Marriott International president and CEO Arne Sorenson says occupancy is
continuing to improve at its 7,400 hotels – now at more than 40% in China from
a low of about 7% in early February and adding “a point and a half or so of
incremental occupancy every week” in the United States over the last six weeks.
“For open hotels we have crossed the 20% occupancy threshold.
The hotels that are performing strongest are those that are most dependent on
drive-to business - that can be drive-to leisure for some hotels, which would
cause them to be performing better on weekends and holidays than mid weeks and
for some that is also drive-to business travel,” Sorenson says during an
interview with Goldman Sachs’ vice president and head of gaming, lodging and
leisure research Stephen Grambling during the Goldman Sachs Travel and Leisure
Conference Monday.
“It is a steady move forward. Crossing over 20% occupancy
for the portfolio as a whole is a meaningful improvement from where we were
before, but it is a long way from where we need to get to.”
Another optimistic indicator: Sorenson says construction of
new hotels is continuing largely as planned pre-COVID.
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“Our numbers in terms of incoming new projects [in Asia
Pacific] are every bit as strong as they were last year, which is sort of a
stunningly positive set of statistics,” Sorenson says.
“What it tells you is our development partners are still looking
forward to the long-term trends which have been driving hotel demand in that part of
the world continuing.”
In the U.S., Sorenson says projects under construction
are continuing, although some have been delayed due to moratoriums on
construction work and also supply chain issues; therefore, openings may
happen later than originally planned.
For new hotels still in the planning stages, Sorenson says the
start of construction will likely be put off but, “because land is owned,
because they were designed ... they were projects that had substantial investment
put in them ... as business comes back more and more of those will be started again.”
When asked about the impact of cleanliness initiatives on
the company’s bottom line, Sorenson says there will be new costs and also new
savings. For example, he cites electrostatic sprayers that the company will use
to sanitize surfaces with disinfectants, which will have costs associated with the
equipment, the cleaning materials and, less so, the labor.
“We think it is imperative that we do that in order to deliver
to our guests a safe room that can give them the kind of confidence they need
in order to get back out there,” Sorenson says.
“I suspect that will not necessarily be forever, but it will
be for a period of time, probably as long as the virus is any way relevant to
decisions we are collectively making about travel.”
Sorenson says there will also be cost savings due to
accelerated adoption of digital check-in technology and also less frequent
housekeeping.
“One of the positive things about a hotel is a guest can, by
and large, control the level of interaction they have with others when they are
in a hotel, unlike an airplane for example,” Sorenson says.
“But that means they are probably going to be less eager to
have a housekeeper showing up while they are staying there, either while they
are in the room or maybe even when they are out.”
He also says the COVID-19 crisis may also be a catalyst for
Marriott to be more thoughtful about how it spends money in the future.
“After 10 or 11 years of a recovering economic market or
growing economic market, I think we probably were pushing some initiatives on
our hotel owners and pursuing some things on our own that probably weren’t as
compelling as they should have been,” he says.
“And I think as we come out of this, we will be more focused
both on our own behalf and for our owners, which should help as well on the
cost side.”