Marriott International Inc. reported second quarter 2023 results, which including a 13.5% RevPAR increase.
“With continued momentum in demand for global travel, we posted another quarter of outstanding results,” said Anthony Capuano, president/CEO, Marriott said. “Second quarter worldwide RevPAR increased 13.5%, aided by significant growth in all of our international regions, where RevPAR rose 39%. Greater China rebounded quickly once travel restrictions were lifted in January, with second quarter RevPAR surpassing pre-pandemic levels. In the U.S. & Canada, RevPAR increased 6%, with many urban markets showing impressive growth in the second quarter. Within customer segments, group once again performed extremely well, with revenue rising 10% above 2022. Business transient revenue also saw strong year-over-year growth, driven by solid average daily rate growth. Leisure transient revenue rose as well, albeit more slowly, as more travelers from the region chose to visit overseas destinations.”
Marriott’s reported operating income totaled $1.096 billion in the 2023 second quarter, compared to 2022 second quarter reported operating income of $950 million. Reported net income totaled $726 million in the 2023 second quarter, compared to 2022 second quarter reported net income of $678 million.
Adjusted operating income in the 2023 second quarter totaled $1.043 billion, compared to 2022 second quarter adjusted operating income of $857 million. Second quarter 2023 adjusted net income totaled $690 million, compared to 2022 second quarter adjusted net income of $593 million.
Base management and franchise fees totaled $1.057 billion in the 2023 second quarter, a 13% increase compared to base management and franchise fees of $938 million in the year-ago quarter. The increase is primarily attributable to RevPAR increases and unit growth.
Incentive management fees totaled $193 million in the 2023 second quarter, a 43% increase compared to $135 million in the 2022 second quarter. Managed hotels in international markets contributed 61% of the fees earned in the quarter.
Owned, leased and other revenue, net of direct expenses, totaled $103 million in the 2023 second quarter, compared to $83 million in the year-ago quarter. The year-over-year change largely reflects improved performance at owned and leased hotels. Results in the 2022 quarter included a $12 million expense accrual related to a portfolio of 12 leased hotels in the U.S. and Canada.
General, administrative and other expenses for the 2023 second quarter totaled $240 million, compared to $231 million in the year-ago quarter.
Interest expense, net, totaled $141 million in the 2023 second quarter, compared to $89 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 $1.219 billion in the 2023 second quarter, compared to second quarter 2022 adjusted EBITDA of $1.019 billion.
“Our growth strategies are proving successful,” said Capuano. “During the quarter, we added approximately 33,100 rooms to our system, including 17,300 City Express rooms in the Caribbean and Latin America region, and our industry-leading pipeline grew to nearly 547,000 rooms, with more than 240,000 global rooms under construction. In June, we announced our planned entry into the affordable midscale extended-stay space in the U.S. and Canada. Initial owner interest in our new offering has been tremendous.
He continued, “Just a few weeks ago, we announced our long-term strategic licensing agreement with MGM Resorts International and the creation of MGM Collection with Marriott Bonvoy. This transaction is consistent with our strategy to pursue deals that meet customer needs, increase our distribution, and enhance the value of Marriott Bonvoy, our powerful loyalty platform. We are excited to have 17 iconic MGM Resorts properties available on our robust digital channels beginning later this fall and to dramatically increase our footprint in Las Vegas, an important, high-barrier-to-entry U.S. market. With this deal, our 2023 full year net rooms growth expectation is now 6.4% to 6.7%.
“While conditions could change rapidly, booking trends remain solid. We are raising our full year rooms growth and earnings guidance and now expect to return $4.1 billion to $4.5 billion to shareholders in 2023.”
Marriott added 254 properties (33,097 rooms) to its worldwide lodging portfolio during the 2023 second quarter, including 17,300 rooms associated with the City Express transaction and roughly 11,200 other rooms in international markets. The company also added more than 2,800 conversion rooms. Seventeen properties (1,995 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled nearly 8,600 properties, with more than 1,565,000 rooms.
At the end of the quarter, the company’s worldwide development pipeline totaled 3,149 properties with nearly 547,000 rooms, including 199 properties with roughly 31,500 rooms approved for development, but not yet subject to signed contracts. The pipeline includes 1,066 properties with more than 240,000 rooms under construction, or 44%, including approximately 37,000 rooms from the MGM Resorts deal.
In the 2023 second quarter, worldwide RevPAR increased 13.5% (a 12.7% increase using actual dollars) compared to the 2022 second quarter. RevPAR in the U.S. and Canada increased 6% (a 5.7% increase using actual dollars), and RevPAR in international markets increased 39.1% (a 36% increase using actual dollars).