Marriott International Inc. reported net income totaled $377 million in the first quarter ended March 31, as well as significant gains in RevPAR and ADR for the period compared to a year ago.
“During the first quarter, we saw the largest surge in global demand since the pandemic began in 2020,” said Anthony Capuano, CEO. “Worldwide occupancy rose dramatically from 45% in January, impacted by the Omicron variant, to 64% in March, less than 10 percentage points below pre-pandemic levels. Rates further strengthened, with worldwide ADR for March exceeding the same month in 2019 by 5%.”
He continued, “In the U.S. and Canada, RevPAR improved significantly in February and March, particularly across our urban markets, driven by occupancy and rate gains across all customer segments. Internationally, RevPAR gains were notable during the quarter in every region except for Greater China given the stringent travel restrictions resulting from the country’s dynamic zero-COVID policy. The Middle East and Africa region was again the furthest recovered, with first-quarter RevPAR up 12% compared to 2019.”
Key highlights:
- First-quarter 2022 comparable systemwide constant-dollar RevPAR increased 96.5% worldwide, 99.1% in the U.S. & Canada, and 88.5% in international markets, compared to the 2021 first quarter.
- First-quarter 2022 comparable systemwide constant-dollar RevPAR declined 19.4% worldwide, 14.5% in the U.S. & Canada, and 31.7% in international markets, compared to the 2019 first quarter.
- First-quarter reported diluted EPS totaled $1.14, compared to reported diluted loss per share of $0.03 in the year-ago quarter. First-quarter adjusted diluted EPS totaled $1.25, compared to first-quarter 2021 adjusted diluted EPS of $0.10.
- First-quarter reported net income totaled $377 million, compared to a reported net loss of $11 million in the year-ago quarter. First-quarter adjusted net income totaled $413 million, compared to first-quarter 2021 adjusted net income of $34 million.
- Adjusted EBITDA totaled $759 million in the 2022 first quarter, compared to first-quarter 2021 adjusted EBITDA of $296 million.
- Marriott resumes cash dividends, with the board of directors declaring a $0.30 per share dividend payable on June 30 to shareholders of record as of May 16.
The company added roughly 11,800 rooms globally during the first quarter, including approximately 5,300 rooms in international markets and a total of more than 2,500 conversion rooms.
At the end of the quarter, Marriott’s worldwide development pipeline totaled nearly 2,900 properties and more than 489,000 rooms, including roughly 20,800 rooms approved, but not yet subject to signed contracts. Approximately 201,400 rooms in the pipeline were under construction as of the end of the 2022 first quarter.
“Globally, robust demand trends continued in April, and going forward we expect leisure travel to remain strong, business travel to accelerate and cross border travel to gain momentum, supporting solid ADR performance,” Capuano continued. “In the U.S. & Canada, we reached a milestone in April, as we estimate that RevPAR for the month was fully recovered to 2019 levels. RevPAR in the U.S. & Canada for the remaining quarters of this year is expected to be roughly flat with 2019 levels. While there is currently more volatility in our international regions, assuming no major change in the global economic environment or the behavior of the virus, we are increasingly optimistic that the global RevPAR gap compared to pre-pandemic levels will continue to narrow meaningfully in 2022.”
“Owner preference for our brands remains strong,” he added. “We signed over 19,000 rooms in the quarter, nearly half of which were in international markets. Our momentum around conversions continued, accounting for 22% of room additions in the quarter. Roughly 80% of those conversion rooms were in the high-value upper-upscale and luxury tiers. For 2022, we still expect gross rooms growth approaching 5% and deletions of 1% to 1.5%, resulting in anticipated net rooms growth of 3.5% to 4%.”
First-quarter 2022 results
Marriott’s reported operating income totaled $558 million in the quarter, compared to first-quarter 2021 reported operating income of $84 million. Reported net income totaled $377 million in the quarter, compared to first-quarter 2021 reported net loss of $11 million. Reported diluted earnings per share (EPS) totaled $1.14 in the quarter, compared to reported diluted loss per share of $0.03 in the year-ago quarter.
