business transient segment , which Marriott said experienced another quarter of sequential growth , with third-quarter RevPAR rising 2 % YOY . ( Leeny Oberg , Marriott ’ s CFO and EVP of development , mentioned that GDS bookings were marginally up , a reflection of the continued return of larger corporations doing their bookings .) Leisure transient RevPAR , meanwhile , was flat against the same period a year ago .
Though post-pandemic RevPAR increases were most pronounced in the select-service , midscale segment , at Marriott the tables have now turned . “ RevPAR growth at luxury and fullservice hotels outperformed select-service properties and weekdays surpassed weekends , reflecting strength in group and business ,” Capuano said . At the same time , Marriott is digging deeper into the midscale space . In October , it announced its City Express by Marriott brand name as its new transient midscale product in the U . S and Canada , with what
Capuano called its “ highly effective operating model and outstanding value proposition .” Though higher segmented business is seeing bigger growth , Capuano remains resolute in Marriott ’ s pivot to midscale . “ If you look at fees per room for RevPARrelated fees , pulling out the non-RevPAR as they tend to grow faster , both in 2024 and 2025 , we see average fees per room growing , which might seem a little counterintuitive , given our push into midscale .” He said there are two principal behind it : strong momentum in the luxury tier , “ which drives outsized fees ” and strong growth in incentive management fees .
In the third quarter , conversions represented more than 30 % of room additions and more than 50 % of signings . Expect conversions to continue to fuel growth . “ The teams are much more focused on removing friction from the conversion process and we ’ ve got dedicated resources in each of the continents that are singularly focused on driving conversion volume ,” Capuano said .
In August , Marriott announced a multiunit conversion deal with Sonder for 9,000 existing rooms and a few 1,000 more in the pipeline . “ This deal expands our portfolio of longer-stay accommodations in key global markets , including New York and Dubai ,” Capuano said .
As the investment community awaits the next Federal Reserve decision on interest rates — a decision that likely will come on Thursday and could include a 25-basis-point cut — Capuano noted the importance , but said other factors hold even more weight than where interest rates rest . “ The availability of debt and an elevated construction-cost environment are bigger impediments to driving the sort of construction start volume we saw prepandemic than the current level of interest rates ,” he said .
Key money is also playing more of a role in more segments , according to Oberg . Key money is an upfront payment to an owner to secure a deal or to fill a particular part of the capital stack . “ Over a number of years , we ’ ve seen a bit more key money across more tiers ,” she said , adding that key money is involved in some form or fashion in around a third of Marriott deals .
CHINA DISTRESS With most regions benefitting from sustained travel , Greater China continues to be the outlier , despite governmentbacked economic stimulus in the country . Greater China RevPAR declined 8 % in the third quarter , with Capuano pointing to “ macroeconomic pressures ” that led to weak domestic leisure demand and restricted pricing . Severe weather and higher-end guests traveling to other regions also impacted results , Capuano said .
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