Marriott International Inc., for the first quarter ended March 31, reported systemwide constant dollar RevPAR increased 34.3% worldwide, 25.6% in the U.S. & Canada and 63.1% in international markets, compared to the same period last year.
“We are off to a great start in 2023. First quarter worldwide RevPAR grew 34% year-over-year [YOY], with meaningful gains in both occupancy and ADR,” said Anthony Capuano, president/CEO. “International markets were particularly robust, with RevPAR growth of 63%. The lifting of travel restrictions throughout Asia-Pacific, particularly in Greater China, significantly boosted first-quarter demand in the region.”
He added, “In the U.S. & Canada, we saw solid demand across the leisure and group segments in the quarter, while business transient demand continued to improve. ADR in the region rose 10% YOY, aided by higher special corporate negotiated rates and 15% growth in group ADR. Our industry-leading pipeline grew to approximately 502,000 rooms, up 2.6% from the year-ago quarter end. Conversion activity remained healthy, accounting for 29% of rooms signed and 25% of rooms opened in the quarter. We still expect net rooms growth of 4% to 4.5% for full-year 2023.”
Highlights
- First-quarter reported diluted EPS totaled $2.43, compared to reported diluted EPS of $1.14 in the year-ago quarter.
- First-quarter adjusted diluted EPS totaled $2.09, compared to first-quarter 2022 adjusted diluted EPS of $1.25.
- First-quarter reported net income totaled $757 million, compared to reported net income of $377 million in the year-ago quarter. First[ quarter adjusted net income totaled $648 million, compared to first-quarter 2022 adjusted net income of $413 million.
- Adjusted EBITDA totaled $1,098 million in the 2023 first quarter, compared to first-quarter 2022 adjusted EBITDA of $759 million.
- The company added approximately 11,000 rooms globally during the first quarter, including roughly 5,800 rooms in international markets and more than 2,700 conversion rooms.
- At the end of the quarter, Marriott’s worldwide development pipeline totaled more than 3,050 properties and approximately 502,000 rooms, including more than 21,000 rooms approved but not yet subject to signed contracts.
- Roughly 200,000 rooms in the pipeline were under construction as of the end of the first quarter.
First-quarter results
Marriott’s reported operating income totaled $951 million in the 2023 first quarter, compared to 2022 first-quarter reported operating income of $558 million. Reported net income totaled $757 million in the 2023 first quarter, compared to 2022 first-quarter reported net income of $377 million. Reported diluted EPS totaled $2.43 in the quarter, compared to reported diluted EPS of $1.14 in the year-ago quarter.
Adjusted operating income in the 2023 first quarter totaled $941 million, compared to 2022 first-quarter adjusted operating income of $605 million. First-quarter 2023 adjusted net income totaled $648 million, compared to 2022 first-quarter adjusted net income of $413 million. Adjusted diluted EPS in the 2023 first quarter totaled $2.09, compared to adjusted diluted EPS of $1.25 in the year-ago quarter. The 2023 first-quarter adjusted results excluded a special tax item of $100 million ($0.32 per share). The 2022 first-quarter adjusted results excluded $11 million after-tax ($0.03 per share) of impairment charges and a $6 million after-tax ($0.02 per share) gain on an investee’s property sale.
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and merger-related charges and other expenses.
Base management and franchise fees totaled $932 million in the 2023 first quarter, a 31% increase compared to base management and franchise fees of $713 million in the year-ago quarter. The increase is primarily attributable to RevPAR increases and unit growth. Other non-RevPAR-related franchise fees in the 2023 first quarter totaled $197 million, a 16% increase compared to $170 million in the year-ago quarter, largely driven by higher cobranded credit card and residential branding fees.
Incentive management fees totaled $201 million in the 2023 first quarter, a 97% increase compared to $102 million in the 2022 first quarter. Managed hotels in international markets contributed 57% of the fees earned in the quarter.
Owned, leased and other revenue, net of direct expenses, totaled $75 million in the 2023 first quarter, compared to $65 million in the year-ago quarter. The YOY change largely reflects improved performance at owned and leased hotels, partially offset by the $33 million of government subsidies received in the year-ago quarter.
General, administrative and other expenses for the 2023 first quarter totaled $202 million, a 3% decrease compared to $208 million in the year-ago quarter.
Interest expense, net, totaled $111 million in the 2023 first quarter, compared to $88 million in the year-ago quarter. The increase was largely due to higher interest expense associated with higher debt balances.
In the 2023 first quarter, the provision for income taxes totaled $87 million, a 10% effective rate, compared to $99 million, a 21% effective rate, in the year-ago quarter. The 2023 first quarter provision included a $103 million benefit primarily from the release of reserves due to the completion of a prior-year tax audit.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $1.098 billion in the 2023 first quarter, compared to first-quarter 2022 adjusted EBITDA of $759 million.
Selected performance information
The company added 79 properties (11,015 rooms) to its worldwide lodging portfolio during the 2023 first quarter, including more than 2,700 rooms converted from competitor brands and roughly 5,800 rooms in international markets. Fourteen properties (2,351 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled nearly 8,400 properties, with more than1.5 million rooms.
At the end of the quarter, the company’s worldwide development pipeline totaled 3,060 properties with approximately 502,000 rooms, including 1,018 properties with roughly 200,000 rooms under construction, or 40%of the pipeline, and 127 properties with more than 21,000 rooms approved for development, but not yet subject to signed contracts.
In the 2023 first quarter, worldwide RevPAR increased 34.3% (a 32.6% increase using actual dollars) compared to the 2022 first quarter. RevPAR in the U.S. & Canada increased 25.6% (a 25.4% increase using actual dollars), and RevPAR in international markets increased 63.1% (a 55.1% increase using actual dollars).
Company outlook
The company is raising its guidance for full-year 2023. One month into the second quarter, global booking trends remain robust.
Given short-term booking windows and a high level of macroeconomic uncertainty, there is less visibility in forecasting the company’s financial performance for the second half of 2023.
“While the global economic picture is uncertain, demand remains strong, and we are not seeing signs of a slowdown,” said Capuano. “With the faster-than-expected recovery in international markets and continued solid booking trends globally to date in the second quarter, we are raising our RevPAR guidance for the full year. We believe our broad portfolio of brands, Marriott Bonvoy loyalty program, dedicated associates and efficient asset-light business model position us very well for future growth.”
Worldwide RevPAR growth is forecasted to come in at 10% to 12% for the second quarter and 10% to 13% for the full year vs. the same periods in 2022, with the U.S. & Canada at 5% to 7% for Q2 and 6% to 9% for the year and international markets at 27% to 29% for Q2 and 22% to 25% for the year. The company also predicts 4% to 4.5% net rooms growth by the end of the year.
