Marriott's new CEO will inherit company battered by Covid-19 pandemic

New York

THE worst year in Marriott International Inc's recent history is in the books.

Now the world's largest hotel company will have to turn the page without its longtime leader. Marriott reported fourth-quarter adjusted earnings per share of 12 US cents on Thursday, three days after the death of chief executive officer Arne Sorenson.

The results beat the average analyst estimate of 11 cents a share, bringing a close to a year in which the hospitality giant recorded a net loss of US$267 million.

Marriott's results come days after the death of its chief executive officer Arne Sorenson.

The company's new leader, who will become the fourth CEO in Marriott's history, will have to engineer a recovery in an industry that was levelled by Covid-19. That means convincing guests to return while ramping up decimated staffing levels and nursing along franchisees whose finances were ravaged.

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The new CEO will also need to keep adding new rooms to the system at a time when uncertainty over the pace of a rebound will give hotel developers and construction lenders pause.

Mr Sorenson, who died at the age of 62 after a battle with pancreatic cancer, would be difficult to replace in any circumstances. He was perhaps the most influential figure in the hospitality industry, a former mergers and acquisitions lawyer whose 2016 purchase of Starwood Hotels & Resorts reshaped Marriott and forced competitors to race to keep up.

Marriott said on Feb 16 that it would name a new CEO within two weeks. The most likely candidates are company veterans Stephanie Linnartz, group president for consumer operations, technology and emerging businesses, and Tony Capuano, who heads Marriott's development efforts.

The two executives have been in charge of the company's day-to-day operations since earlier this month. Ms Linnartz, 52, joined Marriott in 1997. She would be the first woman to lead the hotel giant. She's currently in charge of marketing, technology and the company's loyalty programme, giving her close ties to the corporate and leisure travellers that Marriott will have to win back as it seeks to recover from the worst year in the history of the modern lodging industry.

Mr Capuano, who joined the company two years before Ms Linnartz, rose to serve as president of the global development, design and operations services group, where he oversaw efforts to add new hotels to Marriott's portfolio. That experience put the 55-year-old executive at the helm of the company's revenue engine, experience that will prove crucial as Marriott seeks to jump-start growth in the recovery.

Investors are betting that the transition will be smooth. Marriott's shares rose slightly in the days after Mr Sorenson's death, outpacing the Bloomberg Americas lodging index.

"Arne was a highly regarded leader for both Marriott and the broader hotel industry," said Michael Bellisario, an analyst at Robert W Baird & Co. "During his tenure as CEO, Marriott became a bigger, stronger and better-positioned global hotel company and is well-positioned for continued growth for many years to come."

Marriott said the pace of its group bookings was down 57 per cent in 2021 from end of 2019, after a pandemic-driven collapse in travel pushed the hotel chain to its first full-year loss in more than a decade.

Hotel occupancy rates have recovered from the pandemic lows hit last year, but the emergence of new variants of the novel coronavirus has cast a shadow on the recovery of the hospitality industry. Analysts expect a wider roll-out of Covid-19 vaccines later this year to aid a rebound in leisure travel.

Marriott said that the pace of bookings for its group business, which makes up about 20 per cent of its annual room nights, has improved in the second half of 2021 to being down between 25 per cent and 30 per cent.

"On the group front, (cancellations) have slowed for the second half of 2021, and they are at normal levels for 2022," said Ms Linnartz.

Earlier this week, Hilton also forecast an improvement in group business in the latter half of the year. BLOOMBERG, REUTERS