Людмила Чмуневич
Редактор раздела "Туризм"

A cooled-off construction market for hotels in the U.S. gives owners an opportunity to charge even higher rates during the recovery thanks to less supply in the market. But Marriott needs to show shareholders signs of growth. Hello, Asia and Europe. — Cameron Sperance

The world’s largest hotel company has its eyes set on gobbling up international market share.

Marriott International leaders have touted growth opportunities in the U.S. and abroad through the pandemic via measures like conversions, deals involving owners of existing hotels taking on a franchise agreement for one of the hotels numerous brands. But the company sees plenty of opportunities outside the U.S., even for new build projects, given its comparatively limited exposure.

Marriott accounts for about 17 percent of all hotels in the U.S. as opposed to only 3 percent globally.

“There’s no doubt that our international base of rooms is growing meaningfully faster than our U.S. base because we’ve got a very large chunk here in the U.S. to grow on,” Leeny Oberg, Marriott’s chief financial officer, said Tuesday at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum. “That trend will continue.”

Join Us for a Conversation With Marriott CEO Anthony Capuano at Skift Global Forum in NYC September 21-23

Mainland China, Asia Pacific, Europe, and the Caribbean and Latin America are all on Marriott’s radar for development growth. China should see the most near-term activity from a development standpoint given the developer community’s less reliance on traditional bank lending to get projects built there, Oberg said.

Private investors are often a leading source of capital for the Chinese development community.

The attention on Asia echoes Hilton CEO Christopher Nassetta, who indicated earlier this year a construction slowdown in the U.S. could even be a good thing by limiting supply and boosting the pricing power existing hotel owners could have on daily rates. But companies like Marriott and Hilton are publicly traded, and shareholders want to see growth somewhere.

“I suspect you will see a cycle where, particularly in the U.S., the new construction numbers are going to be much, much lower,” Nassetta said on an investor call in May. “That’s obviously long-term healthy for the for the industry. But the good news for us is the world’s a big place, and the pressures are not the same in all places in the world, particularly recognizing that the place where we have the second-biggest chunk of our growth is Asia.”

New-build hotel projects in the U.S. that didn’t already have financing secured prior to the pandemic are tougher to get across the starting line given lender hesitation on the sector.

European developers similarly rely on traditional lenders, but Marriott remains optimistic on its growth prospects there despite the added headwind of needing more long-haul travelers to occupy hotel rooms than more domestic-oriented travel markets like the U.S. and China.

“You’ve definitely got lenders who are dealing with a lot of existing hotels that they need to work through their situations, so, from that standpoint, the lending environment and the new-build environment has not been as strong,” Oberg said. “It is showing nice signs now, but it’s still starting from further back and is still behind. But it it is better than it was a year ago.”

Marriott leaders expect the company to grow overall between 3 and 3.5 percent this year on top of its roughly 7,800-hotel portfolio. The company had a nearly 478,000-room development pipeline at the end of the second quarter, with more than 212,000 of those rooms already under construction.

But Oberg admits there are some uncertain variables around the company’s growth story. Expansion in 2022 and 2023 is harder to forecast due to issues like supply chain slowdowns, labor shortages, and slower-than-expected construction starts.

“However, the deals are not falling out,” she added. “They’re going to happen.”

Business Travel Optimism

Oberg’s appearance came less than a week after Marriott CEO Anthony Capuano noted at a different banking conference the company saw an overall slowdown in bookings due to the Delta variant last month. But the decline quickly stabilized and company leaders already saw signs of improvement this month, he added.

The business transient recovery at Marriott still has a long way to go, but Oberg noted the trend line doesn’t show signs of a retrenchment. Special corporate — another term for a hotel company’s biggest business contracts where rates are negotiated usually for an entire year due to the high travel volume — bookings were up 7 percent last month over July.

“While, of course, we would like to see it move much closer to where it was in 2019, it has moved from being more than 60 percent down back in March to being in the 40s percent down [range] as we moved into the summer, so I think it is making progress,” Oberg said.

The overall travel industry is still anxiously awaiting what kind of impact Delta may have on performance for the back half of 2021, but Oberg noted there isn’t necessarily as big of a cliff on leisure travel between the summer and colder months. Business travel accounted for 57 percent of all bookings in the third and fourth quarter at Marriott in 2019 while leisure held steady at 43 percent.

“It’s not like in September there’s only business and in August there’s only leisure,” Oberg said. “Now, of course, you’ve got relatively more business transient in September and October, but you’ve got a lot of leisure in November and December. So, I just think it’s important to recognize it’s not all quite so broken up.”

Register Now for Skift Global Forum September 21-23


Actual news

  • Sunday
  • Day
  • Month