Shares of Marriott International (NASDAQ:MAR) fell sharply last month as the world's biggest hotel chain was badly damaged by the coronavirus-driven sell-off. The travel industry essentially ground to a halt in March, with airlines cutting back on flights and Americans responding to stay-at-home orders by suspending travel arrangements.
As a global leader in the industry, Marriott got hammered on the news, finishing the month down 40%, according to data from S&P Global Market Intelligence.
Like other travel stocks and most of the consumer discretionary sector, Marriott shares crashed in the first half of the month. Fear spread about the expanding outbreak, which led to incoming flights from Europe being banned and lockdown-style conditions in a number of states as the spread of COVID-19 kept Americans at home. By the end of the month, U.S. air traffic had less than 10% of the passengers it had a year ago.
Marriott is among the companies most exposed to the catastrophe, and in a March 18 update, CEO Arne Sorensen said, "As the virus and efforts to contain it have spread around the world, demand at our hotels has dropped significantly." Occupancy levels in North America and Europe had fallen to below 25%, compared with around 70% a year ago.
To control costs, the company has taken steps like closing restaurants, shuttering hotel floors, and reducing staff. It's also cutting senior executive salaries and furloughing some employees, as it plans to eliminate at least $140 million in administrative expenses for the year. The company withdrew its guidance and said it had drawn down $2.5 billion of a $4.5 billion line of credit, though it borrowed the remaining $2 billion at the end of the month. Nonetheless, Sorensen expressed confidence that the company could weather the crisis.
Marriott shares recovered modestly in the second half of March as stocks that fell the most during the coronavirus crash gained on hopes for the federal government's rescue package. However, Marriott remains sober about the recovery, saying it didn't expect a material improvement in bookings until the spread of the virus moderated.
With new cases still accumulating quickly in the U.S., it seems like it will be at least a few weeks before the crisis begins to fade.