Marriott International raised its full-year outlook after posting another quarter of solid growth, driven by resilient travel demand in the U.S. and Canada, robust luxury performance and continued expansion of its global development pipeline despite geopolitical headwinds in the Middle East.
Global revenue per available room (RevPAR) increased 3.4% in the second quarter compared to the same period a year ago, including a 5% gain in the U.S. and Canada. International RevPAR declined 0.5% as a 43% drop in the Middle East more than offset gains in Europe, Asia-Pacific and Greater China. Overall, RevPAR in the Europe, Middle East and Africa region fell more than 5% during the quarter.
“We delivered another quarter of excellent results, reflecting strong travel demand, the power of our brands, and sustained development momentum,” said President and CEO Tony Capuano, adding that Marriott is raising its full-year global RevPAR growth expectation to 3% to 3.5% on the back of strong demand it said it expected to continue.
The company reported second-quarter revenue of $7.07 billion, which missed analyst estimates. Net income was $766 million in the quarter. Fee growth remained a key driver of results. Franchise and base management fees climbed 14%, fueled by higher co-branded credit card fees, RevPAR growth and unit expansion. Incentive management fees increased to $212 million from $200 million a year earlier, led by strong performance in the U.S. and Canada.
Development also continued at a brisk pace. Marriott added approximately 17,900 net rooms during the quarter, including about 11,000 internationally, bringing its global portfolio to more than 10,000 properties and nearly 1.814 million rooms. Its worldwide development pipeline reached a record 4,186 properties totaling approximately 629,000 rooms, up nearly 7% from a year ago. About 44% of pipeline rooms are already under construction, while conversions represented more than one-third of signings and 40% of openings during the first half of the year.
Marriott’s loyalty ecosystem also continued to expand. Marriott Bonvoy surpassed 295 million members during the quarter, and the company announced new long-term U.S. co-branded credit card agreements with JPMorgan Chase and American Express, which Capuano said will create additional value for owners, members and shareholders.
The company returned significant capital to investors, repurchasing 3 million shares for $1.1 billion during the quarter. Through July 29, Marriott had returned approximately $2.6 billion to shareholders through dividends and share repurchases and expects to exceed $4.5 billion in capital returns for the full year.
Despite the upbeat results, Marriott’s third-quarter earnings guidance came in below Wall Street expectations,