Marriott eyes international markets, upset at slowing U.S. growth

Published on : Thursday, May 10, 2018

Marriott InternationalMarriott International has started focusing on destinations including Greater China and other growth regions of the Asia-Pacific of late.


The first quarter 2018 numbers have come in for the Bethesda, a hotel brand with comparable systemwide revenue per available room increasing 3.6% worldwide as against the same time last year.


Of that growth, 7.5% came outside North America.


In the quarter the company had added 15,000 rooms including 1,600 rooms converted from competitor brands and nearly 5,800 rooms in international markets. Asia-Pacific had accounted for double-digit RevPAR growth of 10%, stronger than the mid-single growth Marriott had expected.


Greater China RevPAR was up by nearly 12% in the quarter year-over-year.


In India, the fastest-growing economy in Asia, Marriott had opened its 100th hotel in April, the Sheraton Grand Bengaluru.


Presently, Marriott has approximately 20,000 rooms in the country. About half of the Marriott’s pipeline outside North America, CEO Arne Sorenson was absolutely clear about the idea of development of this reputable hotel chain.


Further enhancing the company’s market share in the region is Marriott’s partnership with Alibaba.


Via this new partnership, Chinese users are capable of booking Marriott hotels directly through the website of Alibaba and also would be able to utilize the popular Alipay payment app while staying at certain selected Marriott properties.


At quarter-end, Marriott’s worldwide development pipeline increased to more than 2,700 hotels and nearly 465,000 rooms, including roughly 34,000 rooms approved. First-quarter reported net income totaled $398 million, a 7-percent increase from prior year results.


In Europe, RevPAR was up 4%, deflated somewhat by London, that observed flat RevPAR growth, hampered by weaker demand from financial services that was likely Brexit related.


In the United States, however, cost pressures have made it tougher on operators, resulting in narrower margins, and made it tougher on developers and owners to build new hotels.


Sorenson cited propitious news around its U.S. development pipeline, with signings up 10 percent in the first quarter versus same time last year. He cited new Marriott brands Moxy and AC as helping drive it.


Sorenson also pointed to a more recent trend in hotel development: select-service suburban projects are falling to the wayside in favor of similar select-service hotel stock that is being constructed in urban cores. He said that this change has happened in the last few years and said that urban build-outs have become more customized and take longer to be completed than suburban properties.


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