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Marriott International Inc. (NASDAQ: MAR) reported strong earnings growth in the second quarter and has raised its revenue outlook for the full year as strong travel demand in China and other international markets has more than made up for less-robust growth in the U.S.
The Bethesda hospitality giant posted revenue per room of $132.17 for the second quarter, up 10.7% from the same period last year and 6.45% from second quarter of 2019. In the Greater China region, where Marriott has roughly 475 hotels and dozens more in development, RevPAR — a key industry metric — more than doubled to $85 from the same period last year though remained slightly below pre-pandemic levels.
Marriott executives say they expect the numbers to improve even more in China, noting that the occupancy bump has has been driven largely by residents traveling within the country, not travel in and out of China.
"We’ve got international airlift only at 40% of pre-Covid level, so there’s clearly more room to grow," Leeny Oberg, Marriott’s chief financial officer and executive vice president of development, said on an earnings call with analysts Tuesday morning.
Marriott posted net income of $726 million for the second quarter, up 7% from the same period last year and nearly 213% from 2019's second-quarter. Occupancy improved to nearly 72%, up a little more than six percentage points from the same period a year ago but still trailing pre-pandemic levels of better than 76%
Domestically, room revenue grew more slowly, as more Americans are opting to travel overseas. In the U.S. and Canada, RevPAR came in at nearly $138, up about 4.9% from the same period last year and about 7.1% from second-quarter 2019.
“A year ago in Q2, there were meaningfully fewer choices for travel, there really were consistent restrictions for going overseas,"Oberg said. "When you when you look at the travel patterns this year, there is a big exodus of Americans going over to Europe and other places in the world, and so that certainly had an impact" on domestic revenue.
Marriott said it had 3,100 properties and nearly 547,000 rooms in its development pipeline at the close of the second quarter, including about 37,000 rooms coming into the fold under a a newly announced partnership with MGM Resorts International. It doesn’t include any new rooms from the company’s proposed new extended-stay hotel brand, being referred to as Project MidX studios.
“While it is still early days, initial interest from the development community has been extraordinary,” President and CEO Tony Capuano said of the new brand, which the company announced in June. “We are working on several hundred deals and hope to have our first deal signed by the end of this year.
Company executives also appear to be less concerned about an economic slowdown than they were just a few months ago. Globally, Marriott has boosted its full-year RevPar growth outlook to between 12% and 14%, up from earlier projections of 10% to 13%. In the U.S. and Canada, RevPAR is projected to increase by between 7% and 9%, up slightly from earlier projections of 6% to 9% growth. That outlook is in line with projections of other hospitality brands, including Hilton Worldwide Inc., which recently reported second-quarter earnings and raised its full-year outlook guidance.
"While there is still a level of macroeconomic uncertainty, as we look into the third quarter, the consumer is generally holding up well and our forward bookings remain solid,” Oberg said. “It now seems more likely that the U.S. economy could have a soft landing.”
Marriott's shares were trading at $205.18 midday Tuesday, up 1.7% from Monday's close.
