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Skift Take
Take that, online travel agencies. Marriott not only drove more direct bookings, while the world’s largest hotelier also saw strong growth in its loyalty program.
When the pandemic crushed demand, many analysts predicted that one of the victims of covid would be the hotel chains’ multi-year push to drive direct bookings. Past crises had prompted hotel brands to use online travel agencies to get guests. But Marriott International said on Wednesday it has so far avoided leaning on that higher-cost, third-party distribution.
“The first quarter marked our best quarter ever for direct digital bookings, which helped drive owner and franchisee profitability,” said CEO Anthony Capuano during an earnings call. “Digital bookings were up 14 percent compared to the first quarter of 2019, partially driven by meaningfully higher downloads of our redesigned Bonvoy app, which were 70 percent above pre-pandemic levels.”
Direct bookings avoid the commissions of between 10 and 30 percent that online travel agencies charge. Marriott may have been helped by Google’s decision in the quarter to waive fees to participate in its price-comparison search, as those Google-referred leads also count as “direct.”
Marriott’s push into its loyalty program, called Bonvoy, and its co-branded credit cards helped encourage direct bookings.
Marriott Bonvoy had 164 million members in the quarter, up 26 percent from 130 million members in the same quarter of 2019. That represented significant sign-ups despite a period of heavy travel restrictions during the pandemic. Executives credited a significant increase in its program members earning and using points outside of its hotel through everyday spending, thanks to our partnerships with brands such as Uber.
Marriott’s co-branded credit cards were popular despite the pandemic pause, too. This phenomenon appears in the fact that Marriott International’s non-room-related fee revenue rose $170 million in the first quarter, up 21 percent year-over-year, “primarily due to significantly higher year-over-year credit card fees.”
The direct bookings did their part to support the company’s swing to profitability, though the broader recovery thanks to pent-up travel demand led the way.
In the first quarter, Marriott International earned $377 million in net income, a measure of profit, on revenue of $4.19 billion. Revenue rose 80 percent, year-over-year. Another measure of profit — adjusted earnings before interest, taxes, depreciation, and amortization — was $759 million in the first quarter, compared to $296 million in the year‐ago quarter.
Bleisure Is Booming
Marriott’s results suggested more proof of “The Great Merging” in people’s personas on how they live work and travel.
Data showed that hybrid and remote working policies had been leading to more “bleisure,” or blended business and leisure, trips.
“Day of the week trends continue to show that trips that blend leisure and business are on the rise,” Capuano said. “In March, in the U.S. and Canada, while Monday through Wednesday occupancy was down in the mid-teens, occupancy during the shoulder days, Thursday and Sunday, was down in the single digits and occupancy on Fridays and Saturdays was nearly in line with March of 2019.”
“You also see it manifest itself a little bit in terms of rate,” Capuano said. “ADR [average daily rate] on the weekends was about 4 percent higher than it was on weekdays in the quarter.”
In other words, some of the special corporate negotiated business that you would classically think are the Monday through Wednesday have been the slowest to return.
“Interestingly, Fridays and Saturdays, we definitely seeing in March that they were right around pre-pandemic levels,” said Kathleen Oberg, chief financial officer. “The shoulder days of Thursday and Sunday were down a bit, mid-single-digit compared to 2019. Monday through Wednesday, they were down more in the mid-teens.”
Asia Leads the Marriott Pipeline
In the quarter, the company added 75 properties, including more than 2,500 rooms converted from competitor brands. It signed more than 19,000 rooms in the first quarter. About a fifth of the new rooms were conversions for mostly luxury and upscale properties — and nearly half of which were in international markets.
Looking at its pipeline, about 60 percent is outside the U.S., with Asia Pacific having roughly twice the growth rate as the rest of the world.
For 2022, the company is expecting net rooms growth of between 3.5 to 4 percent.
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