Marriott International MAR 3.57% Inc. posted a larger-than-expected quarterly loss on Monday, though a budding recovery in China offered signs of hope as the pandemic continues to pound the lodging industry.
The world’s largest hotel company posted a second-quarter loss of $234 million, or 72 cents a share, compared with a profit of $232 million, or 69 cents a share, in the same quarter last year, as travel remained depressed during the usually lucrative summer season.
For the three months ended June 30, adjusted losses were 64 cents a share, wider than the 41 cents a share analysts polled by FactSet predicted. The company incurred impairment charges and bad-debt expense due to Covid-19 that hurt reported and adjusted losses by $61 million and $54 million, respectively, after taxes.
The hotel industry is suffering through its worst period in modern times, as the pandemic has led to world-wide cutbacks in business travel and cancellations of conference events. While leisure travel during the summer has shown some pickup in the U.S., some hotel executives have said it could be two or more years until business travel returns to pre-Covid-19 levels.
Shares of Marriott sold off in premarket trading, and Chief Executive Arne Sorenson called the second quarter of 2020 “the worst quarter we have ever seen by far.”
But shares were up more than 2% late Monday morning as investors focused on some of the bright spots, including signs of life in Chinese travel and the prospect that the worst stretch for the company may be behind it.
Occupancy in the region which includes mainland China, Hong Kong, Macau and Taiwan for the three months ended June 30 reached 60%, compared with 70% at the same time last year, Mr. Sorenson said Monday. The region, which hosted the first coronavirus outbreaks and recovered earlier than other places, is referred to by some as Greater China.
“The recovery of travel in Greater China demonstrates the resiliency of demand once there is a sense that the virus is better under control and restrictions can be safely lifted,” Mr. Sorenson said on a conference call.
China’s rebounding consumer economy has become a vital refuge for many U.S. companies, helping them offset the damage from tumbling sales back home. But the broader Asia-Pacific region is recovering at a slower pace, as countries are in various phases of reopening and some borders remain closed, Mr. Sorenson said.
Mr. Sorenson said 91% of Marriott’s 7,400 world-wide properties have reopened, with all hotels in mainland China, Hong Kong, Macau and Taiwan having been in operation since early May.
In North America, 96% of Marriott hotels are open, he said, adding that Marriott expects demand to continue picking up through Labor Day. Business and group travel still lag but are improving, with demand potentially being driven by smaller companies and trips that don’t involve flying, Mr. Sorenson said.
“We too often see [big companies] making decisions about keeping offices for as much as the next year—frustrating to us because, in a sense, that’s just sort of withdrawing from the economy,” Mr. Sorenson said.
Comparable systemwide revenue per available room, a closely watched industry metric also known as RevPAR, fell 84.4% for the quarter. Occupancy fell 57.4 percentage points. Those figures have improved from April lows, when RevPAR was down as much as 90% and occupancy bottomed at 11% for the week of April 11, Mr. Sorenson said.
The Bethesda, Md., company said revenue fell 72.4% to $1.46 billion. Analysts were looking for $1.68 billion.
Marriott said it had liquidity of about $4.4 billion at the end of the quarter, including about $2.3 billion in cash and cash equivalents. The company said it continues to expect the pandemic to hurt its results.
Write to Dave Sebastian at [email protected]
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