Marriott Weathers RevPAR Drop

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Marriott Weathers RevPAR Drop

By Michael B. Baker

OCTOBER 19, 2009 -- Marriott International this month 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, Marriott said.

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.

Corporate room rates during the quarter were down 19 percent from 2008 levels, Marriott executive vice president and CFO Carl Berquist said. "Travel departments are very aggressive, and everyone wants a deal," he said. "We expect corporate rates will continue to be weak until we see meaningful occupancy improvement."

The number of corporate room nights was down 11 percent year over year, Berquist said. Even so, this was an improvement over the second quarter of 2009, when corporate room nights were down 18 percent, though some of that can be attributed to more favorable year-over-year comparisons during the third quarter, he said.

Marriott expects declines to continue but moderate slightly in the fourth quarter.

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