Marriott expects rates to continue to climb in 2013

In Marriott's June-quarter earnings conference call, president and CEO Arne Sorenson said the company would be seeking rate increases in the high single-digit percentages in upcoming negotiations, noting that corporate rates remain "meaningfully lower than they were in 2007." While rate discussions have begun only in the "softest, sort of preliminary way," said Sorenson, the company has started informing its corporate customers of the expected dynamics for the negotiations.

"Our special corporate customers by and large know that demand has come back and has come back reasonably strong and, as a consequence, the power in the negotiations has shifted a little bit," Sorenson said. "None of our special corporate customers likes to pay more than they have to pay, so this will be negotiated very carefully."

Sorenson credited strengthening group business and increased corporate travel for driving up rates and occupancy in North America during the quarter, with revenues from each up 8 percent. Rates increased by 4.3 percent compared with the prior quarter—including a 3.9 percent increase in full-service and luxury rates, and a 4.5 percent increase in limited-service rates—and occupancy increased by 1.6 percentage points to 74.4 percent.

Marriott's net income for the quarter was $289 million, up 13 percent from 2011 levels

Michael Baker, Business Travel News

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