Marriott Group Doing well in Today's Bad Economy.

Marriott an American-based worldwide operator and franchisor of a broad portfolio of Hotels, Accommodation and Lodging Network Founded by J  Willard Marriott , the  company is now led by son J.W. (Bill) Marriott, Jr. Today, Marriott International has about 3,150 lodging properties located in the United States and 70 other countries and territories.

 

It is announced today that Group booking pace is picking up momentum at Marriott International, executives said during the company’s earnings call Thursday.

Pace in the United States grew by 11% during the quarter, compared to 2% growth a year ago, President and CEO Arne Sorenson said. Rate growth for these bookings was approximately 2%.

“Attendance at group meetings is running ahead of expectations,” Sorenson said during the call. “A few meeting planners are complaining about the lack of available space for new bookings during peak times. We are delighted with the performance of our sales organization.”

Underneath the 11% growth, Sorenson said, is 16% to 17% growth in group bookings for smaller hotels, and “high single-digit” growth for the company’s largest convention properties.

“What that should tell you is that it is the … relatively smaller meetings which are leading,” he said. “And by smaller, we don’t necessarily mean tiny, but we mean the meetings that are filling 300-, 400-, 500-, 600-, 700-room hotels, not necessarily the big marquis meetings that are filling 2,000-room hotels.”

One potential headwind as it relates to group pace is in the area of government meetings business, Sorenson said, and the impact the General Services Administration dust-up might have. He said the company will “have to see what the ramifications of that are.”

As it relates to rate, Sorenson said it will take longer to see rates increase for group business. That rate growth is a mix of all prior bookings from prior years, he said.

“So while the rate growth for new bookings is better, maybe a bit—maybe something like double that 2% number when we look at the bookings that are being made today,” he said. “The rate growth is still going to take a little while to come along just as the older business burns off.”

Revenue per available room grew by 6.7% in actual dollars for Marriott’s worldwide, comparable, system-wide properties. The increase largely was related to the bump in the U.S. of “last-minute” group bookings, higher group attendance and strong special corporate-rated business, Executive VP and CFO Carl T. Berquist said.

Development efforts Marriott added more than 10,000 rooms during the first quarter, Berquist said. And as of the end of the quarter, the company’s development pipeline increased to 115,000 rooms from 110,000 rooms. More than 40% of the pipeline rooms are under construction, and 10% are awaiting conversion.

For the full year, Marriott intends to open between 25,000 rooms and 30,000 rooms, he said. Approximately half of the company’s expected 2012 room openings will be outside the U.S. Ten properties, comprising approximately 2,500 rooms, left the system during the first quarter.

In Europe, the company is pursuing conversions for its full-service brands, including Autograph, Sorenson said. There are also ground-up opportunities for the Courtyard by Marriott and AC Hotels brands. Supply growth in Europe should remain below 1% “for the next few years,” he said.

Also, supply growth industry-wide will remain muted, Sorenson said. “… Supply growth for the hotel industry has rarely looked better,” he said.

“We expect supply growth to remain very low for a number of years, particularly in the full-service segments,” he said. “Very little construction financing is available, particularly for large properties. And when it can be found, it typically requires personal guarantees and considerable equity.”