"Tremendous overall improvement" in occupancy and rate during the second quarter are signs of an accelerating global recovery, Marriott International CEO Tony Capuano said during the company’s second quarter earnings call.

Worldwide occupancy grew 6 percentage points across Marriott's portfolio in June compared to May, topping 55%, he said. Average daily rate in June was down only 13% compared to June 2019.

As a result, global revenue per available room grew “meaningfully and swiftly from the depths of the pandemic” when RevPAR was down 90% in June 2020, he said. In comparison, RevPAR for June 2021 was down just 38% from June 2019.

While recovery timelines vary by region due to uneven vaccination trends, virus case loads and travel restrictions, Marriott "remains encouraged by the incredible resilience of travel demand" demonstrated by the rapid return of guests in areas where restrictions have eased and people feel safe to travel again, Capuano said.

Mainland China is the first major market in which RevPAR has recovered to pre-pandemic levels. Occupancy reached 71% in April and 68% in May before dipping to 60% in June because of small COVID-19 outbreaks and lockdowns in certain markets. Demand quickly recovered after restrictions eased, and July RevPAR is expected to exceed 2019 levels.

“Perhaps most encouragingly in April, for the first time since the pandemic began, leisure transient, business transient and group room nights in Mainland China were all ahead of 2019 levels,” he said. “This is especially impressive given the absence of international arrivals due to stringent border restrictions.”

As vaccination rates increased, leisure demand led a travel resurgence in the U.S. and Canada, which account for about two-thirds of Marriott’s rooms, Capuano said. Leisure room nights in the U.S. were 15% higher than in the second quarter of 2019, and remote working flexibility led to more travelers blending trip purposes.

Total U.S. occupancy for Marriott reached more than 63% in June with ADR down only 11% compared to June 2019, he said. The momentum continued into the first three and a half weeks of July, with U.S. occupancy reaching 67% and ADR down only 2% compared to July 2019, resulting in RevPAR for this period down only 16% compared to July 2019.

In the U.S., special corporate and group demand are recovering, Capuano said. While special corporate bookings for the first three and a half weeks of July are down 45% compared to the same period in 2019, they increased 23% from May to June and then another 27% into July.

“Many of our corporate customers are telling us they are beginning to get back on the road this summer, and we expect to see a step up in business travel post-Labor Day as children go back to in-person learning and workers increasingly return to the office,” he said.

Group bookings made for all future dates were down 29% in June compared to June 2019, an improvement from being down 56% in March 2021 compared to March 2019, Capuano said. For the first time since the pandemic started, group bookings made in the month of June, for any time in 2021, exceeded in-the-year bookings made in the same month of 2019.

At the end of the second quarter, group revenue for the fourth quarter was pacing down 31% versus 2019.

“However, it's still early, and we expect bookings made closer to the event date will increase group revenue on the books,” he said.

Marriott’s sales team has been holding on rates, he said. ADR for group bookings is almost flat for the fourth quarter of this year, and it is 3% higher for full-year 2022 compared to full-year 2019.

Marriott’s worldwide development pipeline amounted to 2,750 properties with nearly 478,000 rooms by the end of the second quarter, according to the company’s earnings release. That includes about 19,000 rooms approved but not yet subject to signed contracts. The company has more than 212,000 rooms in the pipeline under construction.

During the quarter, the company added nearly 25,000 rooms globally. That includes approximately 13,000 rooms in international markets, and 5,300 rooms from conversions. For the 12 months ending June 30, gross rooms growth was 6.1%. Fourteen properties left the system during the quarter.

“We are very pleased with our momentum around conversions,” Capuano said, adding conversions accounted for 26% of rooms added in the first half of the year.

For the full year, Marriott expects gross rooms growth will accelerate to about 6%, he said. With more visibility into anticipated full-year deletions, the company projects 2021 net room growth will be toward the higher end of its previous expectations of 3% to 3.5%.

The estimate accounts for headwinds of 100 basis points from the 88 Service Properties Trust hotels that left Marriott’s system earlier this year. Marriott is making progress in replacing those hotels with new products, he said. The company is negotiating conversations for 80% of those locations, with signed or approved deals for nearly 20%.

During the second quarter, comparable systemwide constant-dollar RevPAR increased year over year by 262.6% worldwide, 274.6% in the U.S. and Canada and by 223.2% in international markets. Compared to the second quarter of 2019, comparable systemwide constant-dollar RevPAR fell by 43.8% worldwide, 39.5% in the U.S. Canada and by 55.6% in international markets.

The company reported net income of $422 million during the second quarter compared to a net loss of $234 million in the second quarter of 2020. Second quarter adjusted net income amounted to $260 million, up from the adjusted net loss of $184 million one year ago.

Worldwide occupancy reached 50.8% during the quarter, down 24.1 percentage points from the second quarter of 2019. Worldwide average daily rate was $138.28, down 17.2% compared to the second quarter of 2019.

Adjusted earnings before interest, taxes, depreciation and amortization totaled $558 million in the second quarter, up from $61 million in the second quarter last year.

Base management and franchise fees totaled $587 million in the second quarter, up from $222 million a year ago. The company attributes this growth to RevPAR increases from growing traveler demand.

As of press time, Marriott’s stock price was $140.54, up 12.7% year to date. The NASDAQ Composite Index was up 15.1% for the same time period.