Marriott International Inc. returned to profitability in the latest quarter as it halved its spending and travel demand improved from lows earlier in the pandemic.
"While Covid-19 is still significantly impacting our business, our results for the third quarter showed continued improvement in demand trends around the world," Chief Executive Arne Sorenson said Friday.
The world's largest hotel operator, which had logged a $234 million loss for the second quarter, delivered a third-quarter profit of $100 million, or 31 cents a share. In the year-earlier period, it had a profit of $387 million, or $1.16 a share.
Marriott cut operating and other expenses by more than half to $2 billion for the July-to-September quarter. Those cuts, combined with loyalty-program cash flows, led to a roughly flat cash burn, Finance Chief Leeny Oberg said.
Travel demand rose from the rock bottom of March and April as various parts of the world relaxed Covid-19 restrictions. Marriott said it notched gains in the region comprising mainland China, Hong Kong, Macau and Taiwan, which experienced the first wave of coronavirus infections.
But hotel occupancy industrywide in the U.S. fell 29% to 44.4% for Oct. 25 to Oct. 31, its lowest weekly level since mid-June, according to data-analytics firm STR. Rising Covid-19 cases and less leisure travel led to the declines, the firm said. Meanwhile, Europe once again became the epicenter of the pandemic, with a dramatic rise in infections leading some governments to reimpose lockdowns.
At Marriott, comparable systemwide revenue per available room, a closely watched industry metric known as RevPAR, fell about 66% from a year earlier, a softer decline than in the second quarter. Third-quarter occupancy fell 40.8 percentage points to 35.1%.
In North America, Marriott's RevPAR fell more than 65% and occupancy declined 40.3 percentage points to 37%. Meanwhile, RevPAR for mainland China, Hong Kong, Macau and Taiwan fell nearly 26% as occupancy was off 10 percentage points at 61.4%. Europe RevPAR fell 79% and occupancy declined 58.7 percentage points to 20.8%.
Marriott said its total revenue fell to 57% $2.25 billion for the quarter. Analysts were looking for $2.22 billion.
Its adjusted earnings were 6 cents a share. Analysts polled by FactSet were expecting adjusted losses of 8 cents a share. Impairment charges related to Covid-19 hurt profit by $24 million after tax, it said.
Mr. Sorenson said the timing of a full recovery remains unpredictable, though the company expects net rooms to grow 2.5% to 3% for the year.
He said 94% of Marriott hotels world-wide are open. Meanwhile, the company has laid off 673 employees at its headquarters in Bethesda, Md.
Group bookings for 2021 as of the end of the third quarter were down 30% compared with a year earlier. Mr. Sorenson said he remains optimistic about corporations once again holding in-person meetings and events and expects the decline in bookings to ease after the first quarter.
Hyatt Hotels Corp., meanwhile, expects only a modest pickup in business travel in early 2021.
"Many of our largest customers, such as professional services and consulting companies, are suggesting a slower return to normalized travel levels with continued limitations on travel through the first half of 2021," Hyatt Chief Executive Mark Hoplamazian said.
With the slump in business travel, major hotel operators have started offering rooms as temporary workspaces. Marriott launched a program that allows loyalty-program members to check in and out between 6 a.m. and 6 p.m., without an overnight stay.
On Wednesday, Hilton Worldwide Holdings Inc. posted a third-quarter loss of $79 million as comparable RevPAR fell about 60%. Hyatt booked a quarterly loss of $161 million as RevPAR declined about 72%.
