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.
The stock
MAR,
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
SPX,
shed 0.7%.
“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
XLY,
has advanced 5% and the S&P 500 has tacked on 3.8%.
Credit: marketwatch.com