Marriott International recently announced an increase in its forecast for annual adjusted profit, citing a surge in international travel demand. Despite mixed first-quarter results, the hotel operator remains optimistic about its financial outlook for the year. This article will delve into the factors driving Marriott’s profitability and the challenges it faces in the North American market.
Marriott anticipates a boost in international and group travel to significantly contribute to its full-year profit. The company’s global revenue per available room (RevPAR) witnessed a notable increase, primarily fueled by a remarkable 11% growth in international markets. While North American RevPAR saw a modest rise of 1.5%, driven by group and business travel, the leisure segment remained flat as more customers opted for overseas destinations to seek warmer weather.
Despite the positive outlook, Marriott’s adjusted quarterly profit of $2.13 per share fell short of analysts’ expectations, leading to a 2% decline in the company’s stock price during early trading. However, Marriott revised its 2024 adjusted profit forecast upwards, now expecting it to range between $9.31 and $9.65 per share. Though incentive management fees suffered in North America due to various factors, global fees managed to increase by 4%.
Marriott’s room development pipeline experienced a decrease, falling to 547,000 rooms at the end of March from 573,000 in the previous quarter. Despite this decline, the company reported a 6% growth in quarterly revenue, which surpassed Wall Street estimates. Looking ahead, Marriott projects a 3% to 5% increase in worldwide room revenue for the year and anticipates a 4% to 5% growth in the second quarter.
Marriott International’s strengthened forecast for annual adjusted profit highlights the pivotal role of international travel demand in driving its financial performance. While challenges persist in the North American market, with soft domestic RevPAR growth and a decline in the pipeline, the company remains optimistic about its future prospects. By capitalizing on the growing trend of international travel, Marriott aims to sustain its profitability and expand its global footprint in the hospitality industry.