Marriott International’s first-quarter results came in ahead of the company’s expectations, according to Leeny Oberg, EVP and CFO, which CEO Anthony Capuano said was a result of global demand that “rebounded strongly and swiftly.”
“In March, worldwide [revenue per available room] was just 9 percent below 2019,” Capuano said during the company’s first quarter earnings call. “Occupancy rose to 64 percent with [average daily rate] an impressive 5 percent above March of 2019.”
COVID-19 is still impacting Marriott’s business to varying degrees around the world, but as global vaccination rates increase, case counts decline and new COVID variants appear less severe, many countries have started to cautiously adopt a live-with-COVID policy, leading to a rise in demand for all types of travel, according to Capuano.
“Leisure demand, which had already fully recovered during 2021, has further strengthened this year, with first quarter global leisure transient roomnights more than 10 percent above 2019,” he said. “Recovery of business transient and group demand is still lagging leisure, but as greater numbers of employees return to the office demand has been rapidly improving.”
While global RevPAR is down 19 percent compared to 2019, gross fee revenues totaled 815 million in the quarter, almost doubling from a year ago and driven overwhelmingly by higher RevPAR, Oberg said.
“Our non-RevPAR-related franchise fees once again showed meaningful growth totaling 170 million in the first quarter, up 21 percent year over year, primarily due to significantly higher year-over-year credit card fees,” she said. “Incentive management fees are rebounding nicely and reached $102 million in the quarter. They comprise 13 percent of total gross fees, an acceleration from 7 percent in a year-ago quarter driven in part by strong performance in our U.S. and Canada hotels.”
Marriott signed more than 19,000 rooms in the quarter, nearly half of which were in international markets. Conversions accounted for 22 percent of room additions in the quarter. Roughly 80 percent of those conversion rooms were in the upper-upscale and luxury tiers. For 2022, the company still expects gross rooms growth approaching 5 percent and deletions of 1 to 1.5 percent, resulting in anticipated net rooms growth of 3.5 to 4 percent.
The company also has resumed cash dividends to shareholders sooner than anticipated.
“Our focus on maximizing cash flow, managing expenses and improving our credit profile, combined with strong first quarter results, has resulted in our board of directors declaring a 30 cents per share quarterly cash dividend payable at the end of the second quarter,” Capuano said. “Assuming the demand environment continues to improve and that we are within our target leverage ratio range, we also would expect to resume share repurchases in 2022.”
Highlights from the company’s first quarter results:
- First quarter 2022 comparable systemwide constant dollar RevPAR increased 96.5 percent worldwide, 99.1 percent in the U.S. & Canada, and 88.5 percent in international markets, compared to the 2021 first quarter;
- First quarter 2022 comparable systemwide constant dollar RevPAR declined 19.4 percent worldwide, 14.5 percent in the U.S. & Canada, and 31.7 percent in international markets, compared to the 2019 first quarter;
- First quarter reported diluted EPS totaled $1.14, compared to reported diluted loss per share of $0.03 in the year-ago quarter. First quarter adjusted diluted EPS totaled $1.25, compared to first quarter 2021 adjusted diluted EPS of $0.10;
- First quarter reported net income totaled $377 million, compared to a reported net loss of $11 million in the year-ago quarter. First quarter adjusted net income totaled $413 million, compared to first quarter 2021 adjusted net income of $34 million;
- Adjusted EBITDA totaled $759 million in the 2022 first quarter, compared to first quarter 2021 adjusted EBITDA of $296 million;
- The company added roughly 11,800 rooms globally during the first quarter, including approximately 5,300 rooms in international markets and a total of more than 2,500 conversion rooms;
- At quarter end, Marriott’s worldwide development pipeline totaled nearly 2,900 properties and more than 489,000 rooms, including roughly 20,800 rooms approved, but not yet subject to signed contracts. Approximately 201,400 rooms in the pipeline were under construction as of the end of the 2022 first quarter.
Capuano said he feels extremely optimistic about Marriott’s future: “With our unparalleled portfolio of 30 global brands and over 8,000 properties worldwide, our invaluable Marriott Bonvoy loyalty programs, our numerous growth opportunities and the best associates in the business, I believe Marriott is uniquely positioned to benefit from the continued recovery ahead.”