There are about 630 million causes to rejoice at Marriott Worldwide’s headquarters this week, however even the corporate’s prime executives observe how rapidly the corporate’s good monetary fortune may change.

Marriott, the world’s largest resort firm, reported a $630 million third quarter revenue Thursday and reported its general world efficiency — even with China nonetheless underneath an array of pandemic journey restrictions — had totally recovered from the pandemic.

It’s clearly excellent information for the corporate behind manufacturers that vary from Residence Inn and TownePlace Suites all the best way as much as Ritz-Carlton and St. Regis. In any case, Hyatt solely squeaked out a $28 million revenue for a similar timeline. Hilton, Marriott’s chief competitor, reported a $346 million third quarter revenue late final month.

However even the momentum of profitability throughout the trade isn’t sufficient to dissuade financial realists: Layoffs and hiring freezes proceed to grip Silicon Valley and tech trade darlings like Amazon, Twitter and Lyft. Economists broadly anticipate a recession to grip the worldwide economic system within the coming months.

Whereas Marriott’s prime executives stay extremely optimistic in regards to the firm’s efficiency and outlook for 2023, they admitted Thursday that financial circumstances may rapidly alter the corporate’s restoration momentum.

“Given quickly rising rates of interest and rising considerations a couple of doable world recession, we’re carefully monitoring client and macroeconomic tendencies,” Marriott CEO Anthony Capuano stated on an investor name. “There isn’t any doubt that the hospitality trade is impacted by financial cycles, and with transient reserving home windows averaging solely about three weeks, tendencies may change comparatively rapidly.”

It’s among the many extra somber financial takes the corporate offered in current months. The inventory market clearly observed, as Marriott’s inventory value was down practically 4% Thursday afternoon regardless of the robust third quarter monetary exhibiting.

However Capuano reiterated the corporate isn’t but seeing any indicators of a slowdown in journey demand and spending on rooms at Marriott-affiliated lodges.

“We now have but to see indicators of a slowdown in world lodging demand. Actually, we have seen simply the other,” he stated. “Reserving tendencies stay very wholesome. Given sustained excessive ranges of employment, client tendencies prioritizing experiences versus items, pent-up journey demand and a excessive stage of client financial savings, journey spending has been extremely resilient.”

Hovering resort charges

Increased resort charges proceed to gas Marriott’s efficiency restoration. International occupancy charges for the corporate averaged 69% within the third quarter, however every day charges have been 10% increased than throughout the identical interval in 2019. It will get much more spectacular while you break issues aside by area or sort of buyer.

Common group reserving charges for stays this yr have been 17% increased than the identical type of bookings made in 2019.

Within the U.S. and Canada, common every day charges have been 15% costlier from July via September of this yr than the identical time in 2019.

General efficiency throughout all forms of lodges, from luxurious to prolonged keep, and in all forms of markets, from small cities to the most important U.S. and Canadian cities, was “extra totally recovered” for the primary time, stated Leeny Oberg, Marriott’s chief monetary officer. Marriott’s management staff additionally reported greater than full recoveries for lodges in Europe, the Center East, Africa, the Caribbean and Latin America.

Asia Pacific, led by China, continues to lag, however there’s optimism surrounding the reopening of Japan.

“There clearly continues to be a good quantity of uncertainty in regards to the doable recession given the Fed’s continued rise in charges and financial headwinds that do proceed to develop,” Oberg stated. “However I believe we have some issues in our enterprise that basically do lead us to confidence about 2023, though we aren’t predicting, per se, a recession.”

Tailwinds from loyalty and bank cards

Marriott’s prime leaders is perhaps hedging towards the opportunity of an financial slowdown subsequent yr, however they remained bullish on the corporate’s Bonvoy loyalty program in addition to bank card spending.

Marriott Bonvoy had grown to 173 million members by the tip of the third quarter, and the corporate is working to maintain these members proud of choices to ebook immediately. The long-delayed Ritz-Carlton Yacht lastly hit the seas final month, and Capuano stated roughly two-thirds of reservations are coming via direct bookings. Bonvoy members comprise greater than half the bookings of the Ritz-Carlton Yacht.

There was additionally a document stage of recent Marriott co-branded credit score cardholders coming into the system. Marriott launched two mid-tier bank cards in September, the Marriott Bonvoy Bevy American Categorical Card and the Marriott Bonvoy Boundless Bountiful Card from Chase — “which ought to assist drive robust development going ahead,” Capuano added

Marriott’s bank card charges are up 20% to this point this yr from a yr in the past. That type of pattern affords a pleasant security web amid all of the chatter of financial uncertainty.

“Clearly, while you have a look at in comparison with [2019], these bank card charges have grown meaningfully greater than hotel-related charges due to COVID and the regular development in cardholders and bank card spend each yr as we have moved via 2019,” Oberg stated. “We’re development of non-[hotel performance] charges in 2023, each from credit score cardholders in addition to spend.”

Marriott’s pending dive into affordability

Capuano offered just a little added context on Marriott’s current announcement it was working to amass Mexico-based Metropolis Categorical, an reasonably priced mixture of 152 “mid-scale” lodges throughout the Caribbean and Latin America. The deal wouldn’t solely make Marriott the most important resort firm within the area, however it might additionally give the corporate a lower-priced entry level for vacationers trying to ebook a resort keep.

“We’re fairly bullish on the reasonably priced mid-scale house, which has significant development potential,” Capuano stated.

He additionally confirmed the corporate is exploring the potential to take the Metropolis Categorical model to different components of the world, just like the way it made the extra European-focused AC Resorts a worldwide model after first taking a stake in it in 2011.

“As with many acquisitions that we have executed through the years, as soon as we shut, as soon as we begin rolling in [the Caribbean and Latin America], we’ll, after all, consider the applicability of this platform as as to whether it is smart to roll out some or the entire sub-brands underneath the Metropolis Categorical banner into different markets around the globe,” Capuano stated.