Near term worse, long term better at Marriott

Marriott Headquarters
Marriott International CEO Arne Sorenson acknowledged that the decline of corporate travel meant growth in the share of business coming in through OTAs. Photo credit: Bernstein Companies

Marriott International CEO Arne Sorenson said that, since the group’s third-quarter earnings, the near-term had got worse in terms of the spread of the pandemic, but news of a vaccine had meant that the medium and long term looked better.

The CEO described Europe as “among the weakest big markets in the world” as the virus numbers increased and governments were more inclined to reimpose restrictions.

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Speaking to the Morgan Stanley virtual global consumer & retail conference, Sorenson said: “We can sit here and say with a greater level of confidence than a month or two ago that sometime in 2021, we should see a shift towards the environment in which the virus is receding into the rear-view mirror.”

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The company said that, as the business moved away from the pandemic, it expected to keep some technology traits, commenting: “We’re not a tech company … but we’ve got a loyalty program and a dot-com site and an app where we are probably one of the top 10 globally in terms of the dollars of volume we do through our site. There are aspects of this reliance on technology which will remain good for us in the years ahead. I think digital check-in will be something that gets accelerated because of the pandemic that we’ve been through.”

Looking at current trading, Sorenson described China as “the brightest, big market in the world,” with the business nearing 2019 levels. He said: “One of the reasons for that is that prior outbound business from China has stayed in China. You’ve got an economy which is performing better compared to the rest of the world relative to 2019, but you’ve also got stay-at-home demand. It is a positive sign about what the rest of the world can look like when the virus gets more under control.”

Addressing business travel, the CEO said that as long as offices remained closed in the bigger cities and with the larger employers showing “dramatically higher flexibility,” there were were reasons for business travel.

He said: “Economic strength is highly correlated to lodging demand and to spending. Over time, we will see that people like to travel, they like to travel for work.”

Sorenson acknowledged that the decline of corporate travel meant growth in the share of business coming in through the online travel agencies, but said that direct channels had also grown. The global distribution system had, he said, fallen as business travel had dropped.

He said: “We certainly want to get that leisure business staying with us, so that we get more than our fair share of our business. And in a way that is what’s more clearly value add and incremental business to us from the OTAs than would sometimes appear to be the case. We’re glad to have that business.”

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