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, 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 executive vice president and chief financial officer Carl Berquist said in a conference call to investors that the hotel company's group RevPAR was down 23 percent during the quarter, and group room rates dropped 8 percent, year over year.

"Cancellations and attrition were less of a problem than in the first half of 2009, but last minute bookings in the quarter for the quarter were relatively few," according to Berquist.

Most group business during the quarter came from product launches by pharmaceutical companies, he said.

There also are signs that "financial firms are tiptoeing in with small gatherings" for training purposes, Berquist said. One of the clearest signs in that segment is a boost in occupancy for Marriott's New York properties, he said.

Marriott expects declines to continue but sees them moderating slightly in the fourth quarter. The hotel 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 revenue per available room 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.

Originally published Oct. 19, 2009 This page is protected by Copyright laws. Do Not Copy