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Marriott Hotels Start to Reopen — WSJ

By Dave Sebastian 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 12, 2020).

Hotels are slowly starting to reopen and global occupancy rates are leveling off, Marriott International Inc. Chief Executive Arne Sorenson said.

"April seems to have defined the bottom, and when we look at the last couple of weeks, there have not been significant movements in the number of closed hotels, but most days we're seeing one or two or three more hotels reopen than we are seeing hotels closed," Mr. Sorenson said on a call with investors Monday.

About one-quarter of Marriott's roughly 7,200 properties remain closed, it said.

Travel demand has improved in Greater China, with hotel occupancy in the region reaching 25% in April, up from less than 10% in mid-February, Mr. Sorenson said.

"Looking at our occupancy and booking trends, it appears that lodging demand in most of the rest of the world has stabilized, albeit at very low levels," Mr. Sorenson said.

In the past two weeks, occupancy in North America stood at around 20% at limited-service hotels, with the help of leisure and drive-to demand, Mr. Sorenson said.

The coronavirus pandemic has led to a collapse in global travel as governments imposed restrictions, companies halted business trips, conference were called off and vacationers put plans on hold. The plunge in hotel bookings wiped out in a matter of weeks profits many lodging companies had piled up over the past few years.

Anemic occupancy levels are better than closures, Mr. Sorenson said. He expects operations to break even at about 30% occupancy at longer-stay hotels and about 40% at full-service brands.

In the first quarter, systemwide occupancy was at 53.6%, down 14.5 percentage points from a year earlier.

In Greater China, where the crisis unfolded in January, occupancy fell 37.1 points, while it declined 18.4 points elsewhere in Asia Pacific. North American occupancy fell 12.4 points for the quarter, the company said. Europe occupancy fell 15.3 points.

Comparable systemwide revenue per available room, a closely watched industry metric also known as RevPAR, fell 22.5%. In April, world-wide RevPAR fell about 90%.

Shares of Marriott closed 5.6% lower at $82.31 Monday. The company's stock is down about 46% so far this year.

As the reopenings continue, Marriott also is counting on its Bonvoy loyalty program members and promotions to secure future demand, such as through benefits on co-brand credit cards. Mr. Sorenson said the company is selling gift cards for future hotel stays at a 20% discount.

Hotels are now under heightened health and safety protocols. Marriott is planning to roll out mobile check-ins, mobile keys and no-contact room service.

Marriott on Monday reported first-quarter net income of $31 million, or 9 cents a share, down from $375 million, or $1.09 a share, in the comparable quarter last year.

Adjusted earnings were 26 cents a share, missing the 87 cents a share analysts polled by FactSet had expected. Revenue fell 6.6% to $4.68 billion. Analysts were targeting $4.14 billion.

Marriott and other hotels have cut tens of thousands of jobs to cope with the pandemic.

Also on Monday, Marriott said Chairman J.W. Marriott Jr. plans to transition into chairman emeritus in 2022, with his son, David Marriott, expected to join the board next year. The younger Mr. Marriott would step down as president for U.S. full service at Marriott's hotel-management arm if he joins the board -- in anticipation of his ascension as chairman.

Dave Grissen, the group president for the Americas, will retire in the first quarter of 2021 after 36 years at the company. In his role, Mr. Grissen oversees more than 5,640 properties and a workforce of 160,000 people.

Marriott said that after Mr. Grissen steps down, Liam Brown, currently group president for the Europe, Middle East and Africa region, will take up the position of group president for North America. Craig Smith, current group president for Asia Pacific, will become group president for international operations.

Corrections & Amplifications Marriott International recorded changes in occupancy levels in percentage points for the latest quarter. An earlier version of this article incorrectly misstated various occupancy changes in percentages. (Corrected on May 11)

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

May 12, 2020 02:47 ET (06:47 GMT)

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