Marriott International gained ground during the fourth quarter of 2021, with performance nearing the benchmark year of 2019.

During Marriott’s fourth quarter and full-year 2021 earnings call, CEO Tony Capuano said the company ended 2021 on a high note as the omicron variant of COVID-19 had a limited effect on results.

“We were very pleased with the remarkable progress we made in 2021 across the entire global portfolio despite the ongoing challenges in the COVID-19 pandemic,” he said.

In December, Marriott’s global average daily rate was 3% above 2019’s level, he said. Occupancy gained further ground compared to December 2019, resulting in global revenue per available room being down 11% compared to 2019, a 53-percentage point improvement from the RevPAR decline recorded in January 2021.

Global RevPAR was down 19% compared to the pre-pandemic level, he said. Total occupancy for the quarter was 58%, 12 percentage points lower than 2019, but ADR was only 2% below 2019.

As of press time, Marriott's stock was trading at $179.63, up 8.7% year to date. The NASDAQ Composite Index was down 10.5% for the same time period.

In the U.S. and Canada, RevPAR dropped 15% compared to 2019. ADR was down 2%, supported by robust leisure travel and steady improvement in the recovery of business transient and group demand, Capuano said. Group room revenue in the U.S. and Canada was down 32% compared to 2019, but that was 9-percentage-point improvement from the decline in the third quarter.

Booking windows are still shorter than they were pre-pandemic, he said. Bookings made in the fourth quarter for the same quarter grew 45% compared to the fourth quarter of 2019. New bookings have been gaining momentum, especially bookings made within the year for the same year. For example, Salesforce recently held a large meeting in New York City that was booked one month before the event and reserved more than 25,000 room nights at 11 Marriott properties.

The global booking window was at its shortest in the second quarter of 2020 at five days, but that window has grown to about 17 days during the fourth quarter of 2021, Capuano said.

"It's certainly not back to where we were pre-pandemic, but it's trending in the right direction," he said.

Bookings made in December 2021 for 2022 were down almost 22% compared to the end of 2019 for 2020, he said. Bookings for 2023 by the end of 2021 were down almost 15% compared to what was on the books by the end of 2019 for 2021.

Relative to pre-pandemic levels, special corporate bookings in the quarter were down 33%, but that is an 11-percentage point improvement from the decline in the third quarter.

Group cancellations picked up at the end of 2021 and early 2022 due to omicron, mostly for arrival dates in January and February, he said. Those cancellations have slowed recently.

With the exception of Greater China, hotels in all of Marriott’s international regions posted sequential RevPAR recovery from the third quarter to the fourth quarter as more borders opened and travel restrictions eased, Capuano said.

In Greater China, RevPAR declined 27% in the fourth quarter compared to 2019, which was in line with the decline in the third quarter due to the country’s COVID-19 policies and lockdowns of several cities, he said.

The Middle East and Africa region performed particularly well during the quarter, demonstrating the resilience of travel demand amid relatively high vaccination rates and low travel restrictions, he said.

Led by the strength of the United Arab Emirates, RevPAR in the quarter increased 8% above 2019 levels as a result of a 20% increase in ADR. Occupancy in the region topped 65%, the highest recorded in any of the regions in which Marriott operates hotels.

“Leisure demand was remarkably strong, benefiting from a significant increase in international room nights from international visitors,” he said.

Throughout 2021, Marriott added a record 86,000 rooms and 517 properties, resulting in 6.1% gross rooms growth, Capuano said. The company’s global net rooms growth was 3.9% with a deletion rate of 2.1%. Excluding the exit of 88 Service Properties Trust hotels, the deletion rate was 1.2%.

Marriott grew its global share of rooms in 2021, amounting to 15% of all new-build rooms, he said. The company had 18% of all global rooms under construction by the end of the year. Its development teams signed franchise and management deals for approximately 92,000 rooms during the year, and its year-end global pipeline totaled about 485,000 rooms.

“The composition of our pipeline dovetails nicely with current demand trends,” he said.

Leisure demand has led the recovery, and Marriott is well-positioned to grow its share in resort destinations, including in the all-inclusive space, Capuano said. The company is also seeing a strong preference for its luxury properties, and luxury rooms account for more than 10% of its pipeline.

Conversions were a significant driver of growth in 2021, accounting for 21% of room additions and 27% of signings, he said. Marriott executives expect conversions will remain an important contributor to growth over the next several years.

The company expects gross rooms growth will approach 5% this year with deletions of 1% to 1.5%, resulting in net growth of about 3.5% to 4%, Capuano said. Challenges with construction are expected to have an impact on the company's portfolio growth. The average construction timeline for limited-service properties is about two years, with full-service hotels often taking longer.

Marriott’s fourth-quarter, comparable, systemwide, constant-dollar RevPAR increased 124.5% year over year worldwide, but it declined 19% compared to the fourth quarter of 2019, according to the company’s earnings release. In the U.S. and Canada, RevPAR grew 143.6% year over year while declining 15.3% compared to 2019. In international markets, RevPAR increased 83.3% year over year and fell 28.2% compared to 2019.

The company’s net income totaled $468 million in the quarter compared to a net loss of $164 million in the fourth quarter of 2020. Adjusted net income amounted to $430 million, up from $39 million in 2020. Adjusted earnings before interest, taxes, depreciation and amortization totaled $741 million in the quarter, up from $317 million in the fourth quarter of 2019.

Marriott added more than 86,000 rooms globally throughout 2021, including 43,000 rooms in international markets. More than 18,000 of those rooms were conversions.

By the end of 2021, Marriott’s worldwide development pipeline totaled 2,831 properties with approximately 485,000 rooms. That includes approximately 19,000 rooms approved but not yet signed. The company had more than 202,000 rooms under construction by the end of the year.

Return to the Hotel News Now homepage.