The rebound of travel in China in the wake of the coronavirus pandemic has given Marriott International (NASDAQ:MAR) the green light to reopen all its Chinese hotels, according to a statement today from CEO Arne Sorenson. Occupancy rates in China have risen from as low as 7% earlier in the year to approximately 40% in late May, tracking the return to normality after strict lockdown measures halted COVID-19 there.
Demand for hotel rooms in the United States is also recovering, according to the figures supplied by Sorenson at a travel conference hosted by Goldman Sachs. Occupancy rates at Marriott's American properties are currently only about half their level in China at 20%, but have still risen significantly since April, when the rate was 12%.
Sorenson stated, "It's not just leisure travel growing, but it is business travel. Chinese are flying again," while noting the American hotels that are "performing strongest are those that are most dependent on drive to business." He said occupancy might not recover to 2019's 71% for several years, a point underlined by the company's recent extension of employee furloughs through early October. The press release that announced the furlough extensions detailed Marriott's "expectation that prior levels of business will not return until beyond 2021."
Sorenson's report on rising occupancy helped buoy the stock in trading today. Marriott's shares fell by 40% in March, and are still trading far below their pre-pandemic levels. However, the cautiously positive picture painted by the CEO's figures made investors bid the stock up by more than 7% by mid-afternoon.