- Net Rooms Growth: 6% year-over-year.
- Global RevPAR: Increased nearly 5%.
- Average Daily Rate (ADR): Rose 3%.
- Occupancy: Reached 73%, up about 150 basis points.
- US and Canada RevPAR: Increased nearly 4%.
- International RevPAR: Increased over 7%, with a 13% gain in APAC excluding China.
- Japan RevPAR: Rose 21%.
- EMEA RevPAR: Grew nearly 10%.
- CALA RevPAR: Increased about 9%.
- Greater China RevPAR: Declined roughly 4%.
- Group RevPAR: Rose 10% globally.
- Business Transient RevPAR: Increased 4%.
- Leisure Transient RevPAR: Posted a 2% rise.
- Gross Fee Revenues: Rose 7% year-over-year to $1.34 billion.
- Co-branded Credit Card Fees: Increased 10%.
- Incentive Management Fees (IMF): Totaled $195 million.
- Adjusted EBITDA: Grew 9% to $1.32 billion.
- Adjusted EPS: Increased 11% to $2.50.
- Full Year Global RevPAR Growth Forecast: 3% to 4%.
- Full Year Adjusted EBITDA Forecast: Expected to rise between 6% and 8% to roughly $4.95 to $5 billion.
- Full Year Adjusted EPS Forecast: Expected to be between $9.23 and $9.40.
- Full Year Net Rooms Growth Forecast: 5.5% to 6%.
- Full Year Investment Spending Forecast: $1 to $1.2 billion.
- Capital Returns to Shareholders: Approximately $4.3 billion expected for the full year.
Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marriott International Inc (MAR, Financial) reported a strong quarter with a 6% year-over-year net room growth.
- Global RevPAR increased nearly 5%, with a 3% rise in the average daily rate and a 150 basis point increase in occupancy.
- International RevPAR saw significant growth, particularly in the Asia Pacific region (excluding China) with a 13% increase.
- The Marriott Bonvoy loyalty program continues to expand, reaching over 210 million members and achieving record high member penetration.
- Marriott International Inc (MAR) added approximately 15,500 net rooms, ending the quarter with nearly 1.66 million rooms and a robust pipeline of over 559,000 rooms globally.
Negative Points
- RevPAR in Greater China declined roughly 4% due to macroeconomic pressures and increased outbound travel.
- Incentive management fees in Greater China saw an $8 million decline, impacting overall financial performance.
- The company anticipates continued weakness in Greater China, leading to a narrowed global RevPAR growth range of 3% to 4% for the full year.
- There is a noted softness in the Hawaii market, particularly in Maui, due to the strong dollar and slower recovery post-tragedy.
- Ancillary spend was slightly softer than anticipated, indicating a more cautious consumer behavior.
Q & A Highlights
Q: On the guidance in the second half, it looks like you kind of lowered overall RevPAR by about 50 basis points, the reduction in EBITDA, about 2%. Is that the appropriate kind of operating leverage to consider going forward? And what levers do you have to pull if you were to see the backdrop deteriorate further?
A: (Kathleen Oberg, CFO) The impact of the change in our outlook for Greater China has a disproportionate impact. For one point of RevPAR in Greater China, that is typically more heavily weighted towards IMF than it would be in the US. So, we really have to look at the geography rather than just thinking about it as being a half point overall.
Q: Could you clarify if anything has changed in your thought process regarding fees per room and how net unit growth plus RevPAR translates to overall fees?
A: (Kathleen Oberg, CFO) We believe the algorithm absolutely holds up over time. We are very pleased with the continuing trends in fees per key and non-RevPAR fees, and do not believe that the fundamental algorithm is any different.
Q: What’s driving the weaker Q4 RevPAR guidance compared to Q3? Is it group timing or some other shift?
A: (Kathleen Oberg, CFO) We are seeing a bit lower group bookings specifically in Q4 around the election, which is impacting the US and Canada. Additionally, other international markets are continuing to normalize, leading to a bit lower outlook for RevPAR in Q4 than Q3.
Q: Is the softness in China impacting developer conversations or signing conversations in Greater China?
A: (Anthony Capuano, CEO) Despite the macroeconomic pressures, we had record signings in the first half of the year in China. Our owner community continues to believe in the long-term dynamics of travel and continues to both sign and start construction.
Q: Are you seeing weakness across all regions in Hawaii, or is it more isolated?
A: (Kathleen Oberg, CFO) Maui is still seeing the slowest recovery, and Hawaii overall is impacted by the strong dollar. The tragedy in Lahaina has also had a significant impact on the island.
Q: Can you break down the gross fee guidance reduction for the full year between the net impact from China, the election impact in the US, and FX?
A: (Kathleen Oberg, CFO) Two-thirds of the reduction is from IMFs, with a solid half or more from Greater China. There is also some impact from the US and FX, with a bit from lower RevPAR globally and slightly lower non-RevPAR fees.
Q: Can you talk about construction starts outside the US and how that has been trending?
A: (Anthony Capuano, CEO) In Greater China, nearly half of the deals are expected to open within 12 months. In APAC and EMEA, financing remains a challenge, but despite this, global construction starts are up about 40%.
Q: How do you view the NUG guidance and the impact of deals like the MGM partnership on your fee structure?
A: (Anthony Capuano, CEO) The MGM deal is unique and required a creative deal structure, but the vast majority of our pipeline fits our traditional approach to managed and franchise deals.
Q: Can you provide an update on the MDM deal and its progress?
A: (Anthony Capuano, CEO) The MDM deal is going great. We are elated at the volume of both transient and group leads, and the number of groups considering linking their MGM rewards and Marriott Bonvoy accounts.
Q: Have you seen any booking hesitation from large groups for 2025 in relation to the election?
A: (Anthony Capuano, CEO) Forward bookings for the balance of '24 are consistent with last quarter, and 2025 is pacing at 9%, with some changes in room nights. Group continues to be a standout.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
