Marriott’s second-quarter worldwide revenue per available room grew 13.5% compared to 2022, led by another quarter of meaningful recovery in Greater China.

Speaking during the company's second-quarter 2023 earnings call, Marriott President and CEO Tony Capuano said these improvements in China come less than two quarters after travel restrictions were lifted. RevPAR in Greater China has surpassed 2019 levels primarily due to the surge in domestic demand.

In a year-over-year comparison, RevPAR in Greater China grew 124.5% to $90.90 during the quarter.

Overall cross-border travel demand grew again, mainly driven by an increase of international visitors to the Asia-Pacific region, he said. The percent of room nights from cross-border guests is now roughly 1 percentage point below 2019 levels of approximately 20%.

“Prior to the pandemic, international visitors accounted for nearly one quarter of room nights in Greater China,” he said. “With the region's international airlift still only around 40% of 2019 capacity by the end of the second quarter, we believe there's still meaningful growth opportunities in and from Greater China.”

Worldwide occupancy in the quarter reached 72%, a 5-percentage-point increase compared to a year ago, he said. Global average daily rate grew 6% year over year. Global leisure demand and ADR remain robust, with leisure transient room nights and ADR each increasing 5% year over year, resulting in 10% revenue growth.

In the U.S. and Canada, leisure revenue rose 1% year over year, demonstrating the stabilization of the market as travelers are taking overseas vacations, he said. With past travel restrictions, U.S. and Canadian travel to the Asia-Pacific jumped 90% and increased 20% to Europe compared to last year.

Group revenue in the U.S. and Canada grew 10% year over year, Capuano said. Group revenue is expected to remain strong through the rest of the year. By the end of June, group revenue for the back half of 2023 was pacing up 11% compared to last year. Meeting planners are booking further out, matching a trend among transient guests.

“Group revenue for full-year 2024 was pacing up 14% year over year at the end of the quarter, an improvement from up 9% just three months prior,” he said.

The recovery of business transient remains slow but steady, he said. Demand from Marriott’s top corporate accounts grew modestly in the quarter. In the U.S. and Canada, ADR growth was driven by high single-digit increases in special corporate rates, leading to business transient revenue growing 12% year over year.

Marriott revised its outlook for both the third quarter and full-year 2023 to reflect the resilience of travel. In comparing the third quarter of 2023 against last year, the company expects comparable systemwide constant-dollar RevPAR growth of 6% to 8% worldwide, 2% to 4% in the U.S. and Canada, and 17% to 19% internationally.

For the full-year outlook, Marriott expects comparable systemwide constant-dollar RevPAR growth of 12% to 14% worldwide, 7% to 9% in the U.S. and Canada, and 28% to 30% internationally.

It projects full-year net rooms growth of 6.4% to 6.7% compared to 2022.

Marriott raised its full-year guidance due to better-than-expected second-quarter results and robust global booking trends, said Leeny Oberg, chief financial officer and executive vice president of development.

“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,” she said. “In the U.S., it now seems more likely that the U.S. economy could have a soft landing.”

The updated guidance range assumes relatively steady global economic conditions through the remainder of the year.

“With continued resilience of travel demand, growth is expected to remain higher internationally than in the U.S. and Canada, where we're seeing a return to more normal seasonal patterns and year-over-year RevPAR growth is stabilizing,” she said.

Marriott recently announced a 20-year strategic license agreement with MGM Resorts International and the creation of the MGM Collection with Marriott Bonvoy, Capuano said. It will launch in October and include 17 resorts with 40,000 rooms, giving Marriott a significant presence in Las Vegas and five other key U.S. cities.

Marriott also announced in early June its plans for a new affordable midscale extended-stay brand, known as Project MidX, for the U.S. and Canada, Capuano said. While it’s still early in the process, initial interest in the brand has resulted in several hundred potential development deals, and the company hopes for a first deal signed by the end of the year.

The addition of the City Express brand portfolio to Marriott’s distribution channels has led to a noticeable uplift in conversion rates, ADR and bookings in the Caribbean and Latin America region, he said.

Marriott’s development team remains focused on driving conversions, particularly multi-unit opportunities, Capuano said. In the first half of the year, conversions accounted for 21% of the company’s organic rooms additions. Including the MGM Resorts deal, conversions represented 63% of the company’s organic signings through June.

Marriott is closely monitoring the financial environment, which remains tight globally, Oberg said. While the U.S. and Europe face the most lending challenges, financing hasn’t come to a complete stop. Over the recent months, many owners in these regions have been able to secure financing and begin construction.

“In most of our other regions, there's much less dependence on debt financing for new deals, so hotel construction generally continues apace,” she said.

Marriott added about 33,100 rooms globally during the quarter, according to its earnings release. That includes 17,300 rooms associated with the newly acquired City Express brand along with 11,200 other rooms in international markets. It also added more than 2,800 rooms through conversion.

The company’s global pipeline has more than 3,100 hotels with nearly 547,000 rooms. That includes approximately 31,500 of pipeline rooms approved but not yet signed. It has more than 240,000 rooms, including about 37,000 rooms through its deal with MGM Resorts, under construction as of the end of the quarter.

Marriott reported net income of $726 million, up from $678 million a year ago, according to the earnings report. The adjusted net income for the quarter was $690 million compared to $593 million in 2022.

Adjusted earnings before interest, taxes, depreciation and amortization amounted to $1.2 billion during the quarter, an increase over the roughly $1 billion in the second quarter of 2022.

Compared to the second quarter of 2022, comparable systemwide constant-dollar RevPAR increased 13.5% worldwide, 6% in the U.S. and Canada, and 39.1% in international markets.

By the end of the quarter, Marriott’s total debt was $11.3 billion with cash and equivalents totaling $600 million. That’s compared to $10.1 billion in debt and $500 million in cash and equivalents by the end of 2022.

Year to date through July 28, Marriott has repurchased 13.6 million shares for $2.3 billion.

As of press time, Marriott's stock was trading at $202.63, up 36.2% year to date. The NASDAQ Composite Index was up 36.3% for the same period.

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