Marriott posts lower profit as occupancy drops

Hotel operator might have seen worst of declines in April, CEO says

Marriott International Inc.’s profit fell sharply for the first quarter as the Covid-19 pandemic caused it to close many of its hotels.

The hotel operator on Monday posted a net income of $31 million, or 9 cents a share, compared with $375 million, or $1.09 a share, in the comparable quarter last year.

Adjusted earnings were 26 cents a share, missing the 87 cents a share analysts polled by FactSet had expected.

Comparable systemwide revenue per available room, a closely watched industry metric also known as RevPAR, fell 22.5% for the quarter as the pandemic has battered tourism and travel, while occupancy declined 14.5 percentage points. RevPAR fell 19.5% in North America and 30.4% in other parts of the world. In April, world-wide RevPAR fell about 90%. About a quarter of Marriott’s hotels are currently closed. It had 7,420 properties at the end of the quarter.

In Greater China, where the crisis started unfolding in January, occupancy fell 37.1 points, while it declined 18.4 points elsewhere in Asia Pacific. North American occupancy fell 12.4 points for the quarter, the company said. Europe occupancy fell 15.3 points.

The Bethesda, Md., company said revenue fell 6.6% to $4.68 billion. Analysts were targeting $4.14 billion.

Travel demand has improved in Greater China, with hotel occupancy in the region reaching 25% in April, up from less than 10% in mid-February, Chief Executive Arne Sorenson said.

“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,” Mr. Sorenson said.

In the past two weeks, occupancy in North America stood at around 20% at limited service hotels, driven by leisure and drive-to demand, Mr. Sorenson said.

Marriott and other hotels have cut tens of thousands of jobs in an effort to steer their businesses through the pandemic.

Marriott last week said it will receive a $920 million cash infusion under amended cobrand credit-card agreements with JPMorgan Chase & Co. and American Express Co. The company said it will record the cash as deferred revenue that will be available to fund its operations.

At the end of the quarter, Marriott said it had nearly 3,050 hotels and about 516,000 rooms in its development pipeline.