“We are very pleased to report another quarter of outstanding results,” said Anthony Capuano, CEO. “Global RevPAR more than fully recovered, rising nearly 2% above 2019. In the third quarter, RevPAR compared to 2019 improved sequentially from the second quarter in every region around the world.”
He added, “In the U.S. & Canada, our largest region, RevPAR exceeded 2019 levels by 3.5% in the third quarter. Occupancy in the region has been rising throughout the year, reaching 72% in September, just 2%age points below the same month in 2019. Leisure transient demand remained very robust, and group RevPAR more than fully recovered to 2019 levels in the quarter. Business transient demand, though still lagging in recovery, continued to improve. Our EMEA [Europe, Middle East & Africa] and CALA [Caribbean & Latin America] regions posted nearly 10% and 18% third-quarter RevPAR growth over 2019, respectively. Demand in these regions was boosted by the strong U.S. dollar and the ramping of cross-border travel.”
Q3 highlights
- Third-quarter 2022 comparable systemwide constant dollar RevPAR increased 36.3% worldwide, 28.5% in the U.S. & Canada, and 66.1% in international markets, compared to the 2021 third quarter.
- Third-quarter 2022 comparable systemwide constant dollar RevPAR increased 1.8% worldwide and 3.5% in the U.S. & Canada, while RevPAR declined 2.4% in international markets, compared to the 2019 third quarter.
- Third-quarter reported diluted EPS totaled $1.94, compared to reported diluted EPS of $0.67 in the year-ago quarter.
- Third-quarter adjusted diluted EPS totaled $1.69, compared to third-quarter 2021 adjusted diluted EPS of $0.99.
- Third-quarter reported net income totaled $630 million, compared to reported net income of $220 million in the year-ago quarter. Third-quarter adjusted net income totaled $551 million, compared to third-quarter 2021 adjusted net income of $327 million.
- Adjusted EBITDA totaled $985 million in the 2022 third quarter, compared to third-quarter 2021 adjusted EBITDA of $683 million.
- The company added roughly 14,000 rooms globally during the third quarter, including approximately 8,700 rooms in international markets and nearly 3,900 conversion rooms.
- At quarter’s end, Marriott’s worldwide development pipeline totaled more than 3,000 properties and more than 502,000 rooms, including roughly 33,300 rooms approved, but not yet subject to signed contracts. Approximately 204,800 rooms in the pipeline were under construction as of the end of the 2022 third quarter.
“In mid-October, we announced that we signed an agreement to acquire the City Express brand portfolio, marking our entry into the affordable midscale segment,” said Capuano. “We see meaningful opportunities to further expand the brand in the CALA region and globally, as we have successfully done with other brand acquisitions. Upon closing, we look forward to offering our guests more stay options and our owners and franchisees new opportunities to grow their portfolios.”
He added, “Our award-winning loyalty program, Marriott Bonvoy, hit 173 million members at the end of September. During the quarter, Bonvoy member penetration achieved record highs, reaching 60% in the U.S. & Canada and 53% globally. Co-brand cardholder acquisitions and total card spending worldwide have continued to grow meaningfully, increasing our third-quarter co-brand card fees more than 20% compared to the year-ago quarter.”
Q3 results
Marriott’s reported operating income totaled $958 million in the 2022 third quarter, compared to the 2021 third-quarter reported operating income of $545 million. Reported net income totaled $630 million in the 2022 third quarter, compared to 2021 third-quarter reported net income of $220 million. Reported diluted earnings per share (EPS) totaled $1.94 in the quarter, compared to reported diluted EPS of $0.67 in the year-ago quarter.
Adjusted operating income in the 2022 third quarter totaled $815 million, compared to 2021 third-quarter adjusted operating income of $527 million. Adjusted operating income in the 2021 third quarter excluded impairment charges of $11 million.
Third-quarter 2022 adjusted net income totaled $551 million, compared to 2021 third-quarter adjusted net income of $327 million. Adjusted diluted EPS in the 2022 third quarter totaled $1.69, compared to adjusted diluted EPS of $0.99 in the year-ago quarter. The 2022 third-quarter adjusted results excluded special tax items of $30 million (9 cents per share) and a $2 million (1 cents per share) gain on an investee’s property sale. The 2021 third-quarter adjusted results excluded a $122 million after-tax (37 cents per share) loss on the extinguishment of debt and $8 million after-tax (2 cents per share) of impairment charges.
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and restructuring, merger-related charges and other expenses.
Base management and franchise fees totaled $953 million in the 2022 third quarter, compared to base management and franchise fees of $723 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 2022 third quarter totaled $192 million, compared to $173 million in the year-ago quarter, largely driven by higher credit card branding fees.
Incentive management fees totaled $106 million in the 2022 third quarter, compared to $53 million in the 2021 third quarter. Roughly two-thirds of the incentive management fees recognized in the quarter were earned at hotels in international markets.
Owned, leased and other revenue, net of direct expenses, totaled $44 million in the 2022 third quarter, compared to $37 million in the year-ago quarter. The year-over-year increase in revenue net of expenses largely reflects the ongoing recovery in lodging demand, partially offset by $23 million of lower termination fees and a $19 million accrual related to a portfolio of 12 leased hotels in the U.S. & Canada.
Depreciation, amortization and other expenses for the 2022 third quarter totaled $50 million, compared to $64 million in the year-ago quarter. Expenses in the 2021 third quarter included an $11 million impairment charge.
General, administrative, and other expenses for the 2022 third quarter totaled $216 million, compared to $212 million in the year-ago quarter.
Interest expense, net, totaled $93 million in the third quarter compared to $99 million in the year-ago quarter. The decrease is largely due to lower interest expenses associated with lower debt balances.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $985 million in the 2022 third quarter, compared to the third-quarter 2021 adjusted EBITDA of $683 million.
Selected performance information
The company added 77 properties (14,071 rooms) to its worldwide lodging portfolio during the quarter, including nearly 3,900 rooms converted from competitor brands and approximately 8,700 rooms in international markets. Thirty-five properties (7,440 rooms) exited the system during the quarter, including roughly 5,200 rooms in Russia. At quarter’s end, Marriott’s global lodging system totaled nearly 8,200 properties, with more than 1.5 million rooms.
At quarter’s end, the company’s worldwide development pipeline totaled 3,024 properties with more than 502,000 rooms, including 1,039 properties with approximately 204,800 rooms under construction, or 41% of the pipeline, and 233 properties with roughly 33,300 rooms approved for development, but not yet subject to signed contracts.
Balance sheet
At quarter’s end, Marriott’s net debt was $8.4 billion, representing total debt of $9.4 billion less cash and cash equivalents of $1.0 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
“While we are carefully monitoring macroeconomic trends, bookings across all our customer segments remain strong, contributing to the ongoing momentum in our business. We expect continued demand growth around the world in the fourth quarter and anticipate that global RevPAR could increase 2% to 4% compared to 2019,” Capuano said.
The company expects comparable systemwide constant dollar RevPAR to increase 2% to 4% in the fourth quarter vs. the same period last year (up 4% to 6% in the U.S. & Canada, but down 2% to flat for the rest of the world). For full-year 2022, it forecasts a drop of 5% to 3% globally vs. full-year 2021 (-2% to flat in the U.S. & Canada and -13% to -11% for the rest of the world).
Tags: Anthony Capuano, Marriott Bonvoy, Marriott International Inc, quarterly earnings, third-quarter results
