CEOs' optimism about the economy has improved dramatically since the passage of corporate tax cuts in late 2017, but the executives' enthusiasm has not yet led to higher corporate hotel bookings, Marriott International Inc. President and CEO Arne Sorenson said in a conference call.
"The tone ... in many of the conversations I've had with folks is really quite bullish," Sorenson said in a fourth-quarter 2017 earnings conference call. "That doesn't, sadly, immediately translate into somebody saying, 'Therefore, I'm going to have our team out there spending more money on hotels.'"
Many hotel executives, including leaders at Hilton Worldwide Holdings Inc., the world's second-largest hotel operator behind Marriott, say higher corporate confidence could boost travel in 2018. Sorenson acknowledge that possibility but said the path to better results for hoteliers would be indirect.
"I think if that optimism translates into better corporate profits, if it translates into more investing activity by companies, I think inevitably, we'll see that that is positive for corporate demand for our industry," he said.
Marriott's revenue per available room on corporate bookings grew by 4.1% in the fourth quarter of 2017, roughly in line with growth in all transient business, Sorenson noted. Corporate bookings performing in line with the broader average was a "fairly encouraging" sign, because corporate travel had lagged leisure travel in recent quarters, he added. Corporate group bookings also showed signs of life and were slightly stronger than in prior periods, providing "a hint of something to be optimistic about," Sorenson said.
In general, there is a trend toward groups booking their events at Marriott hotels farther in advance, in a sign that hotels are fuller and groups are more confident about planning events, he said.