Federal Shutdown Hurts Marriott -- WSJ
May 11 2019 - 3:02AM
Dow Jones News
By Aisha Al-Muslim
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 11, 2019).
Marriott International Inc., the world's largest hotel company,
posted weaker than expected revenue growth from guest stays in the
latest period, but said its business is stable as fee revenue rises
and it continues to expand its hotel count.
Marriott, the parent of hotel brands including Ritz-Carlton,
Westin and Renaissance, said Friday that comparable systemwide
revenue per available room rose 1.1% excluding currency
fluctuations in the first quarter. RevPAR, which reflects pricing
power, grew at a faster pace outside North America than it did on
the continent, but both regions still missed Marriott's outlook for
the quarter.
RevPAR growth in North America was hurt by the partial U.S.
government shutdown in December and January and the lingering
impact from a labor strike in Hawaii last year. For two months,
about 8,000 Marriott union workers in several markets were on
strike. The year-earlier period also benefited from strong bookings
related to hurricane-recovery efforts in Florida and Texas.
"We're quite prepared to sacrifice a few tenths on the top line
if it makes sense to drive enhanced profitability," Marriott Chief
Executive Arne Sorenson told analysts on a conference call.
Overall, revenue was flat from a year earlier at $5.01 billion,
and lower than analysts' consensus forecast of $5.11 billion.
Revenue generated from bookings through online travel agencies like
Expedia declined 4%, while direct digital revenue bookings
increased more than 20%.
Shares fell 2.8% to $131.71 in Friday trading, as Marriott's
results weighed on other lodging stocks including Hyatt Hotels
Corp. and Wyndham Hotels & Resorts Inc.
Despite a sluggish start to the year, Marriott maintained its
full-year forecast for RevPAR to rise 1% to 3% world-wide. The
company said it still plans for its hotel room count to increase
about 5.5% for the year.
Hotel companies have signaled they expect RevPAR to slow down
this year compared with 2018 because of pressure from a maturing
global economy, a relative slowdown in China and worries about the
impact of Brexit on Europe.
In recent weeks, Hilton Worldwide Holdings Inc., Hyatt and
Wyndham have also reaffirmed their full-year RevPAR growth outlook
of about 1% to 3%. On Thursday, Choice Hotels International Inc.
lowered the high end of its prior RevPAR guidance.
In the latest period, Marriott's first-quarter profit fell to
$375 million, or $1.09 a share, from $420 million, or $1.16 a
share, a year earlier. Last year's results benefited from one-time
gains from hotels sold.
Excluding special items, adjusted earnings were $1.41 a share,
higher than the $1.34 a share expected by analysts polled by
Refinitiv. If not for nonoperating items, earnings would have
fallen short of consensus expectations, Sanford C. Bernstein
analysts said in a note.
Marriott raised its full-year adjusted profit forecast on
Friday, due in part to a lower effective tax rate. Marriott guided
earnings per share of $5.97 to $6.19, compared with its prior
estimate of $5.87 to $6.10. It also raised its forecast on gross
fee revenue this year due to unit growth as well as higher
incentive fees and credit-card branding fees.
The company said it incurred $44 million of expenses and had $46
million of insurance recoveries related to a data breach disclosed
in November. Marriott has said a hack in the reservation system for
its Starwood properties may have exposed the personal information
of up to 500 million guests, but that number was later revised
lower.
Last week, Marriott said Mr. Sorenson, 60 years old, was
diagnosed with stage-2 pancreatic cancer and would undergo
chemotherapy. Mr. Sorenson, who has been CEO since 2012, said he
expects to remain in his role.
"They believe we have caught it early, that it is operable and
that the course of treatment is proven," he said Friday. "With the
support of an extraordinary, strong team of Marriott executives, we
are going to soldier on."
Marriott also plans to move deeper into the home-sharing space,
competing even more with Airbnb Inc., Expedia Group Inc.'s Vrbo and
others. In late April, Marriott said it would begin offering
accommodations starting this week in about 2,000 high-end homes
throughout 100 markets across the U.S., Europe and Latin
America.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
May 11, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Marriott (NASDAQ:MAR)
Historical Stock Chart
From May 2024 to Jun 2024
Marriott (NASDAQ:MAR)
Historical Stock Chart
From Jun 2023 to Jun 2024