Marriott International, a prominent hotel operator, recently updated its annual profit forecast, signaling a positive outlook despite varied results in the first quarter.
The company, known for brands like Ritz-Carlton, is relying on strong international travel demand to counterbalance less robust trends in North America.
This year, Marriott has observed a significant influx of travelers heading to destinations across Asia, the Caribbean, and Latin America.
This surge in international and group travel is expected to bolster Marriott’s overall profitability.
Specifically, the global revenue per available room (RevPAR)—a key performance indicator in the hospitality sector—has increased by over 4%, fueled by an 11% rise in international markets.
In contrast, North American RevPAR experienced a modest increase of 1.5% during the same period, primarily driven by group and business travel from large corporations.
However, leisure travel within the U.S. and Canada remained stagnant, with many opting for trips abroad in pursuit of warmer climates.
“Leisure RevPAR was flat in the U.S. and Canada, with more customers going abroad to find warmer weather,” explained Kathleen Oberg, Marriott’s Chief Finance Officer, during an analyst call.
This pattern was also observed in China.
Despite these challenges, Marriott’s stock dipped slightly by 2% in early trading following its earnings release, where it reported an adjusted quarterly profit of $2.13 per share—slightly below the anticipated $2.17.
Nevertheless, the company has raised its profit outlook for 2024, now expecting adjusted earnings per share to be between $9.31 and $9.65, up from the previously forecasted range of $9.18 to $9.52.
This adjustment reflects Marriott’s optimistic view of the year ahead.
Marriott also noted a decrease in incentive management fees in North America, largely attributed to the adverse effects of the Maui fires.
Globally, however, these fees grew by 4%.
“The solid upside and guidance increase are clear positives,” commented David Katz, a Jefferies equity analyst, though he also pointed out concerns such as the slow domestic RevPAR growth and a slight downturn in Marriott’s development pipeline.
By the end of March, Marriott’s room development pipeline had shrunk to 547,000 rooms from 573,000 rooms in the previous quarter.
Despite these figures, the company’s quarterly revenue rose by 6% to $5.98 billion, surpassing Wall Street’s expectations of $5.93 billion.
Looking ahead, Marriott anticipates a 3% to 5% increase in worldwide room revenue for the year, with expectations of 4% to 5% growth in the next quarter.