Marriott International Results

Marriott CEO: Commission Reduction and Worker Strikes Affected Q4 - Travel Weekly

Excerpt from Travel Weekly

Marriott International reported relatively sluggish Q4 revenue growth in North America, with CEO Arne Sorenson citing group commission cuts as a contributing factor.

"The quarter was lighter than we anticipated, without a doubt," Sorenson told analysts during Marriott's full-year earnings call on Friday. Marriott's systemwide revenue per available room (RevPAR) in North America increased just 0.2% in the quarter. Worldwide RevPAR was up 1.3%.

"We had moved first [on decreasing group commissions], and while many of our principal competitors have moved similarly, we were exposed to having lower commissions for much of 2018," Sorenson said. "We think that for the year, group bookings impact would have been most pronounced in Q4."

Marriott was the first of the major hotel companies to reduce commissions on group bookings at North American properties from 10% to 7% in early 2018. The cut went into effect March 31, 2018.

In addition to losing business to competitors that hadn't yet reduced group commissions, Sorenson also blamed labor strikes for the North American softness. The strikes affected eight markets in the region throughout 2018, including hotels in Boston, San Francisco and Honolulu.

"We can very easily zero in on that and see that those hotels alone caused us to lose half a point of RevPAR index in Q4," said Sorenson. "It's a pretty significant kind of impact." 

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