Marriott International lowered its third-quarter and full-year 2024 revenue per available room growth guidance as it expects further weakness in Greater China.

During the company’s second-quarter 2024 earnings call, Chief Financial Officer and Executive Vice President, Development Leeny Oberg said Marriott’s global RevPAR is expected to grow 3% to 4% for both the third quarter as well as full-year 2024. That’s a slight downgrade from last quarter’s outlook of 3% to 5% growth for the full year.

“RevPAR growth is expected to remain higher in the vast majority of our international markets than in the U.S. and Canada,” she said. “The primary driver in our full-year outlook at Greater China’s updated expectations of negative RevPAR growth for the rest of the year.”

Marriott expects the continuation of current weak demand and pricing trends in the region, she said. The third quarter should see the most meaningful RevPAR decline as outbound travel accelerates during summer holidays.

Given Greater China’s lower overall average RevPAR compared to the rest of the system, the market makes up about 7% of Marriott’s RevPAR-related fees while accounting for 10% of its open rooms.

Marriott also expects marginally lower full-year RevPAR in the U.S. and Canada than previously anticipated due in part to less group business during the first two weeks of November in light of the intense focus on the U.S. presidential election, she said.

“Overall RevPAR trends in the U.S. and Canada in the back half of the year are expected to remain relatively steady with the first six months of the year,” she said.

Marriott still anticipates worldwide RevPAR growth to be driven by another year of strong growth in group revenue, continued improvement in business transient revenue and slower but still growing leisure revenue, she said.

As of publication time, Marriott's stock was trading at $228.39, up 3% year to date. The Nasdaq Composite was up 19.1% for the same period.

Marriott delivered another strong quarter as travel demand remained robust in most global markets, President and CEO Tony Capuano said. Second-quarter global revenue grew by nearly 5% while average daily rate increased by about 3% and occupancy reached 73%, up about 100 basis points year over year.

RevPAR grew by nearly 4% in the U.S. and Canada thanks to a shift in the Easter holiday, he said. All its chain scales in the U.S. and Canada posted positive second-quarter year-over-year RevPAR. The metric also increased by 7% internationally, led by a 13% increase in the Asia-Pacific region excluding China.

In Europe, the Middle East and Africa, RevPAR grew by nearly 10% with continued strong regional and cross-border travel demand, he said. RevPAR increased about 9% in the Caribbean and Latin America.

During the second quarter, Marriott saw RevPAR growth across all three of its customer segments, with each experiencing increases in both room nights and ADR, Capuano said. Group demand, which makes up 24% of its worldwide room nights, saw RevPAR grow by 10% globally. Full-year 2024 worldwide group revenues are currently on pace to be 9% higher than 2023.

Business-transient demand, which contributes about 33% of global room nights, saw a 4% increase in RevPAR, he said. Leisure-transient demand, making up 43% of room nights during the quarter, posted a 2% increase in RevPAR.

“Within the business transient segment, demand from small- and medium-sized corporates, which now account for nearly 55% of business transient room nights, has grown significantly over the last few years,” he said.

Earlier this month, Marriott announced Business Access by Marriott Bonvoy, a new comprehensive online booking travel program that it launched to ease and expand the booking experience and travel management process for these customers, he said. Though still early days, travelers in this segment have shown great interest in the platform.

During the quarter, Marriott opened approximately 15,500 net rooms to its system, according to its earnings release. Its global system comprised nearly 9,000 properties with nearly 1.66 million rooms.

The company’s global development pipeline totaled 3,509 properties with more than 559,000 rooms. Of those, 208 properties with about 33,000 rooms were approved for development but had not yet been subject to signed contracts. Marriott ended the quarter with 1,127 properties with more than 209,000 rooms under construction. Fifty-seven percent of the rooms in the pipeline are in international markets.

Conversions, including multi-unit opportunities, remain a significant driver of growth in Marriott’s system, Capuano said. During the quarter, conversions represented 37% of its openings and 32% of signings.

“This conversion activity has been broad-based, with hotels converting into 23 different Marriott brands over the last 12 months,” he said.

While still below 2019 levels, Marriott is pleased with the continued upward trend in monthly construction starts, he said. During the quarter, construction starts in the U.S. and Canada rose 40% year over year.

In June, Marriott signed three marquee luxury conversion deals in the U.S. They are the Resort at Pelican Hill, Newport Beach; the Luxury Collection Hotel Manhattan Midtown; and the Turtle Bay Resort in Hawaii becoming a Ritz-Carlton property.

Marriott’s momentum in the midscale space is strong thanks to interest from developers, Capuano said. The company continues to sign deals for the City Express brand in the Caribbean and Latin America region, and it is in multiple discussions with developers for further expansion. The company’s first Four Points Express by Sheraton hotel opened in Turkey. More than a dozen Four Points Express hotels from Marriott’s recent multi-unit conversion deal in the Asia-Pacific region are expected to join its system later this year. Marriott is also in talks regarding its new StudioRes hotel brand in more than 300 markets, he said.

“We continue to execute on and pursue numerous types of opportunities, from large development deals to one-off projects,” he said.

For the second quarter, Marriott reported net income of $772 million, up from $726 million in the second quarter of 2023, according to its earnings release. Adjusted net income reached $716 million, an increase from $690 million a year ago.

Total revenue amounted to $6.4 billion, a 6% increase year over year. Adjusted earnings before interest, taxes, depreciation and amortization was $1.3 billion, up from $1.2 billion in the second quarter of 2023.

By the end of the quarter, Marriott reported $300 million in cash and equivalents and total debt of $13.1 billion. At the end of the second quarter last year, Marriott had $300 million in cash and equivalents with $11.9 billion in debt.

Year to date through July 29, Marriott has repurchased 10.4 million shares for $2.5 billion.

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