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Marriott International, Inc. (MAR - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by robust leisure demand and solid global booking trends. Also, substantial revenue per available room (RevPAR) growth in international markets added to the upside.
The company emphasized the strategic licensing agreement with MGM Resorts International (MGM - Free Report) and the creation of the MGM Collection with Marriott Bonvoy. The deal expands Marriott's footprint in Las Vegas (with the addition of 17 MGM Resorts properties for bookings) and enhances loyalty program benefits for both companies. The initiative allows members to book through Marriott's digital platforms. The company is optimistic concerning the growth strategy and anticipates the deal to support 2023 net rooms growth expectations of 6.4-6.7% on a year-over-year basis.
Earnings & Revenue Discussion
In the quarter under review, Marriott’s adjusted earnings per share (EPS) were $2.26, surpassing the Zacks Consensus Estimate of $2.19. The company reported adjusted earnings of $1.80 per share in the prior-year quarter.
Quarterly revenues of $6,075 million surpassed the consensus mark of $6,047 million. The top line surged 13.8% on a year-over-year basis.
Marriott International, Inc. Price, Consensus and EPS Surprise
During the second quarter, revenues from Base management and Franchise fees came in at $318 million and $739 million compared with $269 million and $669 million reported in the prior-year quarter. RevPAR increases and unit growth primarily backed the upside. Our estimate for revenues from Base management and Franchise fees were pegged at $361.7 million and $740.6 million, respectively.
Incentive management fees during the quarter came at $193 million, reflecting a rise of 43% from $135 million reported in the prior-year quarter.
RevPAR & Margins
In the quarter under review, RevPAR for worldwide comparable system-wide properties increased 13.5% (in constant dollars) from 2022 levels. The upside was primarily backed by a 6% increase in ADR from 2022 levels. Occupancy increased by 4.7% from 2022 levels.
Comparable system-wide RevPAR in the Asia Pacific (excluding China) increased 47.6% (in constant dollars) year over year. Occupancy increased 9.3% year over year, while ADR increased 27.1% from 2022 levels. Comparable system-wide RevPAR in Greater China increased 125.2% year over year.
On a constant-dollar basis, international comparable system-wide RevPAR increased 39.1% from 2022 levels. Occupancy gained 12.4% year over year, while ADR was up 13.7% from 2022 levels. Comparable system-wide RevPAR in Europe increased 24.5%, while RevPAR in the Caribbean & Latin America increased 11.9% from 2022 levels.
Total expenses during the quarter increased 13.5% year over year to $4,979 million, primarily owing to a rise in Reimbursed expenses. Our estimate for total expenses was $5,074.3 million.
During the first quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $1,219 million compared with $1,019 million reported in the prior-year quarter. Our estimate for the metric was $1,149 million.
Balance sheet
At the end of the second quarter, Marriott's total debt amounted to $11.3 billion compared with $10.7 billion reported in the previous quarter. Cash and cash equivalents, as of Jun 30, 2023, came in at $0.6 billion, flat sequentially.
Year to date (through Jul 28, 2023), the company repurchased 13.6 million shares of its common stock worth $2.3 billion.
Unit Developments
At the end of second-quarter 2023, Marriott's development pipeline totaled 3,149 hotels, with approximately 547,000 rooms. More than 240,000 rooms were under construction. During the quarter, the company added 254 properties (33,097 rooms) to its worldwide lodging portfolio.
Outlook
For third-quarter 2023, the company anticipates gross fee revenues in the range of $1,185-$1,210 million. Adjusted EBITDA is expected between $1,105 million and $1,140 million. The company expects third-quarter diluted EPS to be between $2 and $2.09.
For the third quarter, the company anticipates worldwide system-wide RevPAR to increase 6-8% from 2022 levels. RevPAR in the United States and Canada is expected to increase 2-4% from 2022 levels. International RevPAR is expected in the range of 17-19% from 2022 levels. The company anticipates worldwide system-wide RevPAR in 2023 to increase 12-14% year over year compared with the previous growth expectations of 10-13% year over year.
For 2023, the company anticipates gross fee revenues in the range of $4,730 to $4,820 compared with the previous projection of $4,600-$4,750 million. General and administrative expenses for 2023 are projected between $935 million and $915 million. Adjusted EBITDA is expected between $4,535 to $4,650 compared with the previous expectation of $4,360 million to $4,540 million. It projects 2023 diluted EPS in the range of $8.36-$8.65, up from the previous expectation $7.97-$8.42.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 18.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6%, on average. Shares of LYV have increased 39.5% in the past three months.
The Zacks Consensus Estimate for Live Nation’s 2024 sales and EPS indicates a rise of 7.2% and 114.4%, respectively, from the year-ago period’s levels.
