As Travel Demand Remains Strong, Marriott Earnings Top Views

‍Leisure demand tops pre pandemic levels while business travel is still recovering

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With tourists, business travelers, and others continuing to pay up for rooms despite rising rates, Marriott MAR grew 1.75% in the most recent quarter. International Inc. gained 33% in revenue for the period.

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Tony Capuano, the company's chief executive, said domestic leisure travel held up well and group travel exceeded pre pandemic levels. According to him, the U.S. and Canada had a nearly 90% recovery in business travel demand, which had taken longer than expected to recover from the pandemic. 

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Bethesda-based Marriott Hotels & Resorts, with nearly 8,300 properties worldwide, reported a 13% increase in average room rates in the third quarter compared to the same period a year earlier. In addition to a corporate rate increase in the U.S. and Canada, Capuano said the company has also secured rate increases in the Canadian market.

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According to Mr. Capuano, bookings are still strong, despite macroeconomic concerns around the world. 

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Wall Street was expecting $5.37 billion in revenue for the quarter that ended Dec. 31, but the company came in at $5.92 billion, Trade Algo reported. 

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Its net income in the same period last year increased from $468 million, or $1.42 a share, to $673 million in the current period. Analysts were expecting $1.83 a share in adjusted earnings, but the company earned $1.96 a share instead.

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A postmarket rise of 2% lifted shares to $177.58. 

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Despite the rise in room rates and airfares, some airlines and lodging companies have reported relatively strong readouts, showing little sign of travel spending slowing down. Travel demand remains strong in the U.S., as did business and group travel, according to Hilton Worldwide Holdings Inc. In addition to reopening travel to China, Hilton executives said this will benefit 2023 results. 

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Global RevPAR, often referred to as RevPAR, was 5% higher than 2019 levels, as higher room prices helped lift revenue. Almost every region except China saw its RevPAR recover fully, Mr. Capuano reported. 

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A 6% to 11% increase in global RevPAR from 2022 is the company's target for 2023. This growth will be boosted by the performance of Covid-19 Omicron, which suppressed the performance of Covid-19 last year. Despite a moderate economic slowdown, the low end of the range still reflects a significant downturn. 

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It also expects adjusted earnings for the full year to be between $7.23 and $7.91. In Trade Algo’s estimate, adjusted earnings would be $7.44 a share for the full year.