While the Marriott hotel group missed its Q1 profit estimates, the group has reported some bright spots and an analyst says there is cause for optimism.
Like its competitors, bookings dropped in the later stages of Q1 as travel restrictions tightened around the globe. GlobalData?s travel and tourism analyst, Ralph Hollister shared his view on the situation, saying that a strong emphasis on franchising has allowed the company to mitigate some of the impact of COVID-19, despite a 22.5% per cent drop in revenue. Mr Hollister said the drop was similar to declines experienced by Hilton (22.6%), Wyndham (23%) and IHG (25%). He pointed out that these companies have not sacrificed pricing power to stimulate any remaining demand.
In terms of net earnings, Marriott reported at total of US$31mn, Hilton turned a profit of US$18mn and Wyndham announced a net income of US$22mn. With the lowest revenue decline and highest net earnings in relation to its close rivals, Marriott is in a good position to navigate through this pandemic, according to Hollister.
Meanwhile, Q2 results will reveal the full impact of COVID-19 across the hotel sector. It?s likely to be the worst quarter of the year due to restrictions on domestic and international travel in this period. Hilton has already reported a system-wide revenue decline of roughly 90% for April.
