Marriott International Cuts Profit Forecast

By Aishwarya Jain and Doyinsola Oladipo

(Reuters) – Marriott International has revised down its annual profit forecast on Monday, citing weak domestic travel in China which overshadowed strong group and international demand. This announcement led to a 3.4% drop in its shares during early trading.

Hotel operators have reported lackluster demand in China, the world's second-largest economy, as the government attempts to enhance consumer sentiment and faces limitations in pricing power.

Severe weather and affluent Chinese customers traveling abroad have also negatively impacted domestic performance, according to Marriott. The company anticipates negative revenue per available room (RevPAR) growth in China for both the fourth quarter and the entire year.

In the third quarter, system-wide RevPAR, a key indicator in the hospitality sector, decreased by 7.9% in Greater China.

Marriott now predicts its adjusted profit for the year will fall between $9.19 and $9.27 per share, down from its prior estimate of $9.23 to $9.40.

Despite challenges, global leisure room revenue remained stable year-over-year, bolstered by high-end travelers across various regions, including the U.S.

CEO Anthony Capuano noted, “Group remained the standout customer segment, with global group RevPAR increasing by 10% this quarter and anticipated to rise by 8% for the entirety of 2024.”

The Ritz-Carlton operator is forecasting a 2% to 3% growth in room revenue for the fourth quarter and has maintained its 2024 guidance of a 3% to 4% growth.

Analyst Joseph Greff of J.P. Morgan commented that decelerating RevPAR growth is gradually lowering EBITDA estimates, marking the second quarter of decreased EBITDA forecasts for 2024. The company is now expecting an adjusted EBITDA between $4.93 billion and $4.96 billion.

Marriott reported an adjusted profit of $2.26 per share for the quarter ending September 30, surpassing analysts' average expectation of $2.31.

Total quarterly revenue reached $6.26 billion, slightly below analysts' estimates of $6.27 billion, following data compiled by LSEG.

The company forecasts a 6.5% increase in net room additions for 2024.