Marriott now expects its full-year net rooms growth to be between 6.4 % and 6.7 %, aided by the long-term strategic licensing deal it struck with MGM Resorts International and the creation of MGM Collection with Marriott Bonvoy , which brings 17 properties and some 37,000 rooms into the Marriott fold and a heavier footing in Las Vegas . Capuano said to think of the partnership less as a licensing agreement and more as a franchise agreement . “ The structure is akin to a traditional franchise deal ,” he said , where Marriott will be paid on room revenue across the 17 properties .
At the end of the quarter , Marriott ’ s worldwide development pipeline totaled more than 3,100 properties and nearly 547,000 rooms . More than 240,000 rooms in the pipeline were under construction as of the end of the second quarter . Pipeline attrition rates , even in the face of a rockier debt environment , are low , according to Oberg , at around 1.3 %, which is below the historical 2 % fallout level . “ The pipeline is moving ,” she said .
TRAVELER TYPES Marriott ' s higher exposure now in Las Vegas due to the MGM deal should allow it to grow its group and convention business incrementally . Small and midsize enterprises ( SMEs ), which was the first business cohort to recover , account for some 60 % of Marriott ' s group business . Meanwhile , large corporates , the Fortune 100 types , are recovering more slowly . “ A slow and steady recovery — that ' s the pace ,” Capuano said . “ What we hear is that they continue to meet a great deal as they hire and train and that ' s a driver for group business .”
If rate is any indication , group and corporate business will be more lucrative as a portion of Marriott ' s overall business . Oberg said that corporate negotiated rates were up nearly double digits and that “ we are looking for meaningful increases again .”
She added that the classic big four tech firms — Amazon , Apple , Meta and Google — are down in room nights versus 2019 .
Where Marriott ' s — and its peers '— greater opportunity lies is in inbound international travel , particularly into Greater China , where RevPAR there has now surpassed 2019 levels , bolstered primarily through domestic travel . Things are changing , however , as restrictions into Asia Pacific and Europe now cease . Still , there are challenges ; some of them out of hoteliers ' hands . “ In Greater China , there is only a 40 % recovery of airline capacity ,” Capuano said .
In response to an analyst question regarding brand absences in certain segments , Oberg cited its recent entry into the midscale space via its City Express acquisition in the Caribbean and Latin America market and its newly announced midscale extended-stay brand , known as StudioRes . She went a tad further , then , teasing a forthcoming conversion midscale brand for EMEA , with a formal announcement in the back half of this year .
Outside the lower chain segments , Marriott touted its strong performance at the luxury level , where room rates have outpaced inflation and compared to 2019 , while other segments have come more in line with inflation adjusted rates . “ There is a normalization going on with seasonal patterns and a nice , sturdy mix of leisure , business and group ,” Oberg said .
Though major metro areas were decimated during the heyday of the pandemic , Capuano heralded their return . “ Inbound international travel to the U . S . has always been modest ,” he said , “ and not as impactful as outbound U . S . The exception to that is individual cities .” He went on to cite New York , where transient room nights occupied by international travelers was 12 % in 2019 and as of Q2 2023 had exceeded that percentage , with 13 % of transient room nights filled by international travelers . In Miami , it ' s now
[ AI IS ] INCORPORATED INTO HOW WE THINK ABOUT RUNNING OUR BUSINESS AND REMOVING FRICTION FOR OUR GUESTS AND CREATING CAPACITY FOR ASSOCIATES
– TONY CAPUANO , PRESIDENT AND CEO , MARRIOTT INTERNATIONAL
at 15 %, 3 percentage points higher than in 2019 . San Francisco and Hawaii also saw upticks .
Meanwhile , artificial intelligence continues to stretch out inside the operations of many businesses and at Marriott , Capuano said , “ It ' s incorporated into how we think about running our business and removing friction for our guests and creating capacity for associates — but we do it mindfully .” He didn ' t offer any concrete examples of AI ' s current use at Marriott .
Oberg said the use of generative AI was to enhance but not take away from the baseline fundamentals of hospitality . “ We do believe it ' s the person-to-person experience that makes our business unique ,” she said .
September 2023 hotelsmag . com 21