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Marriott International said it could lose about $25 million per month in first-quarter fee revenue due to the coronavirus outbreak, although CEO Arne Sorenson cautioned it was a conservative forecast given the virus’ continued spread.
He called the estimate “a China travel story and an Asia-Pacific story.”
“Obviously, when you look at South Korea and Italy, we will see cancellations and declining RevPAR in those markets,” Sorenson said during Marriott’s Q4 earnings call. “We’re going to see some impact in other markets around the world not entirely dependent on China travel.”
Marriott has approximately 375 properties in Greater China (mainland China, Hong Kong, Taiwan and Macau), accounting for around 9% of the group’s total rooms. Approximately 90 of those hotels are currently closed because of the coronavirus outbreak.
In the Asia-Pacific region outside of China, Marriott has 412 properties, representing roughly 7% of its total rooms.
According to Sorenson, Marriott’s February revenue per available room (RevPAR) for Greater China is down nearly 90% from a year ago, while February RevPAR across the entire Asia-Pacific region is down 50%.
Sorenson said there hasn’t been a virus-related impact on demand outside of the Asia-Pacific region, “though the situation obviously remains fluid.”
Through March 15, Marriott is waiving hotel cancellation fees for guests with reservations at hotels in Greater China as well as for Chinese citizens with reservations at Marriott properties worldwide.
Despite huge uncertainty surrounding the ongoing health crisis, Sorenson is optimistic about Marriott’s longer-term outlook, citing strong momentum in the fourth quarter.“I think even though we would expect this would be messy for the next few weeks, if not the next few months, this will end,” asserted Sorenson. “It’s clear that it’ll end. We can’t tell you when, but when people start to get confidence that they don’t have to be worried about picking up [coronavirus] if they’re thinking about going to Seoul, for example, that travel will come back and it will probably come back fairly quickly.”
Marriott reported systemwide RevPAR growth of 1.1% and 1.3% for the fourth quarter and full year 2019, respectively.
For 2019, total revenue increased 2%, to $5.37 billion.
Source: travelweekly.com