- November 5, 2021
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The boom in leisure travel that is driving the hospitality industry’s recovery from the depths of the Covid-19 pandemic is likely to continue into the new year, according to Marriott International Inc.’s top executive, despite factors like the Delta variant that caused a summer slump.
Global occupancy at Marriott (NASDAQ: MAR) hotels topped 58% for the third quarter, CEO Tony Capuano told analysts on an earnings call Wednesday. That’s up 23.4% from the same period in 2020, driven largely by leisure demand, but down from 74% in 2019. The Bethesda-based hospitality giant also reported the average daily room rate, at $155.21, is just 4% below where it stood at this time in 2019 and has been recovering more quickly than in the past two economic downturns.
“We continue to be quite bullish about leisure,” Capuano said. ”We think there’s lots more run room in terms of the leisure-led recovery. We absolutely believe that leisure’s going to continue to grow into 2022.”
For the quarter, Marriott posted net income of $220 million, or 67 cents per share, up from $100 million for the same period last year, but well below the $347 million in net income for the third quarter of 2019. Revenue per available room, or RevPAR, at $90.32, increased more than 118% worldwide compared to the same period in 2020 but is still down nearly 26% compared to 2019.
While group and business travel continues to lag leisure, as larger corporations keep many of their employees working from home, Capuano said he is encouraged by the pace of recovery in those areas. For hotels in the U.S. and Canada, group room revenues for the quarter were down 46% compared to the same period in 2019 — in the third quarter of 2020, Marriott reported a 76% decline compared to the previous year. Special corporate bookings recovered steadily for each month of 2021 before slowing due to Delta, and are now down less than 40% compared to the same period in 2019.
“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,” he said. “We expect a recovery in business transient to gradually continue as more workers return to the office, guest visitation policies are relaxed and greater numbers of employees are permitted to travel again.”
McLean’s Hilton Worldwide Holdings Inc. (NYSE: HLT) reported a similar surge in leisure travel, and slower recovery in business travel, in its earnings released last week.