Marriott International Shares 2020 Q3 Results

Stuart Jay Raj -

Marriott International worldwide RevPAR declined 66 percent in Q3 of 2020 when compared to the previous year, a nearly 19-percentage point improvement from the decline in the second quarter of this year.

Arne M. Sorenson, president and chief executive officer of Marriott International said that the third quarter showed continued improvement in demand trends around the world.

China Leads Recovery

Greater China continues to lead the recovery and demonstrates the resiliency of travel demand, with third quarter occupancy of 61 percent and RevPAR recovering to down 26 percent, a 35-percentage point improvement compared to the decline in the second quarter.

North America Occupancy Improves

While third quarter occupancy in North America reached 37 percent, nearly double occupancy in the second quarter, primarily driven by leisure, drive-to demand, with business and group recovering more slowly.

94% Marriott Hotels Now Open

Globally, 94 percent of Marriott hotels are now open and welcoming guests.

“The Asia Pacific region led deal signings in the third quarter, accounting for more than half of all rooms signed globally, with the vast majority of those rooms in Greater China. During the third quarter, we added more than 19,000 rooms to our system, nearly 70 percent more than were added in the second quarter, achieving 5 percent gross room growth in the last 12 months.

For full year 2020, we now expect 2.5 to 3 percent net rooms growth, including terminations of 1.5 to 2 percent. Assuming progress is made in containing COVID-19, we would expect gross room additions in 2021 to accelerate compared to our expectations for 2020.”, said Arne M. Sorenson, president and chief executive officer of Marriott International.

Q3 Result Summary

Third Quarter 2020 Results Show:

  • Marriott’s reported operating income totaled $252 million in the 2020 third quarter, compared to 2019 third quarter reported operating income of $607 million;
  • Reported net income totaled $100 million in the 2020 third quarter, compared to 2019 third quarter reported net income of $387 million;
  • Adjusted operating income in the 2020 third quarter totaled $147 million, compared to 2019 third quarter adjusted operating income of $734 million. Adjusted operating income in the 2020 third quarter included impairment charges of $32 million, related to COVID-19;
  • Third quarter 2020 adjusted net income totaled $20 million, compared to 2019 third quarter adjusted net income of $488 million;
  • Base management and franchise fees totaled $366 million in the 2020 third quarter, compared to base management and franchise fees of $821 million in the same quarter of last year;
  • The year-over-year decline in base management and franchise fees are primarily attributable to RevPAR declines related to COVID-19 and a decrease in other non-RevPAR related franchise fees;
  • Incentive management fees totaled $31 million in the 2020 third quarter, compared to incentive management fees of $134 million in the same quarter of the previous year;
  • The company added 127 new properties (19,064 rooms) to its worldwide lodging portfolio during the 2020 third quarter, including roughly 1,400 rooms converted from competitor brands and approximately 7,600 rooms in international markets;
  • 31 properties (6,066 rooms) exited the system during Q3. At quarter-end, Marriott’s global lodging system totaled roughly 7,600 properties and timeshare resorts, with nearly 1,414,000 rooms;
  • At quarter-end, the company’s worldwide development pipeline totaled 2,899 properties with more than 496,000 rooms, including 1,201 properties with approximately 228,000 rooms under construction and 160 properties with roughly 25,000 rooms approved for development, but not yet subject to signed contracts;
  • In the 2020 third quarter, worldwide RevPAR declined 65.9%. North American RevPAR declined 65.4%, and international RevPAR declined 67.4%;

“Although the timing of a full recovery remains unpredictable, we are pleased with the significant progress we have made in restructuring and repositioning the company to successfully manage through these challenging times. Financially, we have strengthened our liquidity position, realigned our cost structure, and minimized our cash burn. We have also remained keenly focused on working with our hotel owners and franchisees to significantly reduce hotel level costs and help preserve cash in this extremely low revenue environment. Operationally, we have elevated our health and cleanliness standards to establish trust and credibility with travelers and to enhance the safety and wellbeing of our associates and guests.”
“We still have a long road ahead, but this crisis will come to an end, and I believe travel will rebound quickly. I am confident that the many steps we have taken this year, combined with our unrivaled global portfolio, the strength of our brands, and the power of Marriott Bonvoy position us very well now and for the future.”, commented Arne M. Sorenson.