Arne Sorenson thanked all his well-wishers Friday but then got right to business. Marriott had a so-so quarter but held out great promise for its expanded homesharing business. But you'll have to wait until 2020 to see any results.
Marriott CEO Arne Sorenson addressed his stage two pancreatic cancer diagnosis for the first time since the hotel company made the news public last week.
The 60-year-old told investors on Marriott’s Friday earnings call that medical professionals at Johns Hopkins have “seen this many times before.”
“They believe we have caught it early, that it is operable, and that the course of treatment is prudent,” added Sorenson. “With the support of an extraordinary strong team of Marriott executives, we are going to soldier on.”
Despite the encouraging news, Marriott’s mixed first quarter results left analysts underwhelmed. The company beat on profit estimates even after falling 11 percent year-over-year to $375 million, but missed on revenue, which rose marginally to $5.01 billion compared to $5.11 billion projected by analysts.
Home Rentals Benefit Bonvoy Members
Marriott is looking at its new homesharing business as a complementary component to its traditional hotel offering, it said. The business is expected to have no material impact on financials in 2019, but it will fill a glaring need in catering to larger groups of people traveling together.
“One of the gaps that arguably we’ve had is when larger families, whether that’s a single nuclear family or an extended family, are traveling together, hotels are not necessarily always the easiest place to be because there may not be places for them to gather outside of the public spaces of the hotel,” Sorenson said.
In a survey conducted in 2018, Marriott found that over 25 percent of its loyalty program members who responded had used home rentals in the prior calendar year. The data led to its home rental pilot in 2018 in Europe, and later the launch of Marriott Homes & Villas last month across 100 cities worldwide.
“Home rental should enable our loyalty members to stay with Marriott throughout any travel experience and ultimately drive a greater share of wallet for our portfolio,” Sorenson said.
At the end of the first quarter, membership for Marriott Bonvoy reached nearly 130 million, up roughly 5 million from the end of 2018. Approximately 40 percent of new members came from China.
Operations by the Numbers
Marriott’s revenues per available room (RevPAR), a standard metric of success for hotels, increased 1.1 percent, led primarily by strong growth in markets outside of North America and the Middle East. RevPAR in the hotel group’s Asia Pacific region increased 3 percent in the quarter, compared to 2 percent in Europe and 4 percent in Latin America.
Marriott also added 19,000 new rooms in the quarter, a growth rate of 5.3 percent from the same time last year. The addition of more units led base management and franchise fees to increase 6 percent to $895 million over the period.
The world’s largest hotel company additionally disclosed it incurred another $44 million of expenses during the first quarter related to the Starwood Hotels & Resorts data breach it reported back in November. All of those costs were offset by insurance recoveries totaling $46 million.
Marriott’s stock was trading down 5 percent shortly after releasing quarterly earnings Friday morning.
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Photo credit: Marriott CEO Arne Sorenson spoke Friday about his cancer diagnosis. Fabrizio Bensch / Skift