Marriott’s profit soars on the vacay-palooza, but Americans’ travel fuel could be running low
Grab the mini-bar champagne… Marriott unpacked strong earnings yesterday as people splurged on ocean-view suites at the Ritz and room service at the W. The world’s largest hotel chain — which also owns Sheraton, Westin, and many others — saw its sales rise a sweeter-than-expected 33% to nearly $6B. Meanwhile, profits surged 44%.
- Expensive nights: Marriott's revenue per available room (a key metric in the hotel industry) jumped 5% above 2019 levels thanks to pricier rates and healthy demand.
- City lights: Leisure and group trips in North America (Marriott's largest market) topped prepandemic levels, while business travel recovered to nearly 90%.
Stash the mini toiletries… With the worst of the pandemic past us, consumers are taking advantage of their regained freedom by traveling — a lot. Last year, US hotel revenue and profits hit record highs. But some of that growth was driven by higher prices (average room rates in North America surged 33% from 2019 prices). Americans have mostly stomached those hikes, but that could change as households burn through their pandemic savings.
Savings may die before demand… As savings dollars dry up, consumers could be forced to cut back on travel spend — even if organic demand is still high. Goldman Sachs predicts that Americans will’ve burned through 65% of their pandemic savings by the end of this year. Still, consumers could satisfy their wanderlust with more budget-friendly choices (think: road trips, cheaper lodging).