Marriott reports solid beat, reinstates strong guidance

Marriott International reported second quarter earnings on Tuesday, beating consensus estimates nearly across the board and reinstated guidance for the second half of 2022 that suggests further improvement in operating fundamentals.

Marriott also announced it resumed share repurchases in the second quarter, repurchasing 1.9 million shares of common stock for US$300 million. Year-to-date through July 29, the company has repurchased 2.9 million shares for US$448 million.

The living room at Marriott’s newly opened W hotel in Toronto

Looking ahead for 3Q22, Marriott estimates RevPAR versus 2019 at 0% to +3%; adjusted earnings per share at US$1.59 to US$1.69 (consensus US$1.59); and adjusted EBITDA of US$927-US$972 million (consensus US$939 million). Full-year guidance ranges include RevPAR versus 2019 at -6% to -3%; adjusted earnings per share of US$6.33-US$6.59 (consensus US$6.010; and adjusted EBITDA US$3,682-US$3,792 million (consensus US$3,554 million).

“Given recently increased expectations, we believe Marriott’s 2Q22 update is more than sufficient to keep the momentum going and the positive investment narrative intact,” wrote R.W. Baird analyst Michael Bellisario. “Our model continues to have an upward bias to near-term fundamental assumptions and earnings estimates.”

Looking more closely at 2Q results, Marriott’s comparable systemwide constant dollar RevPAR increased 70.6% worldwide, 66.1% in the U.S. and Canada, and 87.8% in international markets, compared to the 2021 second quarter.

Second quarter 2022 comparable systemwide constant dollar RevPAR declined 2.9% worldwide (R.W. Baird estimated -5%) and 14.1% in international markets, while RevPAR increased 1.3% in the U.S. and Canada, compared to the 2019 second quarter.

Second quarter reported diluted EPS totaled US$2.06, compared to reported diluted EPS of US$1.28 in the year-ago quarter. Second quarter adjusted diluted EPS totaled US$1.80 (Street estimate was US$1.57), compared to second quarter 2021 adjusted diluted EPS of US$0.79.

Second quarter reported net income totaled US$678 million, compared to reported net income of US$422 million in the year-ago quarter. Second quarter adjusted net income totaled US$593 million, compared to second quarter 2021 adjusted net income of US$260 million.

Adjusted EBITDA totaled US$1,019 million (Street estimate of US$922 million) in the 2022 second quarter, compared to second quarter 2021 adjusted EBITDA of US$558 million.

Marriott added roughly 17,000 rooms globally during the second quarter, including approximately 9,200 rooms in international markets and nearly 4,400 conversion rooms.

At quarter end, Marriott’s worldwide development pipeline totaled nearly 2,950 properties and more than 495,000 rooms, including roughly 27,400 rooms approved, but not yet subject to signed contracts. Approximately 203,300 rooms in the pipeline were under construction as of the end of the 2022 second quarter.

R.W. Baird’s Bellisario added that “importantly, rooms under construction ticked higher after approximately two years of moving backward since the onset of the pandemic.” He also noted that 2Q signing were at a record quarterly level with nearly 30% conversions.