Shares of Marriott International Inc. rallied toward an eight-month high Tuesday after the hotel operator reported profit and revenue that beat expectations, with a big increase in room rates providing a boost.
The company also provided a first-quarter earnings outlook that was well above Wall Street projections and said it has yet to see demand soften despite growing uncertainty in the economic outlook.
climbed 1.5% in midday trading, putting it on track for its highest close since June 6, 2022. The rally bucked the selloff in the broader stock market, as the S&P 500
“As we look ahead to full year of 2023, there is meaningful uncertainty about global economic growth. Lodging is a cyclical business and it’s not immune to downturns in the macroeconomic environment,” said Chief Executive Tony Capuano on a conference call with analysts, according to a transcript provided by AlphaSense. “To date, however, we have not seen signs of demand softening.”
The company said it expects first-quarter adjusted earnings per share, which excludes nonrecurring items, of $1.82 to $1.88, which is above the current average EPS estimate compiled by FactSet of $1.65.
“Certainly, trends could change relatively quickly given our average transient booking window is around three weeks, but a month and a half into 2023, booking demand and pricing remains strong,” Capuano said.
The company also expects first-quarter revenue per available room (RevPAR) to grow 30% to 32%, the same levels seen a year ago, which is an acceleration from the 28.8% growth seen in the fourth quarter.
Also for the fourth quarter, the company reported net income that rose to $673 million, or $2.12 a share, from $468 million, or $1.42 a share, in the same period a year ago.
Adjusted EPS, which excluded merger-related charges, cost-reimbursement revenue and other one-time expenses, grew to $1.96 from $1.30, beating the FactSet consensus of $1.83.
Total revenue increased 33.2% from last year to $5.92 billion, to exceed the FactSet consensus of $5.37 billion.
Worldwide RevPAR rose 28.8% to $113.83, including 23.6% growth in the U.S. and Canada, while the average daily rate (ADR) increased 15.4% worldwide to $176.46 and grew 13.2% to $180.39 in the U.S. and Canada.
For 2022, RevPAR increased 51% from 2021, to $110.64 , while the ADR jumped 21.5% to $172.85.
In the U.S. and Canada, the systemwide ADR for Marriott’s luxury brands, which include Ritz-Carlton and W Hotels, rose 12.8% to $397. The ADRs for its premium brands, which are Marriott, Sheraton and Westin, increased 19.3% to $203.01, while ADRs for its limited-service brands, which include Courtyard, Residence Inn and Fairfield, rose 18.9% to $145.14.
When compared with 2019, systemwide RevPAR for 2022 was down 4% and occupancy was down 7.9 percentage points to 64%, but ADR was up 7.9%.
Marriott’s stock has gone up 11% over the past three months, while the Consumer Discretionary Select Sector SPDR exchange-traded fund
has advanced 5% and the S&P 500 has tacked on 3.8%.