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Marriott International’s first-quarter earnings were well below estimates as a key revenue metric plunged due to the coronavirus-fueled collapse in demand for hotel rooms.
The pandemic has forced the operator of the Marriott, Ritz-Carlton and St. Regis chains to close roughly a quarter of its hotels worldwide, with revenue per available room (RevPAR) falling sharply in the last month of the quarter ended March 31.
“In the last few months, we have seen the impact of COVID-19 spread throughout our business in an unprecedented way,” Marriott CEO Arne Sorenson said in a news release.
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He noted that global RevPAR, excluding the Asia Pacific region, grew 3.2% in the first two months of the year but as the pandemic spread, the metric fell sharply, declining 22.5% for the quarter as a whole. In April, it plunged approximately 90%.
Marriott shares fell 5% to $82.80 in trading Monday as the company also reported that overall revenue dipped 7% to $4.68 billion in Q1 while net income declined to $31 million, or 9 cents a share, from $375 million, or $1.09 per share, a year earlier. Adjusted earnings were 26 cents per share.
Analysts had expected adjusted earnings of 87 cents per share on revenue of $4.14 billion.
As TheStreet reports, “Marriott, like all the other major travel-related companies, has been hammered by the coronavirus as potential travelers have stayed home.”
Sorenson said Marriott had “taken substantial steps to preserve liquidity and mitigate the impact of these extremely low levels of demand” such as reducing operating expenses “dramatically” and issuing $1.6 billion in bond last month.
He pointed to some positive indicators, with occupancy at Marriott hotels in China, where the pandemic originated, reaching 25% in April, up from less than 10% in mid-February.
“Looking at our occupancy and booking trends, it appears that lodging demand in most of the rest of the world has stabilized, albeit at very low levels,” Sorenson said. “Occupancy was around 20 percent over the past two weeks in North American limited-service hotels, benefitting from leisure and drive-to demand.”
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