Two years after Marriott’s $13.3 billion purchase of Starwood Hotels & Resorts, the work of integrating the acquisition is still proving to be a challenge, and still raising concerns among investors and analysts.
Speaking to investors on Tuesday, Marriott CEO Arne Sorenson said that the company saw a “higher level of deletions this quarter than we did [in the first quarter]” and adjusted its outlook accordingly.
“We continue to have the largest pipeline of rooms under development in the world, including more luxury and upper-upscale rooms than our next three competitors combined,” Sorenson noted in his prepared remarks. The company opened 23,000 rooms in the second quarter and has 213,000 rooms currently under construction, with 40,000 rooms signed or approved.
Marriott also removed 14,000 rooms from the pipeline “that had not made enough progress towards construction starts.” By the end of the second quarter, Marriott’s pipeline was approximately 466,000 rooms, “a few thousand rooms higher than last quarter and roughly 25,000 rooms higher than at the end of the second quarter of 2017.” Sorenson added.
Marriott has been making many concerted efforts in the past year to make owning a Marriott hotel more profitable, from tightening cancellation policies and reducing the commissions that hotel owners have to pay to third-party meeting planners.
Shares of Marriott stock, however, were down by approximately 4 percent in trading Tuesday because of reaction to its quarterly revenue, which fell short of expectations. Total revenues for the second quarter were approximately $5.4 billion, an increase of only 3 percent from the same period last year. Analyst expectations were for revenues to be closer to $5.8 billion.
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