Marriott’s Disappointing 2020 Tempered by Bright Spots
During Marriott International’s Q4 2020 earnings conference call on Feb. 18, the brand reported – unsurprisingly – full year declines in worldwide RevPAR of 60% with average occupancy of just over 35% compared to 73% for full year 2019. While the company did see steady improvement throughout the summer and fall of 2020, spikes in COVID cases in many markets ended up flattening global recovery through the fourth quarter and into the first few weeks of 2021. With that being said, Stephanie Linnartz, Group President, Consumer Operations, Technology and Emerging Businesses, did have some positives to point out during the call.
Looking Forward to Group Bookings
For the USA and Canada, Marriott is seeing “some small green shoots of increased demand for corporate and leisure transient bookings as well as in group lead volume,” according to Linnartz. For instance, occupancy over Presidents Day weekend was the strongest Marriott has had for a long weekend since the beginning of the pandemic. Additionally, the brand is seeing some momentum behind special corporate bookings.
For example, at the end of the fourth quarter of 2020, Marriott’s group pace for 2021 was down negative 57%, but the second half of the year was down just 25% to 30%, Linnartz explained. She also mentioned that Marriott was seeing some positive trends as it relates to “group canceled:” with it slowing significantly for the second half of 2021 at normal levels for 2022 and beyond.
“We're also seeing some great trends on lead volume,” Linnartz added. “While it's certainly behind 2019, it's improving. As a matter of fact, over the last 45 days, lead volume has increased 20 to 30 percentage points. So in a significant improvement from what we experienced in the fourth quarter of 2020. And we're starting to see a pickup in what I'd call more normal types of groups. So as an example, we're starting to see some incentive meetings book in the fourth quarter of this year.”
Most recently, January 2021 was a very strong month for booking group events in 2022 and beyond, Linnartz said. She went so far as to call it the best month they’ve had in a couple of years.
“Additionally, this business was booked at average daily rates 11% higher than business booked in January 2020 for stays in 2021 and beyond,” she added. “These are encouraging signs that there is strong demand for travel in the future once real progress has been made in containing the virus.”
Of course, Marriott has always been keenly interested in keeping their loyalty members happy. So it has recently renewed its focus on leveraging digital direct channels, and in particular its Marriott Bonvoy mobile app.
“We recently released our updated redesigned Bonvoy app, with the goal of better meeting the travel shopping needs of today's leisure traveler,” Linnartz commented. “The power of the Bonvoy platform has become even more evident during the pandemic, as many of our more than 147 million members has continued to interact with us in ways other than staying in our hotel.”
For example, Marriott Bonvoy credit card holders “have remained particularly engaged.” Global credit card spending on our cards for 2020 was down only 16% year-over-year, and a marked contrast to the steeper decline in revPAR. Marriott’s home rental platform: Homes & Villas by Marriott International (HVMI) also saw quite a bit of positive attention from loyalty members during the past year.
When HVMI first debuted in 2019, it had approximately 2,000 homes available to loyalty members and now it currently has approximately 25,000. According to Linnartz, Marriott Bonvoy loyalty members have been enthusiastic about booking these rentals, with more than 90% of HVMI room rentals in 2020 booked by loyalty members.
The positive response to HVMI is likely due to the convergence of multiple factors. Marriott only works with professional housing management companies and has very strict standards for the type of homes, their amenities, safety/security standards, etc. And Marriott Bonvoy members can earn and burn loyalty points on an HVMI rental. In fact, last year, 30% of the HVMI bookings were made by members who were redeeming their Marriott Bonvoy points.
“We saw the business do well, particularly during last summer, because people wanted a whole home [to themselves],” Linnartz noted. “Forty percent of our HVMI destinations are actually new to Marriott there where we don't have hotels, and many of them are in more remote locations, which really was quite attractive during COVID. So we're excited about the offering and we see it as complimentary to our core business and a tremendous value proposition for Marriott Bonvoy members.”