Marriott defies the odds in China as rivals flounder

Marriott International has escaped the economic turmoil caused by mounting tensions between the US and China posting a rise in hotel revenue in China.

Marriott has reported positive results in both inbound and outbound Chinese travel, with revenue per available room (RevPAR) in China rising 2.6 percent for the period ending June 30.

Hyatt and Hilton, and Accor all posted declines in RevPAR in China in the second quarter, due to ongoing protests in Hong Kong and the nation’s trade war with the US. China was the fastest-growing area of InterContinental Hotels Group’s (IHG) business with a record number of openings, but progress had also slowed there. IHG reported a 0.3 per cent drop in RevPAR in the six months to the end of June in Greater China and a 1 per cent slide on the mainland.

“Having the two biggest economies in the world not getting on is not good for business,” said Keith Barr, IHG’s chief executive.

Marriott puts its success down to its Alibaba partnership and expanding market portfolio in the country. Of Marriott’s 30 existing brands, 23 are available in China where Marriott is launching about one new hotel per week.

“When you look across the markets, you see that we have a really powerful luxury and full-service portfolio [in China],” said Marriott CEO Arne Sorenson.

“We are also expanding in the select service space, but that has been much more recent for us. We’ve got strong brand familiarity, a strong loyalty program, and strong Chinese customer preference, so that we continue to take strong increases in our RevPAR index performance in China.”

Marriott currently has more than 300 hotels in its China pipeline, accounting for more than 50 percent of the company’s total planned hotel openings in the Asia Pacific region.

Chinese travellers are able to book stays at all 7000 of Marriott’s hotels worldwide through Alibaba’s travel site, Fliggy.

“I think the Alibaba partnership is off to a great start,” said Sorenson. “We are about a year into it, and if anything, we’re seeing ramping performance and we’re very optimistic about the future.”

However, Sorenson was cautious about future growth heading into 2020.

“RevPAR numbers in China were not as good as they were a quarter ago, and they were not as good as they were last year,” he said. “We’ve got very topical things right now, a trade war with China being one and Hong Kong, I think, being another example. Hong Kong performed fairly well in the second quarter, but obviously what’s happening in the streets in Hong Kong today is not a positive sign for traveling into that market.”