Marriott International ($MAR) has revised its full-year earnings projections downward as its third-quarter financial results did not meet market expectations. The hospitality giant now anticipates adjusted earnings between $9.19 and $9.27 per share for 2024, a decrease from its prior guidance of $9.23 to $9.40.
The current consensus on Capital IQ indicates anticipated normalized EPS of $9.36. Following the announcement, the stock price decreased by 2% in premarket trading. Despite the adjustments, Marriott maintains its outlook for systemwide revenue per available room (revPAR) growth for the year, forecasting an increase of 3% to 4%.
The company has adjusted its gross fee revenue estimates to range between $5.13 billion and $5.15 billion, reflecting the top end decrease from the earlier forecast of $5.18 billion. Additionally, net room growth is expected to reach approximately 6.5%, revised up from its previous estimate of 5.5% to 6%. In the third quarter, Marriott's adjusted EPS rose 7% year-over-year to $2.26; however, this fell short of analysts' estimate of $2.31.
Overall revenue climbed to $6.26 billion, up from $5.93 billion in the same quarter last year, aligning closely with market expectations. The company's revPAR experienced a 3% increase globally during the quarter, driven by a notable 5.4% rise in international markets. Europe recorded the highest year-over-year increase, approximately 9.5%, while the revPAR in the US and Canada grew by 2.1%.
In contrast, results from China showed a decline of 7.9%. “Group remained the standout customer segment, with global group revPAR rising 10% in the quarter and on pace to rise 8% for full-year 2024,” stated Chief Executive Anthony Capuano. “RevPAR for the business transient segment continued to grow nicely during the quarter, while leisure transient RevPAR remained flat compared to the previous year, still significantly exceeding pre-pandemic levels.” During this quarter, Marriott expanded its portfolio by adding approximately 16,000 rooms, bringing its global total to nearly 9,100 properties and approximately 1.68 million rooms.
Capuano remarked, “Given the breadth and depth of our portfolio and the meaningful benefits we deliver to owners and franchisees, demand for our brands remains strong.” Looking ahead to the ongoing quarter, the company projects adjusted EPS to fall between $2.31 and $2.39, while the market anticipates it to be $2.43.
Worldwide revPAR growth is estimated between 2% and 3% on an annual basis. Additionally, Marriott expects gross fee revenue for the quarter to range between $1.29 billion and $1.31 billion. “We have undertaken a comprehensive initiative to enhance our effectiveness and efficiency across the company,” Capuano noted.
“At this point, we anticipate this initiative to generate annual reductions in general and administrative costs ranging from $80 million to $90 million starting in 2025.” Price: 255.69, Change: -4.88, Percent Change: -1.87.