Marriott Sees Record Direct Bookings at Its Hotels

Marriott Sees Record Direct Bookings at Its Hotels

Skift Take

Take that, online travel agencies. The world’s largest hotelier not only drove more direct bookings but also saw strong growth in its loyalty program.

When the pandemic crushed demand, many analysts predicted that one of the victims of covid would be the hotel chains’ multi-year push to drive direct bookings. Past crises prompted hotel brands to use online travel agencies to get guests. But Marriott International said on Wednesday it has so far avoided leaning on that higher-cost, third-party distribution.

“The first quarter marked our best quarter ever for direct digital bookings, which helped drive owner and franchisee profitability,” said CEO Anthony Capuano during an earnings call. “Digital bookings were up 14 percent compared to the first quarter of 2019, partially driven by meaningfully higher downloads of our redesigned Bonvoy app, which were 70 percent above pre-pandemic levels.”

Direct bookings avoid the commissions of between 10 and 30 percent that online travel agencies charge. Marriott may have been helped by Google’s decision in the quarter to waive fees to participate in its price-comparison search. Google-referred leads also count as “direct.”

Direct bookings have been on a multi-year trend. In 2019, just before the pandemic, Marriott saw the online travel agency share of its room nights drop for the first time in several years, Capuano said at a December Morgan Stanley Global Consumer & Retail Conference.

“Over time, we expect our direct share will continue to increase in the same sort of way we saw it between 2017 and 2019,” Capuano said.

As context, in aggregate online travel agencies likely accounted for a third of sales at Marriott and its peers, according to a report for subscribers to Skift Research.

With the recent boom in leisure travel, online travel agencies did recover a bit as an important source of customers. Yet the long-term trend may be toward growing strength in direct bookings.

Surge in Loyalty and Co-Branded Card Use

Marriott’s push of its Bonvoy loyalty program and its co-branded credit cards helped encourage direct traffic to its app and sites, too.

In the first quarter, Marriott Bonvoy had 164 million members in the quarter, up 26 percent from 130 million members in the same quarter of 2019. That represented significant sign-ups despite a period of heavy travel restrictions during the pandemic. Executives credited a “significant increase” in its loyalty members earning and using points through routine spending — thanks to its deals with brands such as Uber.

Marriott’s co-branded credit cards were popular despite the pandemic pause, too. This phenomenon appears in how Marriott International’s non-room-related fee revenue rose $170 million in the first quarter, up 21 percent year-over-year, “primarily due to significantly higher year-over-year credit card fees.”

The company’s credit card fees were up 26 percent compared to the pre-pandemic level.

Direct bookings, loyalty program growth, and brand awareness via credit card usage did their part to support the company’s swing to profitability. But the broader recovery thanks to pent-up travel demand was the leading factor.

In the first quarter, Marriott International earned $377 million in net income, a measure of profit, on revenue of $4.19 billion. Revenue rose 80 percent, year-over-year. Another measure of profit — adjusted earnings before interest, taxes, depreciation, and amortization — was $759 million in the first quarter, compared to $296 million in the year‐ago quarter.

In April in the U.S. & Canada, Marriott estimates that RevPAR — or revenue per available room, a key industry metric — had fully recovered to 2019 levels.

Bleisure Is Booming

Marriott’s results suggested more proof of “The Great Merging” in people’s personas — with more blurring in the ways they live, work, and travel.

Data showed that hybrid and remote working policies led to more “bleisure” — or blended business and leisure — trips.

“Day of the week trends continue to show that trips that blend leisure and business are on the rise,” Capuano said. “In March, in the U.S. and Canada, while Monday through Wednesday occupancy was down in the mid-teens, occupancy during the shoulder days, Thursday and Sunday, was down in the single digits, and occupancy on Fridays and Saturdays was nearly in line with March of 2019.”

“You also see it manifest itself a little bit in terms of rate,” Capuano said. “ADR [average daily rate] on the weekends was about 4 percent higher than it was on weekdays in the quarter.”

In other words, some of the special corporate negotiated business that you would classically think happens between Monday and Wednesday has been the slowest to return.

“Interestingly, Fridays and Saturdays, we definitely were seeing in March that they were right around pre-pandemic levels,” said Kathleen Oberg, chief financial officer.

Climate Concerns a Modest Constraint

One reason corporate travel has been slow to return has been that some companies, particularly in Europe, worry about how to rebuild their business travel spending without running afoul of their commitments to reduce their carbon emissions.

“I was in Europe last week and met with about 30 travel managers for multinationals across Europe,” Capuano said. 

“There’s a bit of a tug of war right now, I think, between managing travel costs and being mindful of carbon footprint,” Capuano said, adding that recent data suggested that “appetite for the benefits of in-person interaction are starting to win that tug of war a bit.”

Asia Leads the Marriott Pipeline

In the quarter, the company added 75 properties. More than 2,500 rooms of those were conversions from competitor brands.

The company signed more than 19,000 rooms. About a fifth of the new rooms were conversions for mostly luxury and upscale properties. 

Looking at its development pipeline, about 60 percent was outside the U.S., with Asia Pacific having roughly twice the growth rate as the rest of the world. 

This year, the company forecasts net room growth will be between 3.5 and 4 percent.

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