Two industry powerhouses, Marriott International and Hilton Worldwide reported second quarter results on Wednesday, generally meeting expectations and showing tempered expectations for the second half of the year as a result of slowing business demand.
Marriott posted earnings of $1.03 per share, beating analyst estimates of 98 cents per share. The company reported revenue of $3.9 billion, meeting analysts projected revenue.
At the same time, adjusted EBITDA came in slightly below the low end of the guidance range and net unit growth is now expected to be 6.5%, down from 7% due to delayed openings primarily in North America and the Middle East and Africa.
Marriott expects 2016 RevPAR growth to be approximately 3% versus prior guidance of 3%-5%. RevPAR growth for the first half of 2016 was 2.8% with Marriott expecting similar growth in the second half of the year.
With fee revenue growth slowing and more modest RevPAR growth, Marriott’s full-year adjusted EBITDA guidance is decreasing US$36 million (-1.9%) with most of the reduction coming from the high end of the range.
“While hotel performance reflected generally slower economic growth, leisure travel demand remained robust and group business performed well,” said Marriott CEO Arne Sorenson in a statement.
Hilton Worldwide reported a US$239 million profit Wednesday for the second quarter of 2016, up 48% in the latest period.
Hilton earned 25 cents a share and saw its revenue increase by 4.4% to US$3.05 billion, falling below Wall Street’s estimate of US$3.06 billion.
RevPAR rose 2.9% in Q2. However, Hilton lowered its 2016 RevPAR earnings projections citing slow business travel and international instability. It now expects RevPAR to increase by 2-4%, down from 3-5%.
Managed and franchised net unit growth of 6.9% (year-over-year) was above analysts’ expectations, and Hilton’s pipeline continues to grow with the company’s share of global rooms under construction increasing to nearly 21% from 19% last quarter. Hilton also reiterated its guidance for 45,000-50,000 net room additions in 2016.