Marriott International Inc., for the third quarter ended Sept. 30, reported a system-wide RevPAR increase of 8.8% worldwide, 4.3% in the U.S. & Canada and 21.8% in international markets, compared to the 2022 third quarter.
“We are extremely pleased with our results in the quarter,” said Anthony Capuano, president/CEO. “Worldwide RevPAR grew [nearly] 9% year-over-year, reflecting robust demand around the world. International RevPAR increased [nearly] 22%, with particular strength in Asia-Pacific. Both occupancy and rate contributed to global RevPAR gains in the third quarter, and cross-border travel continued to rise.”
He continued, “In the U.S. & Canada, RevPAR rose more than 4%, with many urban markets showing outsized growth. Group and business transient saw mid-single-digit hotel revenue gains in the quarter, largely driven by rate increases. Leisure transient demand in the region has also remained solid, leading to 4% hotel revenue growth for the segment compared to the year-ago quarter.”
Third-quarter highlights:
- Third-quarter reported diluted EPS totaled $2.51, compared to reported diluted EPS of $1.94 in the year-ago quarter.
- Third-quarter adjusted diluted EPS totaled $2.11, compared to third-quarter 2022 adjusted diluted EPS of $1.69.
- Third-quarter reported net income totaled $752 million, compared to reported net income of $630 million in the year-ago quarter. Third-quarter adjusted net income totaled $634 million, compared to third-quarter 2022 adjusted net income of $551 million.
- Adjusted EBITDA totaled $1.142 billion in the 2023 third quarter, compared to third-quarter 2022 adjusted EBITDA of $985 million.
- The company added approximately 17,200 rooms globally during the third quarter, including roughly 13,000 rooms in international markets and more than 4,900 conversion rooms.
- At the end of the quarter, Marriott’s worldwide development pipeline totaled more than 3,200 properties and nearly 557,000 rooms, including roughly 40,300 of pipeline rooms approved, but not yet subject to signed contracts. Approximately 238,000 rooms in the pipeline were under construction as of the end of the third quarter.
“Given the meaningful benefits we deliver to owners, demand for our brands remains strong,” added Capuano. “Through the first three quarters of 2023, we’ve signed more than 100,000 organic rooms, including the MGM Resorts International deal, an impressive 60% increase compared to the same period last year. Even with 5% net rooms growth in the last four quarters, our development pipeline continues to grow. Of our record 557,000-room pipeline, 43% is under construction.”
He continued, “With continued momentum in our business around the world, we are raising our full-year 2023 worldwide RevPAR growth guidance to 14% to 15% year-over-year and expect to return $4.3 billion to $4.5 billion to shareholders through share repurchases and dividends.”
Third-quarter 2023 results
Marriott’s reported operating income totaled $1.099 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. Reported diluted earnings per share (EPS) totaled $2.51 in the quarter, compared to reported diluted EPS of $1.94 in the year-ago quarter.
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. Adjusted diluted EPS in the 2023 third-quarter totaled $2.11, compared to adjusted diluted EPS of $1.69 in the year-ago quarter. The 2023 third-quarter adjusted results excluded a $24 million ($16 million after-tax and 5 cents per share) gain on the sale of a hotel in the Caribbean & Latin America (CALA) region. The 2022 third-quarter adjusted results excluded special tax items of $30 million (9 cents per share) and a $2 million ($2 million after-tax and 1 cent 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 $1.054 billion in the 2023 third quarter, an 11% increase compared to base management and franchise fees of $953 million in the year-ago quarter. The increase is primarily attributable to RevPAR increases and unit growth. Non-RevPAR-related franchise fees in the 2023 third quarter totaled $208 million, an 8% increase compared to $192 million in the year-ago quarter, largely driven by higher cobrand credit card fees.
Incentive management fees totaled $143 million in the 2023 third quarter, a 35% increase compared to $106 million in the 2022 third quarter. Managed hotels in international markets contributed 77% of the incentive fees earned in the quarter.
Owned, leased and other revenue, net of direct expenses, totaled $70 million in the 2023 third quarter, compared to $44 million in the year-ago quarter. Results in the 2022 quarter included a $19 million expense accrual related to a portfolio of 12 leased hotels in the U.S. & Canada.
General, administrative and other expenses for the 2023 third quarter totaled $239 million, compared to $216 million in the year-ago quarter. The year-over-year change largely reflects higher staffing levels.
Gains and other income, net, totaled $28 million, compared to $3 million in the 2022 third quarter. Gains and other income, net, in the 2023 third quarter primarily reflected a $24 million gain associated with the sale of a hotel in the CALA region.
Interest expense, net, totaled $139 million in the 2023 third quarter, compared to $93 million in the year-ago quarter. The increase was largely due to higher interest expense associated with higher debt balances.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $1.142 billion in the 2023 third quarter, compared to third-quarter 2022 adjusted EBITDA of $985 million.
Selected performance information
Marriott added 97 properties (17,192 rooms) to its worldwide lodging 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 million rooms.
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%, including approximately 37,000 rooms from the MGM deal.
Company outlook
Marriott anticipates that the 37,000 rooms related to its deal with MGM will now be added to its distribution in early 2024. As such, the company now expects full-year 2023 net rooms growth of 4.2% to 4.5%, higher than its Aug. 2, 2023 guidance when excluding the MGM rooms.
