[Asia Economy Reporter Kwon Jae-hee] U.S. hotel chain Marriott International took a direct hit on its first-quarter earnings due to the impact of the novel coronavirus disease (COVID-19).
According to the Wall Street Journal (WSJ) on the 11th (local time), Marriott International announced that its first-quarter revenue recorded $4.68 billion, down 7% compared to the same period last year. Net profit plunged to $31 million from $375 million during the same period, dropping to one-tenth of the previous level. Debt increased by 12% to $12.23 billion.
Following this news, Marriott International's stock price fell more than 5.5% that day. Marriott's stock price has plummeted 42% since the beginning of the year.
The reason Marriott recorded poor first-quarter results is interpreted as a sharp decline in profits due to 25% of approximately 7,200 properties worldwide being closed.
Also, revenue per available room (RevPAR), considered the most important performance indicator in the hotel industry, decreased by 22.5% compared to the same period last year. For the month of April alone, it plunged by 90%.
Leeny Oberg, Chief Financial Officer (CFO) of Marriott International, said, "Sustained recovery in travel demand will depend on virus containment," and forecasted, "With the easing of COVID-19 restrictions, demand for destinations accessible by car will revive."
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