“Marriott’s second-quarter results highlight consumers’ love for travel,” said Anthony Capuano, CEO. “We reported outstanding results, as momentum in global lodging recovery continued. With demand increasing across all customer segments throughout the quarter, and nearly all countries easing travel restrictions, worldwide RevPAR surpassed 2019 levels in June. Second-quarter ADR was robust, at 7% above 2019 levels, and worldwide occupancy reached 68%.
He continued, “In the U.S. & Canada, June RevPAR increased 3% compared to 2019. Among customer segments, group RevPAR saw the most meaningful acceleration in the second quarter, down just 1% to 2019 in June, compared to down nearly 30% in the first quarter. We have not seen signs of leisure travel abating, with leisure room nights in the region more than 15% higher than second-quarter 2019, and ADR meaningfully outpacing pre-pandemic levels. Europe also experienced notably strong RevPAR recovery, in large part due to the return of international visitors, with June RevPAR exceeding 2019.”
Highlights:
- Second-quarter comparable systemwide constant dollar RevPAR declined 2.9% worldwide and 14.1% in international markets, while RevPAR increased 1.3% in the U.S. & Canada, compared to the 2019 second quarter.
- Second-quarter reported diluted EPS totaled $2.06, compared to reported diluted EPS of $1.28 in the year-ago quarter.
- Second quarter adjusted diluted EPS totaled $1.80, compared to second-quarter 2021 adjusted diluted EPS of $0.79.
- Second-quarter reported net income totaled $678 million, compared to reported net income of $422 million in the year-ago quarter. Second-quarter adjusted net income totaled $593 million, compared to second-quarter 2021 adjusted net income of $260 million.
- Adjusted EBITDA totaled $1.019 billion in the 2022 second quarter, compared to second-quarter 2021 adjusted EBITDA of $558 million.
- The company added roughly 17,000 rooms globally during the second quarter, including approximately 9,200 rooms in international markets and nearly 4,400 conversion rooms.
- At quarter’s end, Marriott’s worldwide development pipeline totaled nearly 2,950 properties and more than 495,000 rooms, including roughly 27,400 rooms approved, but not yet subject to signed contracts. Approximately 203,300 rooms in the pipeline were under construction as of the end of the 2022 second quarter.
“Marriott Bonvoy hit 169 million members by quarter’s end,” said Capuano. “As our loyal guests get back on the road, penetration in the U.S. stood at 59% in the second quarter, topping 2019. Members are increasingly engaging with us during and outside of hotel stays. Second-quarter co-brand credit card fees increased nearly 40% year over year, driven by continued strength in global cardholder acquisitions and cardholder spend, both of which achieved record levels in the quarter.”
He added, “On the development front, signing activity has accelerated in 2022, setting a second-quarter record. We signed 23,000 rooms around the world in the second quarter, nearly 30% of which were conversions from competitor brands. Conversions continue to be a meaningful growth driver, comprising roughly 25% of room additions in the quarter.”
Second-quarter results
Marriott’s reported operating income totaled $950 million in the second quarter, compared to 2021 second-quarter reported operating income of $486 million. Reported net income totaled $678 million in the second quarter, compared to 2021 second-quarter reported net income of $422 million. Reported diluted earnings per share (EPS) totaled $2.06 in the quarter, compared to reported diluted EPS of $1.28 in the year-ago quarter.
Adjusted operating income in the 2022 second quarter totaled $857 million, compared to 2021 second-quarter adjusted operating income of $406 million.
Second-quarter adjusted net income totaled $593 million, compared to 2021 second-quarter adjusted net income of $260 million. Adjusted diluted EPS in the second quarter totaled $1.80, compared to adjusted diluted EPS of $0.79 in the year-ago quarter. The second-quarter adjusted results excluded $11 million after-tax ($0.03 per share) of gains on investees’ property sales and a $2 million after-tax ($0.01 per share) gain on an asset disposition. The 2021 second-quarter adjusted results excluded special tax items of $98 million ($0.30 per share).
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and restructuring, merger-related charges and other expenses.
Base management and franchise fees totaled $938 million in the second quarter, compared to base management and franchise fees of $587 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to RevPAR increases due to the ongoing recovery in lodging demand, as well as unit growth. Other non-RevPAR related franchise fees in the quarter totaled $204 million, compared to $160 million in the year-ago quarter, aided by $40 million of higher credit card branding fees.
Incentive management fees totaled $135 million in the quarter, compared to $55 million in the 2021 second quarter. More than one-half of the incentive management fees recognized in the quarter were earned at hotels in the U.S. & Canada.
Owned, leased and other revenue, net of direct expenses, totaled $83 million in the second quarter, compared to $19 million in the year-ago quarter. The $64 million increase in revenue net of expenses year over year largely reflects the ongoing recovery in lodging demand.
General, administrative and other expenses for the quarter totaled $231 million, compared to $187 million in the year-ago quarter. The year-over-year increase primarily reflects higher incentive compensation.
Interest expense, net, totaled $89 million in the second quarter compared to $102 million in the year-ago quarter. The decrease is largely due to lower interest expense associated with lower debt balances.
Equity in earnings/losses for the second quarter totaled $15 million of earnings, compared to an $8 million loss in the year-ago quarter. The improvement largely reflects $13 million of gains on joint ventures’ sales of hotels and improved results at joint venture properties due to the ongoing recovery in lodging demand.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $1,019 million in the second quarter, compared to second-quarter 2021 adjusted EBITDA of $558 million.
Selected performance information
The company added 97 properties (16,917 rooms) to its worldwide lodging portfolio during the quarter, including nearly 4,400 rooms converted from competitor brands and approximately 9,200 rooms in international markets (such as the W Algarve in Portugal, shown here). Twenty-five properties (3,661 rooms) exited the system during the quarter. At quarter end, Marriott’s global lodging system totaled more than 8,100 properties, with more than 500,000 rooms.
At quarter end, the company’s worldwide development pipeline totaled 2,942 properties with more than 495,000 rooms, including 1,014 properties with approximately 203,300 rooms, or 41% of the pipeline, under construction and 197 properties with roughly 27,400 rooms approved for development, but not yet subject to signed contracts.
Balance sheet
At quarter’s end, Marriott’s net debt was $8.3 billion, representing total debt of $8.8 billion less cash and cash equivalents of $0.5 billion. At year-end 2021, the company’s net debt was $8.7 billion, representing total debt of $10.1 billion less cash and cash equivalents of $1.4 billion.
2022 outlook
Marriott’s outlook for the third quarter and year-end includes a worldwide comparable systemwide constant dollar RevPAR range of flat to +3% (+1 to +4 in the U.S. & Canada) in the third quarter vs. third-quarter 2019, and a full-year range of -6% to 3% (-3 to flat in the U.S. & Canada) vs. 2019.
