January 14, 2021
For a thumbnail sketch of the impact that the hospitality industry withstood from the COVID-19 pandemic and the shutdown of travel and tourism that resulted, Marriott International’s Stephanie Linnartz provided some comparative numbers on this week’s Walker Webcast.
Following 9/11, Marriott’s properties suffered a 15% decline in RevPAR. Amid the Great Recession in 2008-2009, RevPAR dropped by 25%. During the depths of the pandemic-driven shutdown last year, RevPAR plunged 85%.
Founded in 1927 and witness to the Great Depression, World War II and other economic down cycles, “Marriott has seen bad times, but never like this,” said Linnartz, the company’s group president of consumer operations, technology, and emerging businesses.
During the same 2020 period that saw lodging performance crater, Linnartz was privy to the very different experience of an industry-leading company that thrived during the extended era of social distancing: Home Depot, for which she’s a board member. Comparing the home improvement retailer’s quarterly earnings during 2020 to Marriott’s, “It’s like living in two different universes,” she told Walker & Dunlop CEO Willy Walker.
However, Marriott managed to weather the equivalent of a Category 5 hurricane, has seen its numbers steadily improve since last spring, and is looking ahead to the eventual full recovery of travel for business and leisure. Not that Linnartz thinks it’ll happen overnight. “2021 will be better, but it will still be down,” she said.
Before the pandemic hit, hotel occupancies reached a historic peak of 66.2%. Walker cited a projection from STR that demand won’t see a full recovery until 2023. “I hope it’s before 2023, but it won’t be this year,” said Linnartz.
The pace of recovery hinges on the distribution of vaccines, although Linnartz doesn’t think we’ll need to vaccinate 100% of the population before consumers and businesses feel confident about traveling again.
In the interim, though, Linnartz believes the industry will see a partial recovery in demand in 2021, with both individual and group business travel likely to rally by the latter part of the year. While the convention and meeting business is getting back on its feet, Linnartz thinks we’ll see a trend toward “hybrid” large-scale gatherings: i.e. Zoom attendance by employees who aren’t yet ready to commit to the travel required for in-person presence.
During the one-hour webcast, Linnartz held forth on re-introducing Marriott brand standards while maintaining sensitivity to operators’ economics, the emerging use of technology in the lodging sector and her company’s strategy for competing on the turf staked out by Airbnb.
She also sounded an upbeat note when Walker asked whether his own company’s plans to hold two big in-person meetings at Marriott properties this year—one in July and another in October—were doable. “I think you’ll be able to pull them off,” she told Walker.
On-demand replays of the Sept. 13 webcast are available by clicking here and through Walker & Dunlop’s Driven by Insight podcast series.
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