Steady as she goes for Marriott

BETHESDA, Maryland – A lot more of the same from a performance and development perspective, with a bit of bump from being among the biggest and most powerful describes the conversation surrounding Marriott International’s third quarter earnings call this week.

Generally speaking, performance strength remains at the high-end chain scales (luxury RevPAR +4%) and in the leisure space with international markets picking up the slack for the U.S. and Canada. Group seems to have plateaued and was off 3% in the quarter, while business transient is still trailing 2019. Third quarter global RevPAR increased 50 basis points, in line with expectations, driven by nearly 1% ADR growth offsetting a 30-basis point decline in occupancy.

U.S. and Canada RevPAR declined 0.4% in the quarter due to weaker demand in the lower chain scales, largely reflecting reduced government travel.

Full-year RevPAR growth guidance is unchanged at 1.5%-2.5%, and Marriott is forecasting 1.0%-2.0% growth in 4Q25.

I expect leisure to continue to be a stronger performer on a relative basis, and particular upper chain scales. Overall, it’s a fairly similar environment globally.

Leeny Oberg

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By customer segment on a global basis, leisure transient continues to lead RevPAR performance for Marriott, rising 1%, while business transient RevPAR was flat and group RevPAR declined 2%, reflecting timing of events. RevPAR growth is anticipated to accelerate from the third quarter, expected to increase 1% to 2% year-over-year in Q4.

By region, RevPAR increases in Q3 were strongest in APEC, which Marriott President and CEO Tony Capuano said has been benefiting from solid macroeconomic growth in many countries and double-digit rooms growth. Third quarter, RevPAR in APEC increased nearly 5%, driven by robust ADR growth and higher demand from international travelers, particularly from Greater China and Europe.

Marriott’s preliminary view is that 2026 year-over-year global RevPAR growth could be similar to the 1.5% to 2.5% growth expected this year. Growth is expected to again be higher internationally than in the U.S. and Canada with next summer’s World Cup possibly contributing around 30 to 35 basis points to full year global RevPAR growth.

Chief Financial Officer and Executive Vice President of Development Leeny Oberg said Marriott is encouraged to see group pace for next year is up 7% (8% in the U.S.)  “I expect leisure to continue to be a stronger performer on a relative basis, and particular upper chain scales,” Oberg continued. “Overall, it’s a fairly similar environment globally.”

Global business transient in the in the third quarter was effectively flat, but that was a sequential improvement versus Q2 when global BT was down 2%. Oberg added that global BT RevPAR, excluding government business (-15% YOY) was actually up 1% YOY. Looking to 2026, Oberg is encouraged by what she is hearing and seeing from larger companies with hesitancy from SMEs trying to navigate the volatile economic environment. “We did see relatively more weakness in the smaller and medium sized businesses, which has a bit greater impact on our select-service brands,” she said.

Conversions drive development

Development activity remains solid with 596,000-room pipeline at quarter end with over 250,000 rooms under construction (30% of signings and openings in Q3 were conversions). Marriott’s 2025 net rooms growth is still anticipated to approach 5%. Looking ahead, strong momentum in global signings, particularly conversions, is creating expectations for global net rooms growth in the mid-single digit range.

We are seeing a bit of a pickup in asset sale transactions in proven markets with proven brands, but I would say we still need to see more improvement on the financing environment to see a dramatic pickup in new-build construction starts.

Leeny Oberg

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“One-third of our room openings this year are expected to be conversion rooms. And frankly, when you look at our signings that trend is not doing anything except staying the same, if not actually moving up a little bit,” Oberg said.

Oberg added that Marriott did see a pickup in shovels digging dirt in the third quarter but tempered that by adding that, overall, the trend is fairly similar with constructions starts still meaningfully below 2019 levels. “As you look at dropping interest rates that should help,” she added. “We are seeing a bit of a pickup in asset sale transactions in proven markets with proven brands, but I would say we still need to see more improvement on the financing environment to see a dramatic pickup in new-build construction starts.”

To attract more owners to Marriott brands, Capuano said they are focused on driving enhanced top line performance. “We think that’s one of the most compelling features of the technology transformation journey that we’re on,” he said.

The reduction in the loyalty charge out rate was an example of an ongoing effort to identify across the Marriott landscape opportunities to reduce affiliation costs, Capuano added. “We believe we have the lowest affiliation cost relative to revenue in the industry, and we expect, with our economies of scale to continue to work on improving that even more,” he said.