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Marriott (MAR) Tops Q2 Earnings Estimates, Raises '23 View
Marriott International, Inc. (MAR - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by robust leisure demand and solid global booking trends. Also, substantial revenue per available room (RevPAR) growth in international markets added to the upside.
The company emphasized the strategic licensing agreement with MGM Resorts International (MGM - Free Report) and the creation of the MGM Collection with Marriott Bonvoy. The deal expands Marriott's footprint in Las Vegas (with the addition of 17 MGM Resorts properties for bookings) and enhances loyalty program benefits for both companies. The initiative allows members to book through Marriott's digital platforms. The company is optimistic concerning the growth strategy and anticipates the deal to support 2023 net rooms growth expectations of 6.4-6.7% on a year-over-year basis.
Earnings & Revenue Discussion
In the quarter under review, Marriott’s adjusted earnings per share (EPS) were $2.26, surpassing the Zacks Consensus Estimate of $2.19. The company reported adjusted earnings of $1.80 per share in the prior-year quarter.
Quarterly revenues of $6,075 million surpassed the consensus mark of $6,047 million. The top line surged 13.8% on a year-over-year basis.
Marriott International, Inc. Price, Consensus and EPS Surprise
Marriott International, Inc. price-consensus-eps-surprise-chart | Marriott International, Inc. Quote
During the second quarter, revenues from Base management and Franchise fees came in at $318 million and $739 million compared with $269 million and $669 million reported in the prior-year quarter. RevPAR increases and unit growth primarily backed the upside. Our estimate for revenues from Base management and Franchise fees were pegged at $361.7 million and $740.6 million, respectively.
Incentive management fees during the quarter came at $193 million, reflecting a rise of 43% from $135 million reported in the prior-year quarter.
RevPAR & Margins
In the quarter under review, RevPAR for worldwide comparable system-wide properties increased 13.5% (in constant dollars) from 2022 levels. The upside was primarily backed by a 6% increase in ADR from 2022 levels. Occupancy increased by 4.7% from 2022 levels.
Comparable system-wide RevPAR in the Asia Pacific (excluding China) increased 47.6% (in constant dollars) year over year. Occupancy increased 9.3% year over year, while ADR increased 27.1% from 2022 levels. Comparable system-wide RevPAR in Greater China increased 125.2% year over year.
On a constant-dollar basis, international comparable system-wide RevPAR increased 39.1% from 2022 levels. Occupancy gained 12.4% year over year, while ADR was up 13.7% from 2022 levels. Comparable system-wide RevPAR in Europe increased 24.5%, while RevPAR in the Caribbean & Latin America increased 11.9% from 2022 levels.
Total expenses during the quarter increased 13.5% year over year to $4,979 million, primarily owing to a rise in Reimbursed expenses. Our estimate for total expenses was $5,074.3 million.
During the first quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $1,219 million compared with $1,019 million reported in the prior-year quarter. Our estimate for the metric was $1,149 million.
Balance sheet
At the end of the second quarter, Marriott's total debt amounted to $11.3 billion compared with $10.7 billion reported in the previous quarter. Cash and cash equivalents, as of Jun 30, 2023, came in at $0.6 billion, flat sequentially.
Year to date (through Jul 28, 2023), the company repurchased 13.6 million shares of its common stock worth $2.3 billion.
Unit Developments
At the end of second-quarter 2023, Marriott's development pipeline totaled 3,149 hotels, with approximately 547,000 rooms. More than 240,000 rooms were under construction. During the quarter, the company added 254 properties (33,097 rooms) to its worldwide lodging portfolio.
Outlook
For third-quarter 2023, the company anticipates gross fee revenues in the range of $1,185-$1,210 million. Adjusted EBITDA is expected between $1,105 million and $1,140 million. The company expects third-quarter diluted EPS to be between $2 and $2.09.
For the third quarter, the company anticipates worldwide system-wide RevPAR to increase 6-8% from 2022 levels. RevPAR in the United States and Canada is expected to increase 2-4% from 2022 levels. International RevPAR is expected in the range of 17-19% from 2022 levels. The company anticipates worldwide system-wide RevPAR in 2023 to increase 12-14% year over year compared with the previous growth expectations of 10-13% year over year.
For 2023, the company anticipates gross fee revenues in the range of $4,730 to $4,820 compared with the previous projection of $4,600-$4,750 million. General and administrative expenses for 2023 are projected between $935 million and $915 million. Adjusted EBITDA is expected between $4,535 to $4,650 compared with the previous expectation of $4,360 million to $4,540 million. It projects 2023 diluted EPS in the range of $8.36-$8.65, up from the previous expectation $7.97-$8.42.
Zacks Rank & Other Key Picks
Marriott currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 18.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6%, on average. Shares of LYV have increased 39.5% in the past three months.
The Zacks Consensus Estimate for Live Nation’s 2024 sales and EPS indicates a rise of 7.2% and 114.4%, respectively, from the year-ago period’s levels.