Business, group travel boost Marriott’s US RevPAR growth

Dive Brief:

• Marriott International posted global RevPAR growth of 3% year on year in the third quarter of 2023, driven by “another quarter of solid rate growth” and strong group performance, CEO Anthony Capuano said on a Monday earnings call. 
• ADR was up 2.5% year over year globally in the quarter. In the U.S. and Canada, RevPAR grew 2% year on year, driven by growth in average rates, Capuano shared. 
• Also in the region, RevPAR growth at luxury and full-service hotels outperformed that at select-service properties, and weekdays surpassed weekends for RevPAR performance, which Capuano attributed to “strength in group and business transient compared to leisure.”

Dive Insight:

Marriott continued to see quarter-over-quarter RevPAR growth in the business transient segment in Q3, Capuano shared. 

“One of the most encouraging facets of that recovery is the big corporates,” he said on the call, noting that business travel from small- and medium-sized companies was earlier to recover. Capuano also called the continued strength of group travel “a really encouraging sign.” 

“All of us spend a lot of time with both corporate and association meeting planners, and the appetite they have for group meetings just continues to be at the high end of our expectations,” he said. 

In the third quarter, Marriott added approximately 16,000 net rooms. Capuano noted that global signing activity was strong in Q3, with the pipeline growing 5% compared to the prior-year quarter to a record 585,000 rooms. 

Conversions, in particular, played a key role in rooms growth. In August, Marriott announced a deal with Sonder to add 9,000 rooms to its system, with more than 1,000 more in the pipeline, which Capuano said “expands our portfolio of longer-stay accommodations in key global markets, including New York and Dubai.”

On the development end, Marriott announced the expansion of its transient midscale brand City Express by Marriott to the U.S. and Canada in October. The company expects to have signed agreements, and possibly some openings, within the next few months, Capuano said. 

Going forward, Marriott CFO Leeny Oberg said the company expects fourth-quarter RevPAR growth in the U.S. and Canada to be “generally in line” with the third quarter, due to strong leisure and business transient trends in October offset by election-related weakness in November. 

Oberg said the company anticipates the election impact on the U.S. and Canada region to be negative 300 basis points to RevPAR in November — “double that of past election cycles,” she said. Builders and economists say election uncertainty is impeding progress on construction projects, Construction Dive reported.