Asia, Europe results bolster Marriott earnings

BETHESDA, Maryland – Marriott International completed 2023 with another big beat, announcing 4Q23 RevPAR rose 7.2% year over year, including 17.4% internationally (3.3% in the U.S. and Canada) with particular strength in Asia and Europe. Full year global RevPAR rose 15%.

In the U.S. & Canada, fourth quarter RevPAR rose over 3%, while group revenue increased 7% compared to the 4Q22, driven by solid rate increases. Leisure revenue continued to increase, up 2% with business transient revenue up 3% from the year-ago quarter.

Marriott’s development signed a record 164,000 organic rooms globally in 2023, including 37,000 rooms from their deal with MGM Resorts International. The development pipeline also reached a new high with roughly 573,000 rooms (3,400 properties) at year end.

During the year, Marriott added nearly 81,300 rooms, including approximately 17,500 rooms associated with the City Express transaction and more than 43,000 other rooms in international markets. More than 232,000 rooms in the pipeline were under construction as of the end of 2023. One in four organic rooms from conversions and net rooms grew 4.7% from year-end 2022.

“Fundamentally, 4Q23 performance was ahead of forecasts – RevPAR growth was near the high end of the guidance range, which drove total gross fees to be ~3% better than our estimate (incentive fees were the upside driver versus our model),” said RW Baird analyst Michael Bellisario. “The moving pieces, which netted to an earnings benefit, included a large termination fee (from a development project), a G&A litigation reserve, and an income tax benefit from IP restructuring.”

Marriott CEO Anthony Capuano said the company expects another year of solid growth in 2024 and significant shareholder returns. With normalizing RevPAR growth around the world, he said the company anticipate a worldwide full year RevPAR increase of 3% to 5% and net rooms growth of 5.5% to 6%. “We expect this should yield adjusted EBITDA of approximately $4.9 billion to $5 billion for the year and enable us to return $4.1 billion to $4.3 billion to shareholders after factoring in $500 million to purchase the Sheraton Grand Chicago,” he said.

Looking more closely at the numbers, fourth quarter reported diluted EPS totaled $2.87, compared to reported diluted EPS of $2.12 in the year-ago quarter. Fourth quarter adjusted diluted EPS totaled $3.57, compared to fourth quarter 2022 adjusted diluted EPS of $1.96.

Fourth quarter reported net income totaled $848 million, compared to reported net income of $673 million in the year-ago quarter. Fourth quarter adjusted net income totaled $1,055 million, compared to fourth quarter 2022 adjusted net income of $622 million.

For full year 2023, Marriott repurchased 21.5 million shares of common stock for $3.9 billion, including 4.7 million shares for $965 million in the fourth quarter. The company returned over $4.5 billion to shareholders through dividends and share repurchases in 2023.