Rebound in China offers hope; 96% of North American properties are open


By Dave Sebastian 

Marriott International Inc. posted a second-quarter loss, though a budding travel recovery in China offered hope even as the pandemic continues to pound the lodging industry.

The world's largest hotel company swung to a second-quarter loss of $234 million, or 72 cents a share, from a year-earlier profit of $232 million, or 69 cents a share, as travel remained depressed during the usually lucrative summer season.

Chief Executive Arne Sorenson called the latest period "the worst quarter we have ever seen by far."

Marriott's shares rose 3.6% on Monday as investors apparently focused on bright spots, including signs of life in Chinese travel and the prospect that business can only get better.

Marriott said that for the three months ended June 30 it had an adjusted loss of 64 cents a share, wider than the 41 cents a share analysts polled by FactSet predicted. Impairment charges and bad-debt expense due to Covid-19 hurt reported and adjusted results by $61 million and $54 million, respectively, after taxes. the company said.

The hotel industry is suffering through its worst period in modern times, as the pandemic has led to world-wide cutbacks in business travel and cancellations of conference events. While leisure travel during the summer has shown some pickup in the U.S., hotel executives have said it could be two or more years until business travel returns to pre-Covid-19 levels.

Mr. Sorenson said Marriott's occupancy in what it terms Greater China -- encompassing China, Hong Kong, Macau and Taiwan -- reached 60% in the latest quarter, compared with 70% a year earlier.

"The recovery of travel in Greater China demonstrates the resiliency of demand once there is a sense that the virus is better under control and restrictions can be safely lifted," Mr. Sorenson said on a conference call. China, where the coronavirus was first detected, managed to bring down infection rates as outbreaks spread to the rest of the world, and the country has rebounded sooner than others.

China's consumer economy has become a vital refuge for many U.S. companies, helping them offset the damage from tumbling sales back home. But the broader Asia-Pacific region is recovering at a slower pace, as countries are in various phases of reopening and some borders remain closed, Mr. Sorenson said.

He said 91% of Marriott's more than 7,400 world-wide properties have reopened, with all hotels in mainland China, Hong Kong, Macau and Taiwan having been in operation since early May.

In North America, 96% of Marriott hotels are open, he said, adding that the company expects demand to continue picking up through Labor Day. Business and group travel is still weak but improving, with demand potentially being driven by smaller companies and trips that don't involve flying, Mr. Sorenson said.

"We too often see [big companies] making decisions about keeping offices closed for as much as the next year -- frustrating to us because, in a sense, that's just sort of withdrawing from the economy," Mr. Sorenson said.

Comparable systemwide revenue per available room, a closely watched industry metric known as RevPAR, fell 84% for the second quarter. Occupancy fell about 57 percentage points. Those figures have improved from April lows, when RevPAR was down as much as 90% and occupancy bottomed at 11% for the week of April 11, Mr. Sorenson said.

The Bethesda, Md., company said revenue for the quarter fell 72% from a year earlier to $1.46 billion. Analysts were looking for $1.68 billion.

Marriott said it had liquidity of about $4.4 billion as of June 30, including about $2.3 billion in cash and cash equivalents. The company said it continues to expect the pandemic to hurt its results.

Write to Dave Sebastian at dave.sebastian@wsj.com

Corrections & Amplifications

This item was corrected on Sept. 8, 2020 to clarify that Marriott's second-quarter loss was not its largest ever.