Adjusted operating income in the quarter totaled $605 million, compared to 2021 first-quarter adjusted operating income of $138 million. Adjusted operating income in the quarter excluded impairment charges of $5 million.
First-quarter 2022 adjusted net income totaled $413 million, compared to first-quarter 2021 adjusted net income of $34 million. Adjusted diluted EPS in the quarter totaled $1.25, compared to adjusted diluted EPS of $0.10 in the year-ago quarter. The first-quarter 2022 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. The first-quarter 2021 adjusted results excluded $3 million after-tax ($0.01 per share) of impairment charges.
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and restructuring, merger-related charges and other expenses. These items totaled a $31 million after-tax loss ($0.10 per share) in the first quarter and an after-tax loss of $42 million ($0.12 per share) in the 2021 first quarter.
Base management and franchise fees totaled $713 million in the quarter, compared to base management and franchise fees of $412 million in the year-ago quarter. The year-over-year (YOY) increase in these fees is primarily attributable to RevPAR increases due to the ongoing recovery in lodging demand and unit growth. Other non-RevPAR-related franchise fees in the quarter totaled $170 million, compared to $141 million in the year-ago quarter, aided by $36 million of higher credit card branding fees.
Incentive management fees totaled $102 million in the quarter, compared to $33 million in the 2021 first quarter. Roughly half of the YOY increase in incentive management fees recognized in the quarter was earned at hotels in the U.S. & Canada.
Contract investment amortization for the quarter totaled $24 million, compared to $17 million in the year-ago quarter. The YOY change largely reflects impairments of investments in management and franchise contracts in Russia and Belarus.
Owned, leased and other revenue, net of direct expenses, totaled $65 million of profit in the quarter, compared to a $27 million loss in the year-ago quarter. The $92 million increase in revenue net of expenses year over year largely reflects the ongoing recovery in lodging demand from the impacts of COVID-19, as well as $33 million of subsidies received from international government COVID-19 assistance programs.
General, administrative and other expenses for the quarter totaled $208 million, compared to $211 million in the year-ago quarter.
Interest expense, net, totaled $88 million in the quarter compared to $100 million in the year-ago quarter. The decrease is largely due to lower interest expenses associated with lower debt balances.
Equity in earnings/losses for the quarter totaled $2 million of earnings, compared to a $12 million loss in the year-ago quarter. The improvement largely reflects an $8 million gain on a joint venture’s sale of a hotel in the U.S.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $759 million in the quarter, compared to adjusted EBITDA of $296 million in the year-ago quarter.
Selected performance information
The company added 75 properties (11,799 rooms)—including The Westin London City—to its worldwide lodging portfolio during the quarter, including more than 2,500 rooms converted from competitor brands and approximately 5,300 rooms in international markets. Sixteen properties (3,494 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled more than 8,000 properties, with nearly 1,488,000 rooms.
At the end of the quarter, the company’s worldwide development pipeline totaled 2,878 properties with more than 489,000 rooms, including 998 properties with approximately 201,400 rooms under construction and 127 properties with roughly 20,800 rooms approved for development, but not yet subject to signed contracts.
In the quarter, worldwide RevPAR increased 96.5% (a 95.5% increase using actual dollars) compared to the sane period a year ago. RevPAR in the U.S. & Canada increased 99.1% (a 99.1% increase using actual dollars), and RevPAR in international markets increased 88.5% (an 84.8% increase using actual dollars).
Balance sheet
At the end of the quarter, Marriott’s net debt was $8.5 billion, representing total debt of $9.5 billion less cash and cash equivalents of $1.0 billion. At year-end 2021, the company’s net debt was $8.7 billion, representing total debt of $10.1 billion less cash and cash equivalents of $1.4 billion.
Investment spending
Marriott anticipates that full-year 2022 investment spending will total $600 million to $700 million. Total investment spending includes capital and technology expenditures, loan advances, contract acquisition costs and other investing activities.
