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Strong RevPAR and ADR gains fuel Marriott’s Q2 earnings

The corporate and group markets have been strong performers for Marriott. Pictured: The 'Connect' lounge at Surfers Paradise Marriott Resort and Spa

By JAMES WILKINSON

Marriott International has reported a strong second quarter of 2012, with net income rising to USD$143 million, a 13 per cent jump on the same period of 2011, fuelled by strong RevPAR and ADR gains, particularly in the MICE segment.

Across the company globally, RevPAR rose 6.7 per cent and average daily rate jumped 4.1 per cent and the company’s President and CEO, Arne Sorenson said he is happy with the result.

“In the second quarter, our business performed well in most markets around the world,” he said. “In North America, strengthening group business, more travel by our special corporate customers, especially in the technology and consulting industries, and the impact of modest supply growth, drove our occupancy and room rates higher.

“In Europe, more travellers from the United States, Russia and China helped move RevPAR higher, [while] in the Asia Pacific region, solid RevPAR growth resulted from strong economic growth and maturing new hotels.

“Property-level revenues from group customers at comparable Marriott brand hotels increased 8 per cent in the second quarter with banquet revenue up 7 per cent.  Special corporate revenue also increased 8 per cent during the quarter.

“While second quarter RevPAR growth benefited from strong group and special corporate business, it also reflected some impact from weak results in Washington, D.C. and renovations at a few hotels. 

“In other markets, such as Hawaii, our hotel occupancy was both very high and well ahead of the market, constraining our REVPAR growth in the quarter,” he said.

Sorenson said Marriott’s outlook remains positive, particularly on the back of the continually-rebounding MICE market in North America.

“With robust group bookings in North America, including Washington, D.C., we expect strong RevPAR and room rate growth in the second half of the year,” he said.

“In fact, group revenue on the books is up 10 per cent for the second half of 2012 and up 8 per cent for 2013. We are targeting high single-digit percentage increases in special corporate rates for 2013.”

Sorenson said the third quarter, in particular, was also expected to produce consistent RevPAR gains.

“For the third quarter, the company expects comparable system-wide RevPAR on a constant dollar basis will increase 6 to 8 per cent in North America, 5 to 7 per cent outside North America and 6 to 8 per cent worldwide,” he said.

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