Marriott beats on revenue jump; 2022 unit growth muted

Strong RevPAR recovery reported on Tuesday by Marriott International helped it beat The Street estimates on results for 4Q21. The company recorded US$4.4 billion in revenue for the quarter, compared to US$2.2 billion a year ago. At the same time, analysts suggested Marriott fell a bit short of expectations for 2022 net unit growth now estimated at 3.5% to 4% versus 6% in 2021.

Marriott International CEO Tony Capuano said global ADR nearly recovered to pre-pandemic levels in the 4Q21, while occupancy came in at 58%, down 12 percentage points versus 2019. “Leisure demand continued to shine in the fourth quarter, with slower, yet continued improvement in business transient and group demand,” he said.

Fourth quarter earnings topped estimates with adjusted EBITDA reported at +6%. Fourth quarter reported diluted EPS totaled US$1.42, compared to US$0.50 loss in the year-ago quarter. Fourth quarter adjusted diluted EPS totaled US$1.30 (The Street estimate was US$1), compared to fourth quarter 2020 adjusted diluted EPS of US$0.12.

RevPAR growth for 4Q21 versus 2019 of -19% (-15.3% in the U.S. and Canada, and -28.2% in international markets) again topped estimates. Fourth quarter 2021 comparable systemwide constant dollar RevPAR increased 124.5% worldwide, 143.6% in the U.S. and Canada, and 83.3% in international markets, compared to the 2020 fourth quarter.

RevPAR (versus 2019) in Greater China was -27% versus -27% last quarter; the U.S. and Canada was -15% versus -20% last quarter; and Europe was -34% versus -44% last quarter.

The new AC Hotel Austin Hill Country in Texas (Rob Gomez Photography)

“Each of our regions saw meaningful continued RevPAR recovery in the fourth quarter compared to the third quarter, with the exception of Greater China, where recovery stalled due to their zero COVID policy,” Capuano added. “In the U.S. and Canada, RevPAR declined 15% compared to fourth quarter 2019 levels versus a 20% decline in the third quarter compared to 2019. Compared to 2019 levels, our international hotels posted a 28% RevPAR decline in the fourth quarter, a 12-percentage point improvement from the third quarter. While Omicron caused a temporary setback in global demand recovery in January, especially for business transient and group travel, new bookings across customer segments have rebounded to pre-Omicron levels. We are optimistic that the global recovery will progress meaningfully throughout 2022.”

Adjusted EBITDA of US$741 million (compared to 4Q20 adjusted EBITDA of US$317 million) topped estimates of US$695 million and total gross fees of US$831 million suggested the recovery continues for Marriott.

Marriott added more than 86,000 rooms globally during 2021, including approximately 43,000 rooms in international markets and more than 18,000 conversion rooms. Net rooms grew 3.9% from year-end 2020.

At year end, Marriott’s worldwide development pipeline totaled 2,831 properties and roughly 485,000 rooms, including approximately 19,000 rooms approved, but not yet subject to signed contracts. More than 202,000 rooms in the pipeline were under construction as of the end of 2021.

For 2022, Marriott expects gross openings to approach 5% with deletions in the 1% to 1.5% range. “In 2021, gross openings totaled 6%, and we expect incremental investor focus to be on the slower-than-expected 2022 growth outlook,” wrote R.W. Baird analyst Michael Bellisario. “Rising construction costs, supply chain bottlenecks, and development delays are putting a modestly lower ceiling on intermediate-term net unit growth, in our opinion.”