Marriott CEO on Sequester: It Will Hurt Our Business
Despite posting better-than-expected earnings and strong revenue growth on Tuesday, Marriott International CEO Arne Sorenson sees gridlock in Washington as a serious threat to his business.
In the conference call, executives explained their rationale for altering guidance for 2013 comparable-sales growth from 5-7 percent to 4-7 percent.
"The entire reason for bringing down the lower end of our guidance range is the sequestration and budget situation in the United States," he said. "We know it will not be good for our business and government agencies will cut travel."
He added that the potential cuts "are very concerning and pose not only near-term threats to the travel business but longer-term threats to the economy if our political leaders can't get to an agreement."
"The frustrating thing about the political situation is that business is really good, and there are so many aspects of the economy that are good for our business but also show signs of a broad recovery," he said. "It's almost as if the political process is targeting and trying to pull back the economic growth that's under way."
"The fourth quarter was very strong across the board. We opened a lot of hotels early in the fourth quarter. But as with most earnings releases, the primary question was about next period," he said.
Abroad, Marriott is scheduled to open the JW Marriott Marquis Dubai, which is set to be the tallest hotel in the world. The grand opening is next week and the hotel is expected to be in full operation in the fourth quarter of 2013.
Marriott says it will have 1,608 rooms and stand 85 feet shorter than New York's Empire State Building when completed. "It's a beautiful asset," Sorensam said.