Marriott CEO on higher prices: ‘I think it’s sustainable’

Marriott International Inc (NASDAQ: MAR) could continue to command “pricing” well beyond the busy summer season, said CEO Tony Capuano this morning on a CNBC interview.

CEO’s remarks on ‘Squawk on the Street’

A hotel room currently costs about 20% more than it did before the pandemic in 2019. Explaining what’s needed for it to sustain without hurting demand, the chief executive said:

I think it’s sustainable if we deliver on the service promise. One of our bigger challenges is labour. We’re making sure our hotels are staffed and teams trained. To continue experiencing pricing power, we’ve got to deliver on service.

Marriott is scheduled to report its financial results for the current quarter on August 2nd. Wall Street, at present, rates the stock at “overweight” and sees upside to $176 on average that represents a 20% increase from here.

Do higher rates pose a threat for Marriott?

Higher rates tend to be a headwind for the “construction” space, but CEO Capuano is convinced the rate hikes in 2022 are not going to be much of a threat for Marriott International.

The good news is that most of our owners are long-term investors in the sector. They don’t try to time construction starts or openings based on economic cycles because they intend to own these assets for years, if not decades.

He reiterated the company’s commitment to expanding on its “luxury” segment that currently makes up about 10% of its global footprint. In the U.S., Marriott is also seeing a “steady growth” in foreign guests, he concluded.

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