Large corporates fuel Marriott’s Q1 growth

First-quarter business transient travel revenue at Marriott International properties from the company’s 100 largest corporate accounts increased at the sharpest quarter-over-quarter level in two years, executives said on Wednesday (1 May) during Marriott’s earnings call, spurring an overall year-over year revenue per available room increase.

Systemwide first-quarter business transient RevPAR increased 1 per cent year over year, said Marriott president and CEO Anthony Capuano, and the segment made up 34 per cent of the company’s Q1 room nights.

The 31 March timing of the Easter holiday dented year-over-year business travel revenue comparisons, he said, and CFO Leeny Oberg said the company projects “continued improvement in business transient revenues” throughout 2024.

Large companies in aggregate since the pandemic have been far slower to recover their business travel volume than their small and mid-sized brethren, but for Marriott’s largest clients, “we absolutely continue to see recovery of that business,” Oberg said. “For example, the finance segment is now 8 per cent up relative to 2019. You saw really strong continued momentum in manufacturing and communications.”

Revenue from the accounting, consulting and technology sectors remains “down meaningfully” from 2019 levels, she said, but “they also continue to see meaningful momentum into Q1.” 

Conversely, Oberg suggested some softening of demand in the SME segment, noting that in the first quarter “you did see, relatively speaking, a slightly lower percentage of small and medium-sized BT business across the portfolio showing up in the lower end.”

Group demand remained strong, Capuano said, with first-quarter systemwide RevPAR for the segment up 6 per cent year over year, with full-year group revenue pacing at a 9 per cent increase. Oberg called the segment “the home-run hitter” in Marriott’s projections. 

Q1 performance and 2024 outlook

Marriott’s first-quarter systemwide RevPAR increased 4.2 per cent year over year to $118.13, while RevPAR in Europe jumped 7.6 per cent to $105.64 and the US and Canada saw an increase of 1.5 per cent to $119.61.

Global occupancy increased 0.9 percentage points year over year to 65.6 per cent and in Europe occupancy increased 3.5 percentage points to 59 per cent.

First-quarter systemwide average daily rate increased 2.8 per cent year over year to $179.99, while in Europe ADR increased 1.2 per cent year over year to $179.02.

Total first-quarter revenue increased 6 per cent year over year to nearly $6 billion, and net income decreased 25 per cent to $564 million.

Marriott projected a second-quarter global RevPAR increase of 4 to 5 per cent year over year and a full-year increase of 3 to 5 per cent.