The second quarter of 2023 was a busy one for Marriott International, as the company finalized its City Express acquisition, launched a new extended-stay brand and formed a new partnership with MGM Resorts International (although that deal was not made public until the beginning of Q3).
During an earnings call with investors, Marriott President and CEO Anthony Capuano said that the company had seen a “noticeable uplift in conversion rates” for the City Express hotels in Latin America. Likewise, he said initial interest from the development community for the as-yet unnamed Project MidX Studios brand has been “extraordinary,” and the company is currently working on “several hundred” deals. “[We] hope to have our first deal signed by the end of this year,” he added. And when the MGM rooms enter Marriott’s system in fall, the additions will boost the company’s rooms distribution by 2.4 percent for the year.
Q2 Results
In the 2023 second quarter, Marriott’s worldwide revenue per available room increased 13.5 percent (a 12.7 percent increase using actual dollars) compared to the 2022 second quarter. RevPAR in the U.S. & Canada increased 6 percent (a 5.7 percent increase using actual dollars), and RevPAR in international markets increased 39.1 percent (a 36 percent increase using actual dollars). Capuano credited much of this to “meaningful recovery” in the Greater China market. “RevPAR in Greater China has now surpassed 2019 levels, primarily due to the surge in domestic demand,” he said.
Worldwide occupancy in the quarter reached 72 percent, five percentage points higher than the same quarter a year ago, while global average daily rate improved 6 percent year over year.
Marriott’s reported operating income totaled $1.09 billion in the 2023 second quarter, compared to 2022 second quarter reported operating income of $950 million. Reported net income totaled $726 million in the 2023 second quarter, compared to 2022 second quarter reported net income of $678 million.
Adjusted operating income in the 2023 second quarter totaled $1,043 million, compared to 2022 second quarter adjusted operating income of $857 million. Second quarter 2023 adjusted net income totaled $690 million, compared to 2022 second quarter adjusted net income of $593 million.
Adjusted earnings before interest, taxes, depreciation, and amortization totaled $1.2 billion in the 2023 second quarter, compared to second quarter 2022 adjusted EBITDA of $1.02 billion.
Unit Growth
Marriott added 254 properties (33,097 rooms) to its worldwide lodging portfolio during the 2023 second quarter, including 17,300 rooms associated with the City Express transaction and roughly 11,200 other rooms in international markets. The company also added more than 2,800 conversion rooms. Seventeen properties (1,995 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled nearly 8,600 properties, with more than 1,565,000 rooms.
At the end of the quarter, the company’s worldwide development pipeline totaled 3,149 properties with nearly 547,000 rooms, including 199 properties with roughly 31,500 rooms approved for development, but not yet subject to signed contracts. The pipeline includes 1,066 properties with more than 240,000 rooms under construction, or 44 percent, including approximately 37,000 rooms from the MGM Resorts deal.
Looking Ahead
Midway through the year, Capuano said that the company’s leadership has refined its full-year net rooms growth expectations to 6.4-6.7 percent.
During the call, Capuano also said that Marriott would be launching new reservation loyalty and property management platforms over the next several years.