Large groups of travelers, particularly for conferences, are changing reservations to friendlier cities such as Toronto over U.S. options “with the view that bringing in an international group would be more hassle-free in Canada and maybe a little bit riskier in the U.S.,” Chief Executive Officer Arne Sorenson said in an interview in Toronto.
RevPAR growth, a measure of financial performance based on revenue per available room, will be in the “mid- to high single digits” in Canada this year, compared with 1 to 2 percent in the U.S., Sorenson said. RevPAR growth alone doesn’t indicate whether travelers are changing their destination.
“You’re going to have people coming in from everywhere, and they’re going to be looking at ‘Can we get our people in? Are they going to want to go to that place?’” Sorenson said, sipping a cappuccino in a meeting room of the Ritz-Carlton hotel. “At the moment there’s a perception around the world that the U.S. is a little less welcoming than it was in the past.”
Sorenson cited the president’s efforts to ban travelers from some Muslim-majority countries and speeches that emphasize nationalism and criticize current immigration policy. In Canada, Prime Minister Justin Trudeau has publicly defended Muslims and extolled immigration.
Marriott is bringing up the issue in conversations with the White House on “welcoming visitors from abroad,” Sorenson said, declining to provide details.
Canada’s economy is booming, expanding faster than any Group of Seven nation’s and forecast to grow at an average of 2 percent annually over the next five years. In the U.S., gross domestic product grew by 1.5 percent last year, though it is forecast to reach 2.4 percent next year, according to a survey of economists by Bloomberg. Overall, Marriott’s occupancy in both countries is over 80 percent.
Sorenson has commented on Trump’s policies in the past. The president’s travel ban is “not good, period,” he said at a company event in Dubai in April. The ban has been repeatedly blocked by federal courts and has drawn condemnation from employers in industries including technology that rely on foreign talent. Sorenson was named to the board of Microsoft Corp. last month.
Sorenson was vice chair of President Obama’s Export Council and was in the delegation that visited Cuba in March of 2016, part of an overture Trump has criticized. Sorenson wrote an open letter to Trump on LinkedIn soon after his election, in which he emphasized the need to unite the country and “break the cycle of retribution.” Former presidential hopeful Mitt Romney, who has denounced the president’s character, is on Marriott’s board of directors.
Corporate guests represented about 70 percent of Marriott’s room-nights in 2016, with leisure accounting for about 30 percent, according to the company. This includes properties from Marriott’s September 2016 acquisition of Starwood Hotels & Resorts Worldwide Inc.
The Bethesda, Maryland-based company is opening a St. Regis-branded hotel in Toronto’s financial district, replacing Trump’s brand on the 65-story luxury tower. The building, now under renovation, was purchased by InnVest Hotels LP this year after financial difficulties, dozens of lawsuits, and negative sentiment plagued the development.
–With assistance from Hui-yong Yu and Josh Wingrove
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