above 2019 levels, where demand was boosted by increased cross-border travel and a strong US dollar, according to Capuano.
Occupancy in Europe for the quarter stood at 72 per cent, up 25 percentage points year over year, while ADR reached $216.92, a 24.1 per cent increase year over year – and 15.5 per cent above 2019.
“Compared to pre-pandemic levels, worldwide RevPAR in September reached a new monthly high watermark, increasing more than 4 per cent – or nearly 7 per cent, excluding Greater China,” Capuano said.
“RevPAR compared to 2019 improved sequentially from the second quarter in every region around the world,” Capuano said.
Marriott's operating income totalled $958 million during the quarter, nearly doubling its Q3 2021 operating income of $545 million, according to the company.
As for development and growth, Marriott reported a pipeline of more than 3,000 properties and 502,000 rooms, “including roughly 33,300 rooms approved, but not yet subject to signed contracts.”
“Approximately 204,800 rooms in the pipeline were under construction as of the end of the 2022 third quarter” the company added.
“This is actually the 20th straight quarter where we’ve had more than 200,000 rooms under construction globally,” Capuano said, while acknowledging the growth in Greater China is disproportionate due to the region’s renewed zero-Covid policy and restrictions.
Capuano also noted the company’s pending acquisition of its City Express brand will mark Marriott’s “entry into the affordable midscale segment” in the Caribbean and Latin America, and “this acquisition gives us the opportunity to evaluate whether it makes sense to enter mid-scale in any other market.”