Shares of Marriott International (NASDAQ:MAR) were 5.3% lower at the close of trading Monday as pricing for West Texas Intermediate crude oil collapsed and plunged into negative territory for the first time ever, suggesting travel, lodging, and resort operators would be in for especially difficult times.
The North American hotel industry has been crippled by the coronavirus pandemic, with occupancy rates falling to about 10%.
Marriott is one of the weaker players, and it has been forced to furlough tens of thousands of workers and suspend its dividend. It had a $4.5 billion revolving credit facility, of which it had drawn down about $2.5 billion, but also entered into a new short-term $1.5 billion revolving credit facility. CEO Arne Sorenson cut his salary to zero as the company struggles to survive the industry downturn.
Approximately 25% of Marriott's 7,300 hotels are temporarily closed, and the hotelier expects it will have to close more.
It says performance is going to degrade further and expects to report that RevPAR (or revenue per available room, an important industry metric) will fall 60% worldwide for March.
Marriott says that until the spread of COVID-19 moderates and the government lifts travel restrictions, it does not see any road toward improvement.