Marriott Enjoys Q3 Profit Boost from Higher Rates and Group Travel Demand


Key Takeaways

  • Marriott International reports increased third-quarter profits.
  • Higher room rates and group travel resurgence contribute to positive figures.
  • The hotel giant revises full-year earnings forecast due to anticipated higher expenses.

Bethesda, MD–Marriott International, a leading hotel operator, has seen a profit rise in the third quarter thanks to higher room rates and a rebound in group travel.

However, the company predicts that elevated expenses and a potential dip in fee revenue might dampen full-year earnings.

Travel Recovery and Cost Pressures

The travel sector’s rebound has favored Marriott recently, with a significant recovery in international travel.

Despite this, the fourth quarter faces challenges from increased expenses, mainly due to heightened staffing needs and a slump in non-room revenues.

CFO’s Market Insight

According to a Yahoo! Finance report, Kathleen Oberg, Marriott’s CFO, remains optimistic, citing strong consumer resilience and steady bookings worldwide despite geopolitical and economic uncertainties.

Revenue and Expense Metrics

The release noted that Marriott’s revenue per available room surged 8.8% year-over-year. Administrative costs also rose, reflecting higher staffing levels.

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Forecast Adjustments

The hotel conglomerate, home to brands like Sheraton and Westin, has raised its room revenue growth outlook for 2023 and adjusted its full-year earnings per share forecast slightly downward.

Financial Performance

Per the release, Marriott’s net income for the quarter reached $752 million, with revenue surpassing analysts’ expectations at $5.93 billion.

Stock Market Response

The release noted that in early trading, Marriott’s stock saw a 2.4% decrease, with the company also revising its net rooms growth forecast downwards.

Industry Comparison

Competitor Hilton Worldwide Holdings recently exceeded third-quarter revenue estimates and increased its annual forecast, highlighting the competitive landscape.

What We Think

Marriott’s third-quarter growth, powered by strategic room pricing and a surge in group travel, signals a strong recovery trajectory in the hospitality sector.

While the company navigates through rising costs and uncertain economic conditions, its ability to adjust forecasts and maintain robust bookings illustrates resilience and adaptability.

This bodes well for maintaining its market leadership, provided it continues to balance customer demand with operational efficiency.

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