During Marriott International's Q4 earnings call Tuesday, CFO Leeny Oberg downplayed concerns about a potential drop in U.S. inbound travel from Canada and Mexico due to economic tensions with the Trump administration.
Earlier this month, President Trump agreed to a 30-day pause on his tariff threats against Mexico and Canada, the U.S.'s two largest trading partners. He agreed to the pause in exchange for tighter border security.
Besides saying it's "too soon to say we're seeing anything of note," Oberg said Canadian and Mexican visitors represent a fraction of its U.S. business -- about 1% to 2% of room nights -- although they are the two largest source markets for U.S. inbound travel.
According to the U.S. Travel Association, a 10% reduction in Canadian travel could mean 2 million fewer visits and $2.1 billion in lost revenue.
After announcing a 25% tariff on Canadian products on Feb. 1, Canada Prime Minister Justin Trudeau urged citizens to "choose Canada," including spending their summer vacations in Canada instead of the U.S.
The anger of Canadian citizens was on display when America's national anthem was booed at pro hockey and basketball games in Montreal, Ottawa and Toronto in early February.
Marriott bullish on tech upgrades
Marriott reported a strong fourth-quarter performance, with global revenue per available room (RevPAR) increasing 5%, driven by a 3% rise in average daily rate (ADR) and a 1-point increase in occupancy.
In the U.S. and Canada, fourth-quarter RevPAR rose over 4%, primarily driven by higher ADR, with Marriott CEO Anthony Capuano saying that demand around November's U.S. presidential election proved more resilient than anticipated.
Looking ahead, Marriott is betting big on what Capuano called a "multi-year digital transformation," which is set to begin rolling out later this year.
According to Oberg, the company is planning for "a higher than historical investment in technology" as part of this rollout, with over half of this investment focused on a revamp of Marriott's property management, reservations and loyalty systems.
Capuano also highlighted the tech upgrade's focus on streamlining non-room bookings.
"There are a wide range of products and services that we offer our guests every day beyond guest rooms -- food and beverage, spa, golf," he explained. "The ease with which a guest can shop across all of those categories on our new reservations platform, we believe represents meaningful revenue upside for our owners."
Renovation of Elegant resorts in Barbados
The company's investment priorities also extend to its owned and leased portfolio, with significant capital being directed toward the renovation of its Elegant Hotels resorts in Barbados. Marriott acquired Elegant and its seven hotels -- some of which are all-inclusive -- in 2020.
While some renovation work at Elegant properties was completed last year, Oberg indicated that "the vast majority" of improvements are scheduled for completion in 2025.
"Since we've acquired it, the performance has been excellent," said Oberg, noting that the company plans to eventually sell the resort real estate after renovations are complete, "subject to long-term contracts to remain in our system."
Capuano said high investor interest in the all-inclusive sector "bodes well" when Marriott is ready to sell.
These developments come as Marriott's luxury and resort segment continues to show strength, with RevPAR for that sector growing 6% in the fourth quarter, boosted by thriving group travel and business travel as well as leisure.
For the fourth quarter, Marriott reported total revenue of $6.4 billion, a 5% increase. Operating income rose to $752 million, up from $718 million a year earlier.