Resort managers acknowledge that one other wave of Covid-19 might have an effect on progress
The hotel industry is pulling away from the fringes.
Earlier this week, both Marriott and Hilton announced that third-quarter earnings had improved, a sign of a much-needed rebound. Marriott raised $ 100 million and Hilton lost $ 81 million (only). This was a significant turn from the previous quarter, which saw losses of $ 234 million and $ 432 million, respectively.
RevPar for the brand is up 19% from the previous quarter and 94% of the brand's hotels are open. The percentages might look cleaner by the end of the year as the brand expects to slip into the usual seasonal lull. Still, Marriott is down $ 287 million year over year. The brand's occupancy rate is 37%, compared to 2019 by 40% and slightly below the national average of 44%.
It's a glimmer of hope for an industry crippled by the pandemic, but the good news didn't go much further. As repeated throughout the summer, the shadow of the pandemic continues to linger over the hospitality industry as the rise in cases in Europe and the US could hamper the industry's recovery. The country's most prominent hospitality executives told a panel at New York University today that the solutions are not that simple.
"I'm not sure if it is politically feasible to pursue a radical shutdown in the US. I'm also not sure if it makes sense," said Arne Sorenson, CEO of Marriott, comparing the US reaction to that of Marriott China, where Marriott sees an occupancy rate of around 62%, a decrease of 9% compared to the previous year.
Getting back to the offices is "a difficult thing to stand up for when we see 100,000 cases a day," he said. "It's deaf at best, but it can be done at reduced density, with social distancing, and with a mask."
Sorenson and Hilton CEO Christopher Nassetta have both touted the work of their brands from whatever programs were unveiled last month, though it's unclear how much additional sales they will actually bring. Ultimately, every executive agreed that 2021 would see record growth, which is more evidence of 2020's troubles than of the year's financial success.
The finances of 2021 can be helped by maintaining some of the cost-cutting measures taken during the pandemic by scaling back amenities like a 24-hour airport shuttle over an extended period of time, even if there is a risk that the integrity of some of most of Marriott's be compromised Premium luxury brands like the St. Regis or the Ritz Carlton portfolio. Sorenson was open about that action could be long-lasting, particularly suggesting a curtailment of food and beverage service in areas where demand has declined significantly. That may not be permanent, but new additions like keyless entry and new staffing models would remain.
"This will not be satisfactory for most guests if we return to a normal demand environment," he said. "They will expect the full service, especially from a full-service hotel, that they expected."
Arne Sorenson, CEO of Marriott, described the 2020 election results as "the best of all possible outcomes, a divided government where members of both parties must work together". All executives in the panel agreed that additional impetus would be necessary to get the US economy and the hotel industry out of the crisis.
“We have to think about stimuli in the traditional sense. We need to think about how we can create incentives to get people mobile again, ”said Nassetta. "The health problem has created a serious economic problem and is not going to resolve itself very quickly."