Conversions are propelling Marriott’s development pace

The group’s number of properties under development increased by 4% during the first half of this year, with the forthcoming key total rising by 10%.

Pipeline snapshot

As at 30 June 2023, Marriott’s worldwide development pipeline totalled more than 3,100 properties and nearly 547,000 rooms, including 199 properties with roughly 31,500 of pipeline rooms approved, but not yet subject to signed contracts.

This compares to year end 2022’s overall amount of 3,028 properties comprising more than 496,000 rooms.

MGM boost

At the end of H1, Marriott signed a long-term strategic licensing agreement with MGM Resorts International to create the MGM Collection with Marriott Bonvoy brand, which will launch in October. Encompassing 17 of MGM’s resorts, the collection will represent more than 40,000 rooms in Las Vegas and other U. cities.

Marriott’s overall pipeline includes 1,066 properties with more than 240,000 rooms under construction, or 44%, including approximately 37,000 rooms from the MGM deal.

Conversion focus

In the company’s Q2 earnings conference call, president and CEO Anthony Capuano revealed: “Our development team remains focused on driving conversions, especially multi‐unit opportunities, and interest from owners remains robust.

“In the first half of this year, conversions accounted for 21% of our organic room additions. Including MGM, conversions represented 63% of our organic signings through June.”

Redevelopment exemplar

One of the most notable conversion signings within this period was an agreement with Grimit Srl to bring The Ritz-Carlton brand to Italy for the first time.

The Ritz-Carlton Lake Como will result from the conversion of the former Hotel Grande Bretagne in Bellagio, on the shores of Lake Como. Expected to open in 2026, the waterfront property is slated to offer 59 guestrooms and 46 suites, including two Ritz-Carlton suites, featuring lake views and luxurious furnishings.

Current network

In terms of current network size, Marriott added 254 properties (33,097 rooms) to its worldwide lodging portfolio during the 2023 second quarter, including 17,300 rooms associated with the City Express transaction and roughly 11,200 other rooms in international markets.

The company also added more than 2,800 conversion rooms. 17 properties (1,995 rooms) exited the system during the quarter. At the end of Q2 2023, Marriott’s global lodging system totalled nearly 8,600 properties, with over 1,565,000 rooms.

Footprint forecast rise

Capuano said: “Our growth strategies are proving successful. With the MGM deal, our 2023 full year net rooms growth expectation is now 6.4% to 6.7%.

“In June, we announced our planned entry into the affordable midscale extended stay space in the US and Canada [Project MidX Studios]. Initial owner interest in our new offering has been tremendous. We are working on several hundred deals and hope to have our first deals signed by the end of this year.”

EMEA conversion brand

Leeny Oberg, chief financial officer and executive vice president, business operations, analysed: “Properties in our industry-leading 547,000 room pipeline that are already under construction continue to move forward, and we have not seen the number of deals leaving the pipeline increase. Global fall‐out in the quarter was 1.3%, below our historical quarterly average of just over 2%.

“We think there’s lots of room for us to have growth across all segments around the world in our existing brands. We’re excited about what we see as the possibility for a conversion midscale brand in EMEA and look forward to some announcements in the back half of the year regarding that.”

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