Marriott International has released its first quarter 2020 results, which were dramatically impacted by the COVID-19 global pandemic and efforts to contain it.
President and CEO, Marriott International, Arne M. Sorenson stated: “In the last few months we have seen the impact of COVID-19 spread throughout our business in an unprecedented way. Worldwide RevPAR began the year with a strong 4.6 per cent growth rate for January, excluding Greater China, where COVID-19 was already impacting results. For the first two months of the year, worldwide RevPAR grew 3.2 per cent, excluding the Asia Pacific region. As the pandemic moved around the world, we saw global RevPAR fall sharply and, in April, worldwide RevPAR declined approximately 90 per cent. Currently, roughly a quarter of our worldwide hotels are closed.”
He continued: “The resilience of travel demand is evident in the improving trends we see in Greater China. Occupancy at our hotels in the region reached 25 percent in April, up from less than 10 percent in mid-February 2020.
“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. Occupancy was around 20 per cent over the past two weeks in North American limited-service hotels, benefiting from leisure and drive-to demand,” he added.
Marriott’s reported operating income totaled $114 million in the 2020 first quarter, compared to 2019 first quarter reported operating income of $510 million. Reported net income totaled $31 million in the 2020 first quarter, compared to 2019 first quarter reported net income of $375 million. Reported diluted earnings per share (EPS) totaled $0.09 in the quarter, compared to reported diluted EPS of $1.09 in the year-ago quarter. Reported results in the 2020 first quarter included impairment charges, bad debt expense, and guarantee reserves of $193 million pretax ($148 million after-tax and $0.45 per share), related to COVID-19.
Adjusted operating income in the 2020 first quarter totaled $192 million, compared to 2019 first quarter adjusted operating income of $655 million. Adjusted operating income in the 2020 first quarter included impairment charges, bad debt expense, and guarantee reserves of $180 million, related to COVID-19.
The company added 88 new properties (14,525 rooms) to its worldwide lodging portfolio during the 2020 first quarter, including nearly 2,100 rooms converted from competitor brands and approximately 7,200 rooms in international markets. Eighteen properties (3,670 rooms) exited the system during the quarter. At quarter-end, Marriott’s global lodging system totaled more than 7,400 properties and timeshare resorts, with nearly 1,392,000 rooms.
Due to the numerous uncertainties associated with COVID-19, Marriott International cannot presently estimate the financial impact of this unprecedented situation, which is highly dependent on the severity and duration of the pandemic and its impacts, but expects that COVID-19 will continue to be material to the company’s results.
“As national, state and local restrictions around travel and business are gradually relaxed, we are preparing to welcome back our associates and guests. A large, and very important, part of that process is addressing their health and safety concerns while on property. To that end, we are rolling out a multi-pronged platform to elevate cleanliness standards and hospitality norms to respond to the new health and safety challenges presented by the current pandemic environment,” Sorenson concluded.