Hotel operator Marriott International raised its forecast for annual adjusted profit on Wednesday after mixed first-quarter results, banking on international travel demand to offset weakening trends in North America.
As travellers flock to overseas destinations in Asia, the Caribbean and Latin America, Marriott expects the boost in international and group travel to lift its full-year profit.
International Business
Global revenue per available room (RevPAR) or room revenue, an important metric in the hospitality industry, rose by more than 4% on the back of 11% growth in international markets.
North American RevPAR rose by 1.5% in the quarter, mostly driven by group and business travel from large corporate businesses.
Warmer Weather
"Leisure RevPAR was flat in the US and Canada, with more customers going abroad to find warmer weather," chief finance Officer Kathleen Oberg said on an analyst call. A similar pattern held true in China, the company said.
Shares of the Ritz-Carlton owner fell 2% in early trading, after its adjusted quarterly profit of $2.13 per share missed analysts' expectations of $2.17.
Maui Fires
The Maryland-based company still raised its 2024 adjusted profit forecast to a range of $9.31 to $9.65 per share, compared to a previous outlook of $9.18 to $9.52 per share.
Incentive management fees were dragged down by declines in North America mainly due to the Maui fires, Marriott said. They rose 4% globally.
Pipeline
"The solid upside and guidance increase are clear positives," said Jefferies equity analyst David Katz. "Two notable offsets (are) the low level of domestic RevPAR growth and the slight decline in the pipeline."
Marriott's room development pipeline decreased to 547,000 rooms at the end of March, from 573,000 in the prior quarter.
Worldwide Room Revenue
Quarterly revenue grew 6% to $5.98 billion (€5.59 billion) that surpassed Wall Street estimates of $5.93 billion (€5.55 billion), according to LSEG data.
Marriott expects worldwide room revenue to increase by 3% to 5% this year. It sees 4% to 5% growth in the second quarter.
