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Marriott International, Inc. (NASDAQ:MAR) - An All-Encompassing Hospitality Powerhouse Delivering Exceptional Experiences
Published on September 24, 2024 | Ticker: MAR

Marriott International, Inc. (NASDAQ:MAR) is a global hospitality powerhouse that continues to elevate the art of hospitality. With a diverse portfolio of over 30 renowned brands, Marriott operates and franchises hotels, resorts, and vacation ownership properties worldwide. The company's unwavering commitment to providing exceptional experiences has solidified its position as an industry leader, delivering impressive financial results year after year.

Financials

In the latest fiscal year, Marriott reported annual revenue of $23.71 billion and net income of $3.08 billion, showcasing the strength and resilience of its business model. The company's annual operating cash flow reached $3.17 billion, while free cash flow stood at $2.72 billion, underscoring its robust liquidity and financial flexibility.

Marriott's first quarter of 2024 was marked by solid performance across its global operations. The company reported a 4.2% increase in worldwide RevPAR (Revenue per Available Room), driven by a 2.8% rise in average daily rate (ADR) and a 0.9 percentage point improvement in occupancy. This growth was primarily fueled by strong demand in the company's International regions, including EMEA, Greater China, and APEC, which saw RevPAR increases of 10.1%, 6.0%, and 16.5%, respectively.

In the U.S. & Canada, where demand has normalized, RevPAR increased 1.5%, led by strong group business. Marriott's first quarter total gross fee revenues rose 7% year-over-year to $1.21 billion, reflecting higher RevPAR, rooms growth, and a 10% increase in co-branded credit card fees.

Segment Performance

Marriott's business segments delivered a solid performance in the first quarter. The U.S. & Canada segment reported net fee revenues of $665 million and segment profit of $625 million. The EMEA segment generated net fee revenues of $115 million and segment profit of $81 million, while the Greater China segment recorded net fee revenues of $65 million and segment profit of $51 million. The APEC segment achieved net fee revenues of $86 million and segment profit of $72 million.

The company's Unallocated corporate and other segment, which includes a portion of Marriott's revenues, such as fees from credit card programs and vacation ownership licensing agreements, as well as general, administrative, and other expenses, reported a segment profit of $51 million.

Outlook

Marriott's strong performance in the first quarter has led the company to raise its full-year 2024 earnings and capital returns guidance. The company now expects global RevPAR to grow 3% to 5% for the full year, with higher growth anticipated in its International regions compared to the U.S. & Canada. Gross fee revenues are expected to rise 7% to 9% to $5.2 billion to $5.3 billion, with non-RevPAR-related fees growing 9% to 10%.

Adjusted EBITDA is now projected to increase between 7% and 9% to approximately $5.0 billion to $5.1 billion, while adjusted EPS is expected to be in the range of $9.31 to $9.65. Marriott's capital allocation strategy remains focused on maintaining its investment-grade rating, investing in growth opportunities, and returning excess capital to shareholders through a combination of a modest but rising cash dividend and share repurchases, which are now expected to be between $4.2 billion and $4.4 billion for the full year 2024.

Development Pipeline and Unit Growth

Marriott's robust development pipeline and unit growth continue to be key drivers of its success. In the first quarter, the company added a record 46,000 net rooms, representing a 7.1% increase compared to the end of the first quarter of 2023. The company's development pipeline stood at over 3,400 hotels and nearly 547,000 rooms at the end of the first quarter, with more than 202,000 rooms, or 37%, under construction.

The company's strategic licensing agreement with MGM Resorts International, which added approximately 17,000 rooms to Marriott's system, has been a significant contributor to its growth. Marriott also continues to see strong developer interest in its new mid-scale brands, such as City Express by Marriott, Four Points Express, and StudioRes, which are gaining traction across various regions.

Innovation and Technology Transformation

Marriott's commitment to innovation and technology transformation is another key aspect of its strategy. The company is in the midst of a multiyear digital and technology transformation of its major systems, including reservations, property management, and loyalty, which is expected to unlock new revenue opportunities, strengthen its efficient operating model, enhance the Marriott Bonvoy program, and elevate the associate and customer digital experience.

Loyalty Program

Marriott's Bonvoy loyalty program remains a powerful driver of its success, with nearly 203 million members at the end of the first quarter. Member penetration of global room nights reached record highs of 70% in the U.S. & Canada and 64% globally, underscoring the program's ability to attract and retain loyal customers.

Conclusion

While Marriott faces some macroeconomic headwinds, such as inflationary pressures and economic uncertainties, the company's diversified global portfolio, resilient demand trends, and efficient operating model position it well to navigate these challenges. The company's continued focus on innovation, technology, and enhancing the guest experience through its powerful loyalty program and growing development pipeline further solidify its position as a leading global hospitality provider.

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