Key Points
- Adjusted EPS was $2.50, slightly exceeding management's guidance.
- Worldwide Comparable RevPAR (Revenue per Available Room) increased by 4.9% in Q2, meeting the higher end of guidance.
- Adjusted EBITDA reached $1.32 billion, surpassing the upper range of guidance.
Global hospitality leader Marriott International (MAR -1.01%)reported second-quarter earnings Wednesday that outpaced management expectations across several critical metrics. However, management slightly lowered full-year 2024 revenue per available room (revPAR) guidance.
Gross Fee revenue in Q2 hit $1.34 billion, which was near the low end of management's guidance. Owned, Leased, and Other Revenue Net exceeded expectations at $99 million. Adjusted EPS stood at $2.50, slightly beating the upper range of expectations.
Overall, the quarter's results illustrate solid operational efficiency, but also some regional challenges.
| Metric | Q2 2024 | Management Guidance | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Worldwide revPAR | $150.24 | 4% to 5% | $148.66 | 4.9% |
| Gross Fee revenue | $1.34 billion | $1.34 to $1.355 billion | $1.25 billion | 7.4% |
| Owned, Leased, & Other revenue | $99 million | $90 million | $103 million | (3.9%) |
| Adjusted EPS | $2.50 | $2.43 to $2.48 | $2.26 | 10.6% |
| Adjusted EBITDA | $1.32 billion | $1.295 to $1.315 billion | $1.22 billion | 8.6% |
Source: Marriott International. Note: Management guidance was provided in the May 1 earnings report. revPAR = Revenue per available room. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Company Overview
Marriott International is a leading global lodging company with properties in over 130 countries. The company generates its revenue through management and franchise fees, along with licensing fees from a diverse portfolio comprising numerous brands from luxury to midscale.
Marriott’s business model focuses on generating high returns with low capital expenditures by leveraging management and franchising agreements. This model allows the company to expand rapidly without direct property ownership. Recent focus areas include geographical expansion, the Marriott Bonvoy loyalty program, and digital transformation efforts.
Notable Developments in Q2 2024
Marriott saw significant performance gains in Q2 with Gross Fee Revenue reaching $1.34 billion, up 10.2% from Q2 2023. The company attributed this increase to higher RevPAR and unit growth. Adjusted EBITDA jumped 8.6% year over year, demonstrating robust operational efficiency.
However, there were challenges. RevPAR in Greater China declined by 4.6% due to macroeconomic difficulties, and interest expenses rose notably due to higher debt balances, impacting net income. Additionally, leisure RevPAR in the U.S. and Canada showed modest growth, suggesting a potential plateau in travel demand in the region.
International growth remained a standout, with RevPAR in international markets rising 7.4%. The Asia Pacific region, excluding China, led this growth with a strong 13% RevPAR increase, reflecting the success of Marriott's geographical expansion strategy. The development pipeline also continued to grow, now boasting about 559,000 rooms, including over 209,000 under construction.
The Marriott Bonvoy loyalty program also saw expansions, adding over 210 million members, partly fueled by new strategic collaborations, such as the one announced with Starbucks (SBUX 0.43%). The number of members linking their accounts already surpassed expectations, further highlighting the program's strength.
Marriott continued to expand its brand portfolio, adding 15,500 net rooms and remaining a preferred choice for property owners. Technological advancements and digital transformations were also pivotal, with ongoing enhancements to digital platforms like the Marriott Bonvoy app.
Looking Ahead
Management narrowed its full-year 2024 RevPAR growth expectations to 3% to 4% due to the slowdown in Greater China and softer leisure travel forecasts for the U.S. and Canada. The net rooms growth target remains at 5.5% to 6% for the year-end. Looking forward, the company anticipates adjusted EPS to range between $9.23 and $9.40 and adjusted EBITDA for the full year to be between $4.95 billion and $5.015 billion.
Investors should monitor Marriott's international growth closely, given the strong performance outside of China. Technological advancements and the continued expansion and success of Marriott Bonvoy are also areas to watch.
