Marriott International Inc reported a 4% decline in its shares in pre-market trading on Wednesday, following a revenue miss despite beating profit forecasts for the second quarter. The hotel operator's adjusted earnings reached $3.19 per share for the three months ending in June, exceeding analysts' expectations of $3.05 to $3.08 per share. However, total revenue of $7.07 billion fell short of consensus estimates, which ranged from $7.17 billion to $7.26 billion, according to Proactive Investors.
Revenue and Guidance Concerns
Marriott's revenue figures were impacted by over $5 billion in cost reimbursement revenue, which the company collects from hotel owners and passes through without markup. Adjusted revenue, excluding this figure, increased 11% to $2.01 billion. The company also provided a cautious outlook for the second half of the year, projecting third-quarter adjusted earnings between $2.74 and $2.82 per share, a slowdown from the 13% growth seen in the second quarter. Full-year adjusted earnings guidance is now set at $11.64 to $11.81, slightly above the $11.64 consensus.
Mixed International Performance
The company's international business showed mixed results, with revenue per available room (RevPAR) declining 0.5% globally. This decline was largely attributed to a significant 43% drop in the Middle East, overshadowing a 5% gain in Europe. In contrast, RevPAR in the U.S. and Canada rose 5%, driven by higher average daily room rates. Marriott's President and CEO, Anthony Capuano, noted that while EMEA faced challenges, regions like APEC and Greater China experienced strong leisure demand and robust growth.
Marriott also reported a record development pipeline of nearly 4,200 properties, translating to around 629,000 rooms worldwide, with 44% currently under construction.
Related coverage: Tata Consumer Q1 Earnings Beat Estimates, Shares Rise 3%, Seatrium Shares Rise 5.6% on Positive Profit Guidance.
The decline in Marriott's shares may influence investor sentiment in the hospitality sector, particularly affecting hotel stocks and related indices as concerns about revenue growth persist. Investors will watch for the upcoming third-quarter earnings report to gauge the company's performance amid ongoing geopolitical challenges and economic conditions.