Marriott International and Hilton Worldwide this week separately
reported growth in their respective group and transient segments during the
first quarter of 2015.
Meanwhile, a day after Hilton CEO Christopher Nassetta pledged to "remain open-minded" about his company's potential role in
Starwood Hotels & Resorts Worldwide's exploration of strategic alternatives,
including a possible sale, Marriott CEO Arne Sorenson hit the brakes on any
speculation of a Marriott-Starwood deal.
“It is crystal clear that there is nothing like organic
growth in this business,” Sorenson said Thursday during Marriott's first-quarter
earnings call, noting that Marriott deals in recent years for Gaylord Hotels,
Protea Hospitality Group and Delta Hotels and Resorts were far smaller than
would be a Starwood deal.
“The strength of the brands delivers management and
franchise contracts at very light capital costs, if any," Sorenson said, "and
that provides, essentially, nearly infinite returns. That's what we want to
remain focused on.”
Transient and small-group bookings fueled revenue growth at Marriott’s
limited-service brands, including Residence Inn and Courtyard, CFO Carl
Berquist said during the call.
Across all tiers, Marriott reported a 5 percent year-over-year
rise in North American revenue per available room for group bookings, mostly
due to increased room rates. Berquist said small-group demand was “particularly
strong” and transient bookings grew 7 percent year over year, with room rates
up 5 percent.
“We successfully reduced the volume of special corporate
business in favor of a greater volume of higher-rated retail business,”
Berquist said. Marriott also expects strong transient and group demand to
continue for the rest of 2015, he added, with the pace for group bookings at
full-service hotels up 10 percent from last year.
Worldwide, Marriott reported an average daily rate of
$153.23 during the first quarter of 2015, up 4.4 percent from the same period in
2014. The 70.2 percent occupancy rate increased 1.6 percentage points year over
year, and net income rose to $207 million from $172 million.
Meetings Fuel Hilton's
Q1 Growth
Hilton’s systemwide group room revenue rose 6.8 percent year
over year during the first quarter, fueled by strong demand from small group and
corporate meetings business, Nassetta said Wednesday during the company's
earnings call.
U.S. group revenue grew 6.5 percent, fueled by group demand
in Chicago and San Francisco. In Europe, group bookings bolstered revenue in
Germany, Copenhagen, Prague and Ireland. Group demand also boosted RevPAR in
the Middle East and Africa region, especially in Doha, Dubai and Mecca.
Hilton's U.S. transient revenue grew 6.3 percent, supported by a 9 percent increase in corporate negotiated business. Nassetta expects group and transient demand to drive occupancy rates and revenue growth for the rest of 2015.