Within the United States, the world’s largest hotel brand Marriott is seeing occupancy rates rise as the travel industry begins to inch toward recovery, surpassing 20% among its open properties.
“Crossing over 20% occupancy is a meaningful improvement from where we were before, but it is a long way from where we need to get to,” Marriott International president and CEO Arne Sorenson said today at a travel conference hosted by Goldman Sachs.
That uptick is similar to the incremental climb reported by the airline industry ahead of Memorial Day weekend, traditionally one of the busiest travel times of the year.
Sorenson said most of Marriott’s occupancy growth was from drive-to markets, which is in line with expectations that domestic local travel will return well before international travel.
Extended stay hotels have been less hard-hit than the rest of the hospitality industry, with some seeing occupancy rates in the 30% to 40% range.
“The Residence Inn brand would be performing better than the Courtyard brand, and leisure markets are performing betters than the others,” Sorenson said. “It’s a steady move forward.”
Despite the inklings of recovery, Marriott announced last week that it would extend furloughs that began in April through Oct. 2. Sorenson commented on this during the conference, noting that in addition to on-site workers, the company had furloughed two-thirds of its corporate staff.
“It would have been incomprehensible before Covid-19. We know we won’t be able to bring everybody back,” Sorenson said.
Meanwhile, in China, where all of Marriott’s 350 outlets have fully reopened, hotels and inns are crossing 40% occupancy rates as restaurants and businesses also begin to return.
“It’s a big enough country where you can’t have those numbers without seeing [leisure] and business travel growing,” said Sorenson. “We are seeing steady improvement.”
Like the United States, China is a domestic travel market, and its recovery could foreshadow where the U.S. market is headed.
With occupancy down and travelers concerned about health and sanitation more than ever—Hilton has partnered with Lysol, while Marriott launched its own “cleanliness council”—Sorenson said the new cleaning initiatives could impact revenue.
“On the cost side, we will spend more on cleaning between guest stays than we spent before Covid-19,” Sorenson said. “Think about the electrostatic sprayers we’re rolling out globally, which will intensify that cleaning—there is a cost to the equipment, there is a cost the materials that are used, and there is a labor cost associated in that incremental step. But, we think it is imperative we do it to deliver to our guests a safe room.”
The initiatives may not last forever, Sorenson noted, but will be maintained as long as Covid-19 is “any way relevant to decisions we’re making about travel.”