Marriott International’s initial-quarter earnings were well down below estimates as a essential profits metric plunged due to the coronavirus-fueled collapse in demand from customers for hotel rooms.
The pandemic has forced the operator of the Marriott, Ritz-Carlton and St. Regis chains to shut around a quarter of its motels throughout the world, with profits for each accessible area (RevPAR) slipping sharply in the very last month of the quarter ended March 31.
“In the very last several months, we have found the affect of COVID-19 unfold throughout our small business in an unparalleled way,” Marriott CEO Arne Sorenson explained in a information release.
He noted that world-wide RevPAR, excluding the Asia Pacific region, grew 3.two% in the initial two months of the yr but as the pandemic unfold, the metric fell sharply, declining 22.5% for the quarter as a whole. In April, it plunged somewhere around ninety%.
Marriott shares fell 5% to $eighty two.eighty in buying and selling Monday as the firm also described that over-all profits dipped 7% to $four.68 billion in Q1 although internet money declined to $31 million, or nine cents a share, from $375 million, or $one.09 for each share, a yr earlier. Modified earnings were 26 cents for each share.
Analysts had predicted adjusted earnings of 87 cents for each share on profits of $four.fourteen billion.
As TheStreet studies, “Marriott, like all the other big journey-related businesses, has been hammered by the coronavirus as opportunity tourists have stayed residence.”
Sorenson explained Marriott had “taken considerable steps to maintain liquidity and mitigate the affect of these really lower levels of demand” this kind of as minimizing operating costs “dramatically” and issuing $one.six billion in bond very last month.
He pointed to some beneficial indicators, with occupancy at Marriott motels in China, in which the pandemic originated, achieving 25% in April, up from much less than ten% in mid-February.
“Looking at our occupancy and booking traits, it seems that lodging demand from customers in most of the relaxation of the entire world has stabilized, albeit at incredibly lower levels,” Sorenson explained. “Occupancy was about 20 p.c in excess of the past two months in North American restricted-services motels, benefitting from leisure and travel-to demand from customers.”
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