Group travel, hotel conversions bright spots for Marriott in Q2

Dive Brief:

• Marriott International posted 4.9% year-over-year systemwide RevPAR growth in the second quarter of 2024, with RevPAR in the U.S. and Canada specifically increasing 3.9% for the period, according to an earnings report published Wednesday. The hotel company’s adjusted EBITDA was also up year over year in Q2. 
• In the quarter, Marriott added roughly 15,500 net rooms to its portfolio. The company also grew its worldwide development pipeline to approximately 3,500 properties and more than 559,000 rooms. 
• Marriott CEO Anthony Capuano attributed financial results in the quarter, in part, to strong growth in group revenues and continued improvement in business transient revenues. As for portfolio growth, he said that momentum around conversions remained strong in the quarter.

Dive Insight:

In the second quarter, Marriott saw growth across all three of its customer segments, including group, leisure transient and business transient, Capuano said during a Wednesday earnings call with analysts. Each segment, he added, experienced increases in both room nights and average daily rates in Q2. 

“Group, which comprised 24% of worldwide room nights in the quarter, remained the strongest customer segment. Compared to the year-ago quarter, group RevPAR grew 10% globally,” Capuano said. He added that business transient RevPAR grew 4% in the quarter. 

“Within the business transient segment, demand from small- to medium-sized corporates, which now account for nearly 55% of business transient room nights, has grown significantly over the last few years,” Capuano added. 

Earlier this month, Marriott launched Business Access by Marriott Bonvoy, a direct channel for small- to medium-sized businesses with digital booking and management tools, to ease the travel planning process. 

“While it’s still early days, this new offering has already seen great interest,” Capuano said about Business Access. “We’re extremely pleased with the initial account signups and users of the platform, both of which have outpaced expectations.” 

On the development side, Marriott’s global portfolio “continues to grow meaningfully faster than overall industry supply,” Capuano said. In the second quarter, conversions accounted for 37% of Marriott’s room openings and 32% of signings, according to the CEO. 

“Conversions, including multi-unit opportunities, remain a significant driver of growth, as owners continue to value the depth and breadth of our brand portfolio,” Capuano said. 

Marriott announced in June plans to convert three luxury properties, including Oahu’s Turtle Bay Resort, to brands within the Marriott Bonvoy portfolio. 

In February, Capuano projected that Marriott would see continued growth in hotel conversions throughout 2024 as sourcing debt for new construction remained challenged. The CEO noted during the Wednesday call, though, that construction starts in the U.S. and Canada rose 40% year over year in Q2. 

Marriott launched a new conversion-focused brand, dubbed Project Mid-T, in June, at which time Chief Development Officer for the U.S. and Canada Noah Silverman told Hotel Dive the company was engaged in “dozens upon dozens” of conversations with “mostly existing owners and franchisees” about hotels under the brand.