Yesterday, Marriott International reported the company’s fourth quarter 2018 results, including an increase in global RevPAR for the fourth quarter and full year (1.3 percent and 2.6 percent, respectively), with slower RevPAR growth in North America (0.2 percent and 1.5 percent, respectively). Comparatively, RevPAR outside North America grew 4 percent in the fourth quarter and 5.5 percent for the full year 2018.
“North American RevPAR growth in the quarter was impacted by labor strikes in eight North American markets and weaker than expected transient demand for the industry,” explained Arne M. Sorenson, president and chief executive officer of Marriott International. “We expect North America RevPAR will increase 1 to 2 percent in the first quarter, reflecting the impact of the government shutdown offset by a favorable calendar comparison. Outside North America, RevPAR growth is expected to moderate slightly in the first quarter due to the slower economic growth outlook in the Asia Pacific region.”
Marriott’s full-year 2018 reported net income totaled $1,907 million, a 31 percent increase compared to the prior year results. Full-year 2018 adjusted net income totaled $2,201 million, a 38 percent increase over 2017.
“Our team delivered solid results in 2018 even as we worked to complete the integration of Starwood Hotels & Resorts,” Sorenson said. “Our rooms grew by nearly 5 percent, net; worldwide revenue per available room, or RevPAR, increased nearly 3 percent; general and administrative expenses rose only 1 percent; and adjusted earnings per share surged 48 percent. We ended the year with a record 1.3 million rooms operating under our 30 leading lodging brands. During the year, we reduced operating costs for owners, increased the value of our loyalty program for customers, and improved guest ‘intent to recommend’ scores.”
Last year, the company added more than 80,000 rooms, including over 9,900 rooms converted from competitor brands and nearly 36,400 rooms in international markets. In 2018, Marriott signed agreements for a record 125,000 rooms, increasing the company’s worldwide development pipeline to a record 478,000 rooms as of year-end, including nearly 23,000 rooms approved, but not yet subject to signed contracts.
“We continue to grow our market share of industry rooms. According to STR, our worldwide market share of rooms at year-end 2018 stood at 7 percent, while our share of rooms under construction totaled a leading 20 percent. We expect rooms growth will accelerate, as we signed contracts for a record 125,000 rooms in 2018 and our development pipeline increased to a record 478,000 rooms. Select-service signings were especially strong in North America, particularly for Residence Inn, Fairfield Inn & Suites, and Courtyard,” Sorenson said.
The company also reported in its fourth quarter earnings announcement that it incurred $28 million of expenses and recognized $25 million of insurance proceeds related to the data security incident it disclosed on November 30, 2018.
2019 RevPAR Outlook
For the 2019 first quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent in North America, 2 to 4 percent outside North America, and 1 to 3 percent worldwide. For the full year 2019, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 3 percent in North America, 2 to 4 percent outside North America, and 1 to 3 percent worldwide.
“For the full year 2019, we expect North America and worldwide RevPAR growth of 1 to 3 percent and rooms growth of roughly 5.5 percent, net. This should yield an increase in total fee revenue of 5 to 7 percent, despite foreign exchange headwinds. It should also enable us to return at least $3 billion to shareholders in share repurchases and dividends in 2019, even assuming no asset sales for the year,” Sorenson said. The 5.5 percent anticipated net room additions for full-year 2019 assumes deletions of 1 to 1.5 percent.
Read the full earnings announcement here.