Marriott Sees Drop in Demand from Coronavirus, But Remains Optimistic
by Jessica Montevago /
Marriott International has about 90 properties closed in China due to the coronavirus outbreak, and is working on reopening hotels every day.
Marriott had 375 properties, with roughly 122,000 rooms, across Greater China at the end of 2019, representing 9% of its total global rooms. During the company’s earnings call, CEO Arne Sorenson cautioned that reopenings will be a slower process now.
“I think it's too soon to put much stock in this effort to reopen China because it's early and you still have schools closed and we don't really know exactly how this is going to come back,” Sorenson said. “But there is at least some hope, I suppose, that we've bottomed in China and maybe things will get a little bit better.”
Marriott began to see the impact of the coronavirus on business in mid-January, he said, with occupancy declines gradually, spreading from Wuhan to other markets in the Asia-Pacific region. In February, RevPAR in Greater China declined almost 90%, versus the same period last year.
In the Asia-Pacific region outside Greater China, February RevPAR declined roughly 25%, year-over-year. Marriott had 412 properties with 100,000 rooms at year-end 2019, representing 7% of its total worldwide rooms.
February RevPAR in the Asia-Pacific region overall has been running down around 50% compared to February of last year. Outbound travelers from China in 2019 made up less than 1% of room nights in our system outside of Asia-Pacific and around 0.5 of 1% of room nights in North America.
Sorenson said Marriott has not seen a significant impact on overall demand outside of the Asia-Pacific region, but “the situation obviously remains fluid.”
In regards to the comparison to SARS, Sorenson said if you go back to 2003, Chinese annual outbound travel would have been less than 10 million trips a year. Last year, meanwhile, it was closer to 150 million China trips, so “the relevance of China to the rest of the world is dramatically different.”
In other destinations affected by the coronavirus, Sorenson said South Korea and Italy will see both cancellations and declining RevPAR in those markets, though it’s still too early to tell.
“I think even though we would expect this will be messy for the next few weeks, if not, maybe the next few months, we’d go back to what we’ve said before, and that is that this will end,”