by Michael J. Shapiro | August 08, 2017
Marriott International reported what CEO Arne Sorenson, left, termed "solid" performance for the second quarter, with an increase in worldwide revenue per available room of more than 2 percent. Transient demand in Europe and Asia was particularly good, and the company's hotels in Mexico posted robust RevPAR growth of 10 percent. North American RevPAR growth was just 0.9 percent for the quarter, but in line with the company's expectations.
Group business in North America for the year is falling short of the company's predictions, though, currently less than 1.5 percent above what it was a year ago. "I think group has softened a bit more than we would have anticipated," said Sorenson during the company's earnings call. Last year at the same time, Marriott group business for 2017 was up about 7 percent year-over-year -- a pace the company knew would soften. 
"When we start a year with mid- to high-single-digit group revenue on the books above the prior year, we always anticipate we'll give some of that back over the course of the year," Sorenson said. A robust early booking rate indicates that planners are booking earlier, and that Marriott will have less capacity to book more group business as the year progresses. "But I think to be fair, we're forecasting right now… that we're going to end up [with] stayed-and-paid group business in the books in 2017 a bit less than what we would have anticipated when the year began. And I think we're seeing 2018 a touch more modest than we would have expected a few quarters ago."
Sorenson attributed the softening to a number of factors, including the longer booking window, Marriott's high occupancy rate (80 percent) and the fact that the numbers are being compared to robust group bookings from the previous year. "I think there's probably a piece of some corporate cautiousness that is preventing us from posting even better numbers," he added.
The outlook for group business later this year is stronger, Sorenson noted. "October will be a great month," he said. "I should keep my fingers crossed and knock on wood when I say it that definitively, but October and the fourth quarter as a whole will be obviously a fairly strong quarter, certainly compared to Q3." Marriott's group business on the books for the fourth quarter is not only already robust, but also markedly higher than the quarter preceding it.