Despite losing revenue due to its timeshare spinoff, Marriott International, Bethesda, Maryland, saw its earnings increase 5.9% year-on-year to US$143 million in the second quarter.
On a constant dollar basis, worldwide comparable systemwide RevPAR rose 6.7% year-on-year in the second quarter, while ADR rose 4.1% using constant dollars.
“In North America, strengthening group business, more travel by our special corporate customers, especially in the technology and consulting industries, and the impact of modest supply growth, drove our occupancy and room rates higher. In Europe, more travelers from the United States, Russia and China helped move RevPAR higher. In the Asia Pacific region, solid RevPAR growth resulted from strong economic growth and maturing new hotels,” said Arne Sorenson, Marriott International president and CEO. “Property-level revenues from group customers at comparable Marriott brand hotels increased 8% in the second quarter with banquet revenue up 7%. Special corporate revenue also increased 8% during the quarter. Group revenue on the books is up 10% for the second half of 2012 and up 8% for 2013. We are targeting high single-digit percentage increases in special corporate rates for 2013.”
RevPAR forecast lowered
Marriott expects full year 2012 comparable systemwide REVPAR will increase 6 to 8% in North America. Outside North America the company anticipates 5 to 7% comparable systemwide constant dollar REVPAR growth as markets in the Middle East and Asia experience softer demand growth, particularly in the luxury segment.
The company expects to add 20,000 to 25,000 rooms in 2012, not including the pending Gaylord transaction. Some new unit openings in Mexico, Asia and the Middle East have been delayed to 2013. The company also expects approximately 9,000 rooms will leave the system during the year.
The company expects full year fee revenue could total US$1.41 billion to US$1.44 million, growth of 8% to 10% over 2011 adjusted total fee revenue of US$1.3 billion. Compared to prior expectations, anticipated fee revenue is modestly lower due to the impact of foreign exchange rates, the sale of the corporate housing business, some delayed hotel openings and softer RevPAR growth in some markets.
“The company set a conservative tone on its outlook for the Middle East and Asia, lowering its international systemwide RevPAR growth expectation for 2012 to 5%-7%. Given the positive results in Q2 in each of these regions, Marriott’s caution suggests soft booking trends post-quarter,” David Loeb, analyst with Robert W. Baird & Co., wrote in a note to investors. “Risks include Marriott’s lower-than-peer pipeline as a percentage of systemwide rooms which could limit its intermediate growth profile, and sustainability of its brand equity.”