Best quotes from Marriott’s 2Q earnings call

Marriott International lowered its RevPAR guidance 50 bps when reporting second quarter earnings on Wednesday, while reporting net rooms growth of 6% year over year and worldwide RevPAR growth of 4.9%. The Street did not like the adjustment as MAR stock was down 4.8% on the same day.

Hotel Investment Today sat in on Marriott’s earning call and we highlight the best quotes offered by President and CEO Anthony Capuano and CFO and Executive Vice President of Development Leeny Oberg:

“APAC benefitted from strong macro trends and increased cross-border travel, especially from Mainland China. Growth in APAC was broad based but particularly robust in Japan where RevPAR rose 21%.” Anthony Capuano

Anthony Capuano

“RevPAR in Greater China declined roughly 4% in the quarter as macroeconomic pressures led to softer domestic demand. The region was also impacted by an increase in outbound high-end travelers. Positive RevPAR growth in tier 1 cities, Hong Kong, Macau and Taiwan, was more than offset by declines in all other markets with Hainan seeing a meaningful RevPAR decline.” – Anthony Capuano

“In the second quarter, conversions represented 37% of openings and 32% of signings. This conversion activity remains broad based with hotels converting to 23 Marriott brands over the past 12 months.” – Anthony Capuano

“In the second quarter, constructions starts in the U.S. and Canada rose 40% year over year.” – Anthony Capuano

“Growth in incentive management fees (IMFs) were led by mid-teens percentage increases in APAC and EMEA, partially offset by an $8 million decline in Great China. IMFs in the U.S. and Canada were flat year over year in part impacted by continued softness in Hawaii.” – Leeny Oberg

“The primary change in our full-year [RevPAR] outlook is Greater China’s updated expectation of negative RevPAR growth for the rest of the year. We expect the continuation of current weak demand and pricing trends in the region with the third quarter expected to see the most meaningful RevPAR decline, and as outbound travel accelerates during summer holidays.” – Leeny Oberg

“Overall RevPAR trends in the U.S. and Canada in back half of the year are expected to remain relatively steady with the first six months of the year.” – Leeny Oberg

Leeny Oberg

“We are seeing a bit lower group bookings in Q4 around the election [and it’s bleeding into the week after the election] which is having an impact on the expectations for U.S. in Canada in Q4 v Q3.” – Leeny Oberg

“Other international markets continue to normalize. Compared to the first half of the year, the back half for EMEA APAC and CALA would expect to be a bit lower. And as move toward Q4 as move toward normalization, although still quite strong RevPAR in those markets, you get a bit lower RevPAR outlook for Q4 versus Q3.” – Leeny Oberg

“We signed 63 select-service deals in the first half in China and almost half of those are expected to open within 12 months. As we look at the pace, we ask ourselves if we are stacking paper or are we signing deals that will materialize as openings. The pace of construction is really encouraging.” – Anthony Capuano

“We are clearly seeing [on the leisure front] stronger performance in the upper chain scales compared to the lower chain scales… Ancillary spend around the world was a hair softer than anticipated and shows the consumer in general is perhaps being a bit more judicious about having the fancy dinner or going on that extra trip when on a vacation. That is the only thing. It is not trade down in any meaningful way.” – Leeny Oberg

“The percentage of deals in full year 2023 that required key money is a bit lower than 2019 and similarly the amount of key money offered in deals in 2023 was almost 10% lower than 2019… In 2019, the bulk of the key money deployed was in upper upscale and luxury and now you are seeing selectively the opportunity or need to deploy key money lower in the quality tier.” – Anthony Capuano