It has been a difficult couple of weeks for everyone at Marriott International with the death of its well respected CEO Arne Sorenson after an almost two year battle with pancreatic cancer. He had first joined the company back in 1996 and became only its third CEO in 2012, a landmark appointment being the first to hold the role and not have the Marriott surname.
His last year in charge of the company has seen it face its biggest crisis in its history as COVID-19 brought travel and hospitality to a standstill. In his last full quarter in charge Marriott reported a net loss of USD164 million in 4Q 2020, combining to a USD267 million loss for the full-year 2020. A sad end to a great career for a man described by Marriott executive chairman and chairman of the board J W Marriott Jr as “an exceptional executive, but more than that, also “an exceptional human being”.
But just a week after his “unexpected” death, Marriott executives revealed during an earnings call with investors and analysts that there are some positive signs and “green shoots” of demand recovery, especially of note in the valuable business travel sector.
“In the US and Canada, we are encouraged to see some small green shoots of increased demand for corporate and leisure transient bookings, as well as in group lead volume. While still down meaningfully year-over-year, transient booking pays and visits to our direct booking sites have been improving recently,” said Stephanie Linnartz, group president, consumer operations, technology and emerging businesses at Marriott International.
Ms Linnartz also acknowledged Marriott is also “starting to see a bit of momentum behind special corporate bookings” with special corporate bookings in Jan-2021 for the month of Jan-20201 “the best that we’ve seen since last fall”. Looking ahead at bookings from corporate accounts further out, she said “we’re seeing them tick up each week, particularly from accounting and consulting firms and technology companies”.
Marriott is “quite bullish on the overall outlook,” according to Ms Linnartz. “Yes, when we look medium, longer term past COVID. We think there is robust demand for travel across all segments, leisure, business travel, group meetings. There could be some slight shifts here and there. When this disease when COVID gets under control, we see the demand come back. And we’re already on the business travel side,” she added.
Similarly, Chris Nassetta, president and CEO of Hilton Worldwide Holdings, acknowledged on its 4Q 2020 earnings call that the company expects “a more pronounced recovery in the back half of the year driven by increased leisure demand and meet meaningful rebounds, and corporate transient and group business”.
Additionally, he said conversations with Hilton’s large corporate customers along with “sequential upticks in business transient booking pace year-to-date” indicate that there is “pent-up demand for business travel that should drive a recovery in corporate transient trends as the year progresses”.
These observations remain “admittedly anecdotal,” acknowledged Mr Nassetta and are simply based on “discussions that we’re having with our big customers and trends that we’re seeing”. Likewise, the forward visibility “remains limited,” he noted, with roughly 70% of bookings currently being made within a week of travel. “However, we continue to see signs of optimism,” he said. “In fact, the vast majority of our large corporate accounts agreed to extend 2020 negotiated rates into this year.”
While many still predict a decline in future demand, Mr Nassetta is sceptical on the numbers being touted by many and highlights historical warnings that the telephone, the internet and telepresence and voicemail were previously going to truncate the need to travel.
“The reality is what it typically does is it accelerates it … it just gives more efficiency… it ultimately speeds things up,” he explained. “It ultimately continues to connect the world and speed up globalisation. And as a result, people need to congregate, they need to travel, they need to build relationships, they need to build cultures, they need to innovate. And those things really cannot be done as well without face-to-face opportunities, both in a group setting, as well as individual business travel type needs.”
The forthcoming CTC partner event, the HRS Corporate Lodging Forum, the first of which on the Asia Pacific region takes place on 02-Mar-2021 will deliver a platform to better understand the future industry. The eighth annual edition of the flagship event from the business travel hotel solutions provider – entitled ‘Emerge. Stronger. Together.’ – will this year explore what the future of corporate travel might look like, as well as discussing sustainability, elevating traveller satisfaction, and cost savings. Last year, 1400 business travel decision-makers joined to hear the latest trends. CTC readers can register directly here – Emerge. Stronger. Together. – or via the banner below.
The forum will explore what COVID-19 has taught us and what innovations will transform the industry in the next 3 years; how brands, investors and operators are navigating through a zero cashflow environment; how a green hotel programme can support travel professionals to achieve their company’s sustainability goals; study the latest innovations driving the touchless payments revolution; and consider if this is the end of traditional RFP to a data-led decision making procurement process.
There will also be special deep dive sessions looking at the current situation of the hotel landscape, recovery outlook and market-specific trends in specific country markets, as well as sessions on how hotels can efficiently fill rooms even before vaccines become widespread and the rising demand for extended stays, and how they can be incorporated into travel programmes.
The business travel market had ground to a near halt over the past year as people have learned to communicate via videoconferencing channels without the need to jumping on a plane or staying in a hotel. But they are now coming back will be back and with a stronger flow just as soon as the environment allows, maybe not in the same numbers initially, but certainly with a renewed appetite for travel.