As hotel industry performance continues to normalize, Marriott International’s performance continues to grow, President and CEO Tony Capuano said.
During his company’s first-quarter 2024 earnings call, Capuano said Marriott’s first-quarter global revenue per available room grew 4.2% as average daily rate increased by 3% with occupancy growing nearly 100 basis points year over year to almost 66%.
“We continue to gain RevPAR index across our portfolio and increase our market share of global hotels,” he said.
RevPAR grew across Marriott's three customer segments of group, leisure transient and business transient, he said. Group comprised 24% of its global growth during the quarter, and this segment was again the strongest segment when compared to the first quarter of 2023. Group RevPAR grew 6% in the quarter while full-year 2024 worldwide group revenue paced up 9% by the end of the quarter with a 5% increase in room nights and a 5% increase in ADR.
Leisure transient accounted for 42% of worldwide room nights in the quarter, he said.
“Both leisure demand and ADR growth have remained remarkably resilient, driving leisure RevPAR up 4% year over year,” he said.
Business transient contributed the remaining 34% of global room nights in the first quarter, he said. The segment had a 1% increase in RevPAR.
Outlook for the Year
Marriott’s full-year 2024 outlook still assumes sturdy travel demand and a continuation of current macroeconomic trends, said Leeny Oberg, chief financial officer and executive vice president of development. Global RevPAR is expected to grow 4% to 5% in the second quarter and 3% to 5% for the full year.
The company expects the group segment will continue to be a strong driver for RevPAR growth this year, she said. Business transient will show continued improvement, and leisure revenue will grow but at a slower pace.
Marriott's international markets will have higher RevPAR growth than in the U.S. and Canada, she said. While full-year global RevPAR guidance isn’t changing from prior expectations, the company now forecasts higher year-over-year RevPAR growth in the Asia-Pacific; Europe, Middle East and Africa; and Caribbean and Latin American regions while lower growth in the U.S., Canada and Greater China.
The revision of RevPAR guidance for the U.S. and Canada is because of the flattening of leisure RevPAR as more guests traveled abroad, Oberg said. However, she expects to see that increase a little for the year.
“We view that [business travel] and group are absolutely as strong as we expected, and leisure is still fine,” she said.
While that change is about a point lower in the U.S. than expected last quarter and perhaps more than a point higher internationally, it still puts Marriott in the same place from a RevPAR perspective globally, Oberg said.
“We do expect that our peers across the segment in the U.S. — we do expect that they will all be up for the year in terms of RevPAR, from select service all the way up through luxury,” she said.
Net Unit Growth
By the end of the quarter, Marriott’s global portfolio included nearly 8,900 properties with more than 1.6 million rooms, according to its earnings release. It added approximately 46,000 net rooms during the quarter, which includes about 37,000 rooms from its partnership with MGM Resorts International.
At the end of March, Marriott’s global development pipeline totaled 3,419 properties, comprising nearly 547,000 rooms. That includes 155 properties with about 27,000 rooms that are approved for development but not yet signed. There were 1,089 properties with more than 202,000 rooms under construction. Fifty-seven percent of its rooms in the pipeline were in international markets.
While the financing environment in the U.S. and Europe is still challenging, Marriott has strong momentum in room signings following a record 2023, Capuano said. The company had notable deal production in Greater China specifically and the Asia-Pacific region generally.
The number of open and pipeline hotel rooms grew 6.7% year over year, excluding the addition of the 17,000 rooms under the City Express portfolio of brands, he said. Conversions, including multiunit opportunities, are still a meaningful driver of growth, representing 30% of global signings during the quarter.
Marriott’s new midscale brands, City Express by Marriott, Four Points Express by Sheraton and StudioRes by Marriott, continue to draw significant developer interest, he said. Earlier this year, the company signed its first City Express deal since acquiring the brand, and it is in multiple discussions for other hotel properties across the Caribbean and Latin American region. Marriott also opened its first Four Points Express property in Turkey. Marriott signed its first midscale deal in the Asia-Pacific region for a portfolio of more than a dozen hotels that should join its system later this year.
In the U.S. and Canada, Marriott has commitments for roughly 140 StudioRes properties with potential deals for over 100 more, Capuano said.
“Additionally, in about a month, we look forward to unveiling details on our next exciting brand launch, a conversion-friendly midscale brand in the region,” he said.
By the Numbers
By the end of March, Marriott’s total debt was $12.7 billion while cash and cash equivalents amounted to $400 million. At year-end 2023, it had $11.9 billion in debt and $300 million in cash and equivalents.
First-quarter 2024 comparable systemwide constant-dollar RevPAR increased 4.2% worldwide year over year, with 1.5% growth in the U.S. and Canada and 11.1% in international markets.
Marriott's net income totaled $564 million compared to a reported net income of $757 million in the first quarter of 2023. Adjusted earnings before interest, taxes, depreciation and amortization totaled $1.14 billion during the quarter, up from $1.09 billion the year prior.
Year to date through April 26, Marriott has repurchased 6.2 million shares for $1.5 billion.
As of publication time, Marriott’s stock was trading at $234.65 a share, up 5.8% year to date. The NASDAQ Composite Index was up 6% for the same period.