Harbingers of Growth Found in Marriott, Starwood Earnings

Marriott International and Starwood Hotels & Resorts Worldwide in February separately reported signs of resurgence in business travel as they released fourth-quarter performance results.

"Business travelers have returned, as witnessed by improving Monday through Thursday occupancy," Starwood CEO Frits van Paasschen said during a conference call. "New York, a good leading indicator, saw occupancy levels of roughly 88 percent in the fourth quarter, just short of the peak 88.5 percent in 2007."

Revenue per available room declined by 7.9 percent worldwide and by 9.6 percent in North America during the quarter compared with the same period in 2008. Those results beat Starwood's expectations, however, and were Starwood's best RevPAR results since the third quarter of 2008, van Paasschen said.

"We hear from corporate customers that cuts in travel are behind them," said Starwood CFO Vasant Prabhu, adding that he expects business travel to further rebound. "Companies want to get people back on the road, drumming up business and motivating their teams."

Average daily rate was down 8.3 percent worldwide and by 10.1 percent in North America during the quarter. Occupancy was up by 0.7 percent worldwide and flat in North America.

Prabhu also said group cancellations were down 50 percent during the quarter and that bookings for the first half of this year are up more than double last year's. "Businesses also are confirming meetings that had been put on hold," he said.

Meanwhile, during the final quarter of 2009, RevPAR for Marriott-operated properties decreased by 12.2 percent globally and by 13.1 percent in North America. Average daily rate was down by slightly more than 11 percent both in North America and worldwide for the quarter.

Marriott said its performance beat expectations and attributed it in part to a business travel rebound, particularly for international destinations. Marriott chairman and CEO J.W. Marriott Jr., said in a statement that the company also benefited from leisure travelers taking advantage of special deals.

For the full year, Marriott's RevPAR fell 20 percent worldwide and 18.5 percent in North America compared with 2008.

Marriott also said it opened a total of 38,000 rooms in 2009 and that its current global pipeline stands at about 100,000 rooms.

Originally published March 1, 2010