Marriott International’s second-quarter business transient recovery remains “slow but steady,” thanks to “robust” small- and midsize enterprise demand, group bookings and international travel, particularly in Greater China, hotel executives said Tuesday during an earnings call.
“Recovery in business transient remains slow but steady,” Marriott president and CEO Anthony Capuano said, adding that demand from corporate accounts was “progressing modestly” in the second quarter.
SMEs represent about 60 percent of Marriott’s business, Capuano said, and that demand continues to be “quite robust.” However, “the large corporate room nights continue to be recovering a bit more slowly,” he said. The hotel company recently teased an impending SME program, but has yet to announce an official launch.
As for 2024 negotiated corporate rates, the company does expect a “meaningful increase next year,” Marriott CFO and executive VP of business operations Leeny Oberg said, adding that “overall business transient is up compared to ’19, and we are continuing to see some recovery. … Overall, business transient is doing well from a revenue perspective.”
Marriott’s systemwide second-quarter revenue per available room rose 13.5 percent year over year to $132.17, “led by another quarter of meaningful recovery in Greater China,” Capuano said. Revenue per available room in Greater China has now surpassed 2019 levels, “primarily due to the surge in domestic demand,” he added.
Marriott’s systemwide occupancy in Q2 reached 71.9 percent, up 4.7 percentage points year over year, and global average daily rate grew 6 percent year over year to $183.79.
Overseas, Marriott’s second-quarter international RevPAR was $119.21, up 39.1 percent year over year, thanks to “Greater China RevPAR more than doubling,” Oberg said. International occupancy in Q2 was 68.2 percent, up 12.4 percentage points year over year, and ADR was $174.91, up 13.7 percent year over year.
Specifically in the U.S. and Canada, Marriott’s Q2 RevPAR increased 6 percent year over year to $137.93. Occupancy in the region was 73.6 percent in the second quarter, up 1.3 percentage points. Average daily rate was $187.44, up 4.1 percent year over year, “thanks to high single-digit corporate rate increases,” which led to “business travel revenues rising 12 percent year over year,” Capuano said.
“Demand in this market has been stabilizing on a year-over-year basis, with travelers from the region increasingly taking trips overseas,” Capuano said.
Growth Outlook
Overall, international travel was a high point for Marriott in the quarter. The company said total Q2 room nights by cross-border guests to the Asia-Pacific region, was shy 1 percentage point of 2019 levels. Marriott is especially bullish on Greater China, as the hotel company expects “meaningful growth opportunities in and from” the region, Capuano said.
Group revenue was “driven by both rate and occupancy,” Capuano said, and increased 10 percent year over year in the U.S. and Canada. The hotel company expects group demand to increase through 2024, as “revenue was pacing up 14 percent for next year, year over year,” according to Capuano.
In Q2, Marriott reported $6.08 billion in revenue, up 13.9 percent year over year, and net income of $726 million, up from $678 million in the second quarter of 2022.
