Marriott International reported solid revenue growth in the third quarter. Executives forecasted a stable pace of revenue expansion during the company’s Q3 earnings call today.
Third-Quarter Results
In the quarter, Marriott’s comparable systemwide constant-dollar revenue per available room rose 4.3 percent in the U.S. and Canada and reached 21.8 percent in international markets compared to the same quarter a year ago.
Global average daily rate continued to rise, growing 4 percent, said Leeny Oberg, CFO and EVP, development. “Total company gross fee revenues totaled $1.2 billion in line with our guidance and 13 percent above the prior-year quarter. Fees would have been higher given our RevPAR performance but for the negative impact of the wildfires in Maui.”
In the 2023 third quarter, worldwide RevPAR increased 8.8 percent (an 8.7 percent increase using actual dollars) compared to the 2022 third quarter. RevPAR in the U.S. & Canada increased 4.3 percent (a 4.2 percent increase using actual dollars), and RevPAR in international markets increased 21.8 percent (a 22 percent increase using actual dollars).
Marriott’s reported operating income totaled $1.09 billion in the 2023 third quarter, compared to 2022 third quarter reported operating income of $958 million. Reported net income totaled $752 million in the 2023 third quarter, compared to 2022 third quarter reported net income of $630 million.
Adjusted operating income in the 2023 third quarter totaled $959 million, compared to 2022 third quarter adjusted operating income of $815 million. Third quarter 2023 adjusted net income totaled $634 million, compared to 2022 third quarter adjusted net income of $551 million.
The 2023 third quarter adjusted results excluded a $24 million ($16 million after-tax and $0.05 per share) gain on the sale of a hotel in the Caribbean & Latin America region. The 2022 third quarter adjusted results excluded special tax items of $30 million and a $2 million ($2 million after-tax and $0.01 per share) gain on an investee’s property sale.
Adjusted earnings before interest, taxes, depreciation and amortization totaled $1.14 billion in the 2023 third quarter, compared to third quarter 2022 adjusted EBITDA of $985 million.
Adoption of the company’s Marriott Bonvoy mobile app continued to grow with third quarter app downloads, increasing 19 percent versus the same quarter last year. “We also continue to drive engagement for Bonvoy collaborations, including Uber Eats and our co-branded credit cards which are currently in 11 countries,” President and CEO Anthony Capuano said during the call.
Executives said they expected RevPAR to grow between now and 2025 at a pace of between 3 percent and 6 percent a year.
Unit and Pipeline Growth
Marriott added 97 properties (17,192 rooms) to its worldwide portfolio during the 2023 third quarter, including roughly 13,000 rooms in international markets and more than 4,900 conversion rooms. Eleven properties (1,494 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled nearly 8,700 properties, with approximately 1,581,000 rooms.
“During the quarter, our pipeline reached a new record high of nearly 557,000 rooms on record and the strong interest in conversions continues, including multiunit opportunities and conversions represented 20 percent of signings and nearly 30 percent of openings in the quarter,” Capuano said. “We are very excited about the global opportunity for midscale. We already have 10 signed letters of intent for City Express in CALA and nine of which are in new countries for the brand, four signed deals for Four Points Express in Turkey and in London. And we're in numerous additional discussions for both brands.
“While we just recently issued the franchise disclosure documents for StudioRes, we are already in talks for deals in over 300 markets across the U.S. We expect there will be shovels in the ground for studio res projects in the next few months.”
The Marriott and MGM partnership was scheduled to roll out last month but the MGM Collection with Marriott Bonvoy is now expected to launch until sometime in early 2024. Analysts estimate the delay is another casualty of MGM's data breach back in September. Once implemented, the new partnership will bring 17 MGM resorts into the Marriott fold. It also includes a handful of MGM gambling properties in other U.S. cities.
At the end of the quarter, the company’s worldwide development pipeline totaled 3,239 properties with nearly 557,000 rooms, including 242 properties with roughly 40,300 rooms approved for development, but not yet subject to signed contracts. The pipeline includes 1,081 properties with approximately 238,000 rooms under construction, or 43 percent, including approximately 37,000 rooms from the MGM deal.