Deep Drop In Marriott RevPAR Still Better Than Expected

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Deep Drop In Marriott RevPAR Still Better Than Expected

By Michael B. Baker

OCTOBER 08, 2009 -- Marriott International today reported revenue per available room dropped more than 20 percent year over year in the third quarter of 2009, although CEO J.W. Marriott, Jr., said the declines were less than expected.

Worldwide RevPAR for comparable company-operated properties dropped 23.5 percent during the quarter. RevPAR in international markets was down 28.9 percent, spurred by a 22.7 percent drop in average daily rate. Those markets were hurt not only by the economy but also by unfavorable comparisons with last year's Olympics in Beijing and concerns about the H1N1 virus, according to Marriott.

Domestically, systemwide RevPAR was down 19.3 percent. The company's full-service and luxury hotels—the flagship Marriott brand, Ritz-Carlton and Renaissance—saw a 14.6 percent decline in rate.

"Revenue per available room across our North American system declined less than expected during the third quarter as leisure travelers responded to attractive promotions and great values in our hotels," Marriott said in a statement. "With solid cost controls, our hotels translated better than expected occupancy rates to stronger than expected fee revenue and earnings."

Marriott expects declines to continue but moderate slightly in the fourth quarter. The company is forecasting RevPAR to decline between 13 percent and 16 percent in North America and between 16 percent and 18 percent internationally.

For 2010, the company said the pricing environment would remain difficult. For the full year, the company expects worldwide RevPAR to be flat to down 5 percent and for international markets to strengthen quicker than North American markets.

Marriott added 79 new properties, or 10,380 rooms, to its portfolio during the quarter, with 8,600 of those rooms in limited-service properties in North America. The company expects to open more then 33,000 rooms during 2009 and between 25,000 and 30,000 rooms in 2010.

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