Marriott International lowers 2024 forecasts

Key points

• Adjusted earnings per share were $2.50, slightly exceeding management’s forecasts.
• Global comparable RevPAR (per available room) increased 4.9% in Q2, meeting the high end of forecasts.
• Adjusted EBITDA was $1.32 billion, exceeding the upper end of forecasts.

A world leader in the hotel industry Marriott International (DESTROY -4.80%)on Wednesday, it reported second-quarter results that beat management’s expectations on several key metrics. However, management slightly lowered its revenue per available room (revPAR) guidance for full-year 2024.

Q2 gross fee revenue was $1.34 billion, near the low end of management’s guidance. Net revenue from property, lease and other assets exceeded expectations at $99 million. Adjusted earnings per share were $2.50, slightly above the high end of guidance.

Overall, the quarter’s results demonstrate high operational efficiency, but also some regional challenges.

Source: Marriott International. Note: Management’s guidance was provided in the May 1 earnings report. revPAR = Revenue per available room. YOY = Year-over-year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.

Informations about company

Marriott International is a leading global hospitality company with properties in more than 130 countries. The company generates revenue from management, franchise and licensing fees from a diverse portfolio of brands ranging from luxury to midscale.

Marriott’s business model focuses on generating high profits with low capital investment through the use of management agreements and franchising. This model allows the company to expand rapidly without directly owning properties. Recent areas of focus include geographic expansion, the Marriott Bonvoy loyalty program, and digital transformation efforts.

Important events in the second quarter of 2024

Marriott reported significant performance gains in Q2, with gross fee revenue reaching $1.34 billion, up 10.2% compared to Q2 2023. The company attributed the increase to higher RevPAR and unit growth. Adjusted EBITDA increased 8.6% year-over-year, reflecting solid operating performance.

However, challenges emerged. RevPAR in Greater China fell 4.6% due to macroeconomic headwinds, while interest costs rose significantly due to higher debt balances, weighing on net income. Additionally, RevPAR in leisure destinations in the US and Canada showed moderate growth, suggesting a potential plateau in travel demand in the region.

International growth remained exceptional, with RevPAR in international markets increasing by 7.4%. Asia Pacific, excluding China, led the growth with a significant 13% increase in RevPAR, reflecting the success of Marriott’s geographic expansion strategy. The development pipeline also continued to grow, now totaling approximately 559,000 rooms, including over 209,000 under development.

Marriott Bonvoy’s loyalty program also saw expansion, gaining more than 210 million members, thanks in part to new strategic partnerships like the one announced with Starbucks (Network 2.65%). The number of members linking their accounts has already exceeded expectations, further underlining the strength of the program.

Marriott continued to expand its brand portfolio, adding 15,500 net rooms and remaining the preferred choice of property owners. Technological advances and digital transformations were also key, with ongoing improvements to digital platforms such as the Marriott Bonvoy app.

Looking to the future

Management has narrowed its full-year 2024 RevPAR growth expectation to 3%-4% due to the slowdown in Greater China and a weaker outlook for U.S. and Canadian leisure travel. The net room growth target remains at 5.5%-6% by year-end. Looking ahead, the company expects adjusted earnings per share to be in the range of $9.23-$9.40 and adjusted EBITDA for the full year to be in the range of $4.95 billion-$5.015 billion.

Investors should keep a close eye on Marriott’s international growth, given its strong performance outside of China. Technological advances and the continued expansion and success of Marriott Bonvoy are also areas to watch.

JesterAI is a Foolish AI, powered by various Large Language Models (LLMs) and Motley Fool’s proprietary systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool is ultimately responsible for the content of this article. JesterAI cannot own stocks, so it has no positions in any stocks mentioned. The Motley Fool has a position in and recommends Starbucks. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.