Whether it is delays or crackdowns, U.S. companies operating in China will need to factor in the sometimes dramatic influence of political maneuvers.
Author: Dennis Schaal
Political maneuverings in China — namely November’s National Party Congress — may be mucking up the pouring of concrete for Marriott’s hotel builds in the country.
Marriott hopes to open 90,000 to 105,000 new rooms globally through 2014, and “the biggest story is in China” when it comes to projects facing delays, said CFO Carl Berquist during Marriott’s second quarter earnings call today.
Berquist says there have been “government-encouraged” hotel-project slowdowns in China, although he expressed optimism that they would get back on track once “important political transitions” take place there later this year.
In response to a question about possible over-supply in China, one official noted there are probably 1 million rooms in China compared with about 5 million in the U.S.
“China will clearly see those rooms double and then double again,” the official said.
Olympics effect on London
Switching continents, Europe accounts for about 40% of Marriott’s international distribution and the impact of the London Olympics on RevPar has been “not huge,” perhaps “three-tenths to four-tenths of a point,” Marriott CEO Arne Sorenson said.
In other words, Marriott doesn’t expect to be taking away a horde of gold from the Olympics.
Meanwhile, the European debt crisis didn’t appear to have put a severe crimp into Marriott’s RevPar — at least through June 30.
“In Europe, more travelers from the United States, Russia and China helped move RevPar higher,” the company states. “In the Asia Pacific region, sold RevPar growth resulted from strong economic growth and maturing new hotels.”