Skift Take
It is difficult to be optimistic about fall hotel performance for business like Marriott and Hilton– unless the lack of business travel is somehow offset by higher-than-expected leisure travel.
Cameron Sperance
The Delta version’s influence on hotel reservations is most likely short-lived, declares the CEO of the world’s biggest hotel business.
After major hotel CEOs mostly minimized the potential effect the more infectious pressure of the coronavirus might have on reservations, Marriott International CEO Anthony Capuano Thursday indicated the Delta variant did cause a recession last month. Income per offered rooms, the hotel industry’s key performance metric, was down 27 percent from 2019 levels throughout the business’s global network– a drop from the 23 percent decrease seen in July.
The surge of Delta cases caused lots of business to push their planned return to in-office work– and most likely the accompanying company travel that chooses it– to later on in the year and even into 2022. But that isn’t sounding any public-facing alarm bells at Marriott.
“The patterns appear to be stabilizing as we enter into the early days of September,” Capuano said Thursday at the Bank of America Video Gaming and Lodging Conference.
The steepest decline for Marriott came from China, where spaces profits plummeted half from 2019 levels in August after being up 9 percent in July. That cratering of performance originated from the Delta outbreak and the country’s rigid lockdown steps in more than 150 markets.
Marriott CEO Tony Capuano (Credit: Marriott International)
Spaces profits in the U.S. and Canada saw a less significant decline, going from 17 percent off 2019 levels in July to a 21 percent decrease in August. That comes from the truth the U.S. economy remained largely open in spite of a substantially higher rise of newly reported cases than in China.
While Capuano didn’t provide particular numbers around what constitutes as “stabilization,” there are signs things are starting to turn around, at least in China. The most recent information shows revenue per readily available room was down 44 percent off 2019 levels– not ideal but an improvement from the 57 percent decrease seen a week prior, according to STR.
China’s recovery trajectory has been a crucial guide for Marriott, as business leaders initially anticipated they would see a full rebound there sometime this year. While there was a strong rebound in the spring, it was fleeting due to the Delta variant. That volatility has considering that spread to other parts of the world.
Significant employers pressed their go back to the office from right after Labor Day to October or even into next year. Microsoft Thursday decided to press its organized reopening of workplaces indefinitely up until the variant was consisted of.
“Certainly, when you look at the possible effect of the Delta variation, [and] the impact that’s had on the timing of a go back to the office, it is possible that we might not see business short-term need return as quickly as we may have hoped post-Labor Day,” Capuano said. “But again, it’s early to tell. The reservation window for service transient is so brief right now that it’s truly tough to understand just how much of a bump in the roadway a hold-up of a return to the workplace may really represent.”
Capuano stayed positive the U.S. Food & Drug Administration’s complete approval of the Pfizer vaccine was a good idea for a business like Marriott. More business have instated vaccine requireds now that at least one vaccine has complete FDA approval compared to earlier emergency situation usage permission.
The delayed return to the workplace this fall paired with the largely mandated go back to schools may appear like a recipe for disaster for hotels, especially during the middle of the week when corporate travel is generally at its peak.
It is harder to take a week off and work from another location if your child is still expected at school 5 days a week, indicating leisure travel is a not likely source to offset the uncertain outlook on company travel.
But Capuano maintained a positive outlook on the blend of company and leisure travel– something he sees as a long-lasting legacy of the pandemic that can eventually benefit the hotel industry.
“As we check out that crystal ball, it’s most likely a little bit more nontransparent than any of us might like,” Capuano said. “I would say, broadly, we’re pleased with the momentum we’re seeing in the recovery, and our self-confidence continues to grow about a strong, long-term return of travel across all segments.”