Marriott cautiously optimistic about demand rising in US and China [Construction Report]

by | 08 Jun 2020 | News

The picture is steadily improving in the US and China, according to Marriott’s leadership. (Picture: Marriott)

The CEO of Marriott International is hopeful that the US and China will recover relatively quickly from coronavirus.

During Marriott International’s Q1 2020 earnings conference call on 11 May, president and CEO Arne Sorenson was positive when he discussed the future of the hotel and travel industry and Marriott in particular.

We find out how Marriott is planning to move forward and what the company’s outlook is for the coming months.

Facing the challenge and entering recovery

At the beginning of the call, Sorenson shared that RevPAR fell 90% worldwide in April. Travel bans and lockdowns have resulted in about 25% of Marriott’s hotels worldwide being temporarily closed. In the US, the closure figure is slightly lower at 16%, while just over three-quarters of Marriott’s hotels are closed in Europe.

“To state the obvious, we are operating in a very challenging environment,” Sorenson said. “However, the glimmer of good news is that overall negative trends appear to have bottomed in most regions around the world.”

Indeed, markets have been steadily recovering in China. There, occupancy rates are close to 40%, after peaking at around 45% during China’s Labour Day holiday at the beginning of May. Resort markets were close to 70% during this time.

A focus on domestic travel

Sorenson showed great optimism about both China and the US’ ability to recover more quickly than Europe since they’re both domestic markets.

“Even in normal times, the US is about 95% to 96% US travel, with the rest dependent on inbound travel from the rest of the world,” he explained.

“Looking at the US, we obviously see the drive-to markets as being the strongest. [..] I think that’s both leisure and to some extent it is sort of local or regional business, but a business that is dependent on the car. And I think that will come back the most.”

Leveraging the loyalty program

Now that governments are restarting economies the world over, Marriott is working on creating region-specific marketing strategies and using its loyalty program to capture market share.

“A key component of our marketing plans will be leveraging our powerful Marriott Bonvoy loyalty program and focusing on reaching our highly engaged member base and our many Marriott Bonvoy credit cardholders,” he revealed.

So far, Marriott has done exceedingly well with this and has used its loyalty program to stay in touch with guests and offer perks via various partnerships.

“Throughout this crisis, we have continued to communicate with our loyalty members, including with special promotions on our co-brand credit cards in the US, such as our offer for six times points on groceries. We have also extended elite benefits, and today, to help spark demand, we will announce a new promotion to buy gift cards for future hotel stays at a 20% discount.”

“In Greater China, our joint venture with Alibaba has been very helpful in rebuilding demand. A recent spring sale run by Alibaba’s Fliggy travel site was very successful and generated terrific near-term bookings. Bookings from Ctrip have also grown significantly over the past few weeks and are up over 15% for the first week of May versus the same time last year.”

Strong communication

Finally, Sorenson noted that Marriott will focus on communicating the company’s focus on health and safety to guests, so they feel safe and comfortable staying at its hotels. This will include announcements around global cleanliness guidelines, as well as promoting new technologies such as mobile check-in, mobile keys and no-contact room service that will help reduce staff-guest interaction.

“The recovery is not going to happen uniformly across all regions, and it is not going to occur overnight,” Sorenson added. “It may take longer than any of us would like and we will likely operate a bit differently going forward, but we have taken the steps necessary to position the company to manage through this crisis successfully, and travel will rebound. Our people, our solid financial footing, our 30 industry-leading brands and our number one Marriott Bonvoy loyalty programme continue to point toward a brighter future.”

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ABOUT THE CHAIN

 

Marriott International, Inc. is based in Bethesda, Maryland, USA, and encompasses a portfolio of more than 7,000 properties under 30 leading brands spanning 131 countries and territories.

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