Hotel operator Marriott International lowered its forecast for 2024 room revenue growth on Wednesday, citing softer domestic travel demand in China and North America, sending its shares down about 4%.
Marriott expects its revenue per available room (RevPAR), an important metric for the hospitality industry, to grow between 3% and 4% this year, lowering the top end of the range from 5%.
Macroeconomic Pressures
Global companies have been lowering annual sales and profit expectations as consumer sentiment was hurt by weakness in China's economy.
Macroeconomic pressures led to softer domestic demand in China, Marriott said on an investor call. It expects negative room revenue growth in China to continue for the rest of the year.
Its quarterly RevPAR fell 4.6% in China, versus a rise of 12% elsewhere in Asia.
Domestic Travel
Greater China is a big driver of net unit growth, so the pace of development, signings and starts is important to watch, said Michael Bellasario, analyst at Baird.
Marriott's global room development pipeline sequentially increased by about 2.2% to 559,000 rooms by end-June.
Domestic travel in the US has been weak since the beginning of the year as more tourists choose to travel internationally to destinations in Asia, Latin America and Europe.
US elections
The company also expects fourth quarter group bookings in the United States and Canada to be impacted by the US elections.
Marriott's international RevPAR rose 6.4% in the quarter, led by a 16.8% increase in the Middle East and Africa.
It reported a quarterly adjusted profit of $2.50 per share, above analyst expectations of $2.47 per share, according to LSEG data.
China's Slowdown
Total revenue was $6.44 billion (€5.94 billion) in the quarter through June 30, up about 6% from a year earlier.
Morningstar analyst Dan Wasiolek said China's slowdown could have a similar impact on rival Hilton Worldwide, which will report quarterly results next week.
