Marriott International Reports Q2 2022 Results

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Marriott International, Inc. reported Q2 2022 results. Highlights include:

  • Q2 2022 comparable systemwide constant dollar RevPAR increased 70.6 percent worldwide, 66.1 percent in the United States Canada, and 87.8 percent in international markets, compared to Q2 2021;
  • Q2 2022 comparable systemwide constant dollar RevPAR declined 2.9 percent worldwide and 14.1 percent in international markets, while RevPAR increased 1.3 percent in the United States and Canada compared to Q2 2019;
  • Q2 2022 reported diluted EPS totaled $2.06 compared to reported diluted EPS of $1.28 in Q2 2021. Q2 2022 adjusted diluted EPS totaled $1.80 compared to Q2 2021 adjusted diluted EPS of $0.79;
  • Q2 2022 reported net income totaled $678 million compared to reported net income of $422 million in Q2 2021. Q2 2022 adjusted net income totaled $593 million compared to second quarter 2021 adjusted net income of $260 million;
  • Adjusted EBITDA totaled $1,019 million in Q2 2022 compared to Q2 2021 adjusted EBITDA of $558 million;
  • The company added roughly 17,000 rooms globally during Q2 2022, including approximately 9,200 rooms in international markets and nearly 4,400 conversion rooms;
  • At quarter 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 resumed share repurchases in Q2 2022, repurchasing 1.9 million shares of the company’s common stock for $300 million. Year-to-date through July 29, the company has repurchased 2.9 million shares for $448 million.

Anthony Capuano, CEO, said, “Marriott’s second-quarter results highlight consumers’ love for travel. 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 RevPAR1 surpassed 2019 levels in June. Second quarter average daily rate was robust, at 7 percent above 2019 levels, and worldwide occupancy reached 68 percent.

“In the United States and Canada, June RevPAR increased 3 percent compared to 2019. Among customer segments, group RevPAR saw the most meaningful acceleration in the second quarter, down just 1 percent to 2019 in June, compared to down nearly 30 percent in the first quarter. We have not seen signs of leisure travel abating, with leisure room nights in the region more than 15 percent 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.

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“Marriott Bonvoy hit 169 million members by quarter’s end. As our loyal guests get back on the road, penetration in the United States stood at 59 percent 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 percent year over year, driven by continued strength in global cardholder acquisitions and cardholder spend, both of which achieved record levels in the quarter.

“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 percent of which were conversions from competitor brands. Conversions continue to be a meaningful growth driver, comprising roughly 25 percent of room additions in the quarter.

“I am proud of the remarkable work our team has accomplished since the beginning of the pandemic. This has been the most challenging period in our company’s history, but the resiliency of our associates and our business model have never been more evident. With our robust cash flow and profits, we resumed share repurchases during the second quarter, in addition to paying a cash dividend. Looking ahead, we are optimistic about our financial outlook and strong cash generation and expect to return more than $2.2 billion to shareholders through dividends and share repurchases in 2022.”

Second Quarter 2022 Results

Marriott’s reported operating income totaled $950 million in Q2 2022 compared to Q2 2021 reported operating income of $486 million. Reported net income totaled $678 million in Q2 2022 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 Q2 2021.

Adjusted operating income in Q2 2022 totaled $857 million, compared to Q2 2021 adjusted operating income of $406 million.

Q2 2022 adjusted net income totaled $593 million compared to Q2 2021 adjusted net income of $260 million. Adjusted diluted EPS in Q2 2022 totaled $1.80 compared to adjusted diluted EPS of $0.79 in Q2 2021. The Q2 2022 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 Q2 2021 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 Q2 2022 compared to base management and franchise fees of $587 million in Q2 2021. 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 Q2 2022 totaled $204 million compared to $160 million in Q2 2021, aided by $40 million of higher credit card branding fees.

Incentive management fees totaled $135 million in Q2 2022, compared to $55 million in Q2 2021. More than one-half of the incentive management fees recognized in the quarter were earned at hotels in the United States and Canada.

Owned, leased, and other revenue, net of direct expenses, totaled $83 million in Q2 2022, compared to $19 million in Q1 2021. 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 Q2 2022 totaled $231 million compared to $187 million in Q2 2021. The year-over-year increase primarily reflects higher incentive compensation.

Interest expense, net, totaled $89 million in Q2 2022 compared to $102 million in Q2 2021. The decrease is largely due to lower interest expenses associated with lower debt balances.

Equity in earnings/losses for the Q2 2022 totaled $15 million earnings compared to an $8 million loss in Q2 2021. 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 Q2 2022, compared to Q2 2021 adjusted EBITDA of $558 million.

Selected Performance Information

The company added 97 properties (16,917 rooms) to its worldwide lodging portfolio during the Q2 2022, including nearly 4,400 rooms converted from competitor brands and approximately 9,200 rooms in international markets. 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 over 1,500,000 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 percent of the pipeline, under construction, and 197 properties with roughly 27,400 rooms approved for development, but not yet subject to signed contracts.

In Q2 2022, worldwide RevPAR increased 70.6 percent (a 69.1 percent increase using actual dollars) compared to the 2021 second quarter. RevPAR in the United States and Canada increased 66.1 percent (a 66.0 percent increase using actual dollars), and RevPAR in international markets increased 87.8 percent (an 80.4 percent increase using actual dollars).

Balance Sheet

At quarter end, Marriott’s net debt was $8.3 billion, representing the 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 the total debt of $10.1 billion less cash and cash equivalents of $1.4 billion.

Marriott Common Stock

The company repurchased 1.9 million shares of common stock in Q2 2022 for $300 million at an average price of $157.38 per share. Year-to-date through July 29, the company has repurchased 2.9 million shares for $448 million at an average price of $152.99 per share.

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