Marriott CEO Arne Sorenson told Bloomberg Television today that the U.S. government shutdown is wreaking havoc on business in the Maryland-based hotelier's backyard, Washington, D.C. "It varies from market to market," he said in an interview at the World Economic Forum in Davos, Switzerland. "Washington, of course, we are big—that's our hometown. We have 150 hotels in the greater Washington area. Business there is down double digits."
Marriott isn't the only hotelier suffering from the shutdown. For the week ending Jan. 12, the D.C.-Maryland-Virginia region registered the third-largest declines in each of the hotel industry's three key performance metrics, according to STR. Occupancy was down 20 percent to 47.4 percent compared with the same week in 2018; average daily rate dropped 7.9 percent to $124.32; and revenue per available room was down more than 26 percent to $58.89. While January and February are generally slower times for the D.C. hotel market, STR analysts noted that postponed trips among government contractors and canceled group travel due to the government shutdown impacted hotel performance.
Marriott had a record number of organic signings in 2018 and opened nearly 500 properties comprising more than 80,000 rooms around the world, including a 200-room Moxy Hotels location in D.C. A Jan. 11 note from Baird equity research analyst Michael Bellisario said supply increases, a weaker convention calendar and reduced lobbying activity had weighed on results in the market. With its property concentration in the region, Marriott is more exposed than other hotel brands.
The hotel industry at large sits in a crucible of issues surrounding the shutdown. Not only is it suffering from a slowdown in business and government travel but also, given the number of foreign workers the U.S. hotel industry employs, it is at the center of the issue driving the shutdown, immigration. Should the shutdown lift in the short term, there are longer-term industry interests in play, as well.
Aside from the government shutdown, however, Marriott remains bullish on global travel going into 2019. Chief commercial officer Stephanie Linnartz told Yahoo Finance that a growing middle class in a number of strong markets and globe-trotting millennials will supply travelers for its approximately 6,900 hotels. On the negative side, she said, "political uncertainty and stock market volatility," were concerns moving deeper into the new year.