Marriott International Reports First Quarter 2023 Results and Raises Full Year Outlook

Marriott International, Inc. today reported first quarter 2023 results

  • First quarter 2023 comparable systemwide constant dollar RevPAR increased 34.3 percent worldwide, 25.6 percent in the U.S. & Canada, and 63.1 percent in international markets, compared to the 2022 first quarter;
  • First quarter reported diluted EPS totaled $2.43, compared to reported diluted EPS of $1.14 in the year-ago quarter. First quarter adjusted diluted EPS totaled $2.09, compared to first quarter 2022 adjusted diluted EPS of $1.25;
  • First quarter reported net income totaled $757 million, compared to reported net income of $377 million in the year-ago quarter. First quarter adjusted net income totaled $648 million, compared to first quarter 2022 adjusted net income of $413 million;
  • Adjusted EBITDA totaled $1,098 million in the 2023 first quarter, compared to first quarter 2022 adjusted EBITDA of $759 million;
  • The company added approximately 11,000 rooms globally during the first quarter, including roughly 5,800 rooms in international markets and more than 2,700 conversion rooms;
  • At the end of the quarter, Marriott’s worldwide development pipeline totaled more than 3,050 properties and approximately 502,000 rooms, including more than 21,000 rooms approved, but not yet subject to signed contracts. Roughly 200,000 rooms in the pipeline were under construction as of the end of the first quarter;
  • Marriott repurchased 6.8 million shares of common stock for $1.1 billion during the first quarter. Year to date through April 28, the company has returned $1.5 billion to shareholders through dividends and share repurchases.

Marriott International, Inc. (NASDAQ: MAR) today reported first quarter 2023 results.

Anthony Capuano, President and Chief Executive Officer, said, “We are off to a great start in 2023. First quarter worldwide RevPAR[1] grew 34 percent year over year, with meaningful gains in both occupancy and average daily rate. International markets were particularly robust, with RevPAR growth of 63 percent. The lifting of travel restrictions throughout Asia Pacific, particularly in Greater China, significantly boosted first quarter demand in the region.

“In the U.S. & Canada, we saw solid demand across the leisure and group segments in the quarter, while business transient demand continued to improve. ADR in the region rose 10 percent year over year, aided by higher special corporate negotiated rates and 15 percent growth in group ADR.

“Our industry-leading pipeline grew to approximately 502,000 rooms, up 2.6 percent from the year-ago quarter end. Conversion activity remained healthy, accounting for 29 percent of rooms signed and 25 percent of rooms opened in the quarter. We still expect net rooms growth of 4 to 4.5 percent for full year 2023.

“We were thrilled to welcome City Express to our lineup as our 31st brand yesterday, further broadening our brand portfolio into the midscale space. With roughly 17,000 rooms joining our system, we are now the largest hotel company in the Caribbean & Latin America region. Demand for the mid-scale segment is growing rapidly, and we see meaningful opportunity to both expand the brand further in CALA and introduce it in other regions.

“While the global economic picture is uncertain, demand remains strong, and we are not seeing signs of a slowdown. With the faster than expected recovery in international markets and continued solid booking trends globally to date in the second quarter, we are raising our RevPAR guidance for the full year. We believe our broad portfolio of brands, award-winning Marriott Bonvoy loyalty program, dedicated associates, and efficient asset-light business model position us very well for future growth.”

First Quarter 2023 Results
Marriott’s reported operating income totaled $951 million in the 2023 first quarter, compared to 2022 first quarter reported operating income of $558 million. Reported net income totaled $757 million in the 2023 first quarter, compared to 2022 first quarter reported net income of $377 million. Reported diluted earnings per share (EPS) totaled $2.43 in the quarter, compared to reported diluted EPS of $1.14 in the year-ago quarter.

Adjusted operating income in the 2023 first quarter totaled $941 million, compared to 2022 first quarter adjusted operating income of $605 million. First quarter 2023 adjusted net income totaled $648 million, compared to 2022 first quarter adjusted net income of $413 million. Adjusted diluted EPS in the 2023 first quarter totaled $2.09, compared to adjusted diluted EPS of $1.25 in the year-ago quarter. The 2023 first quarter adjusted results excluded a special tax item of $100 million ($0.32 per share). The 2022 first quarter adjusted results excluded $11 million after-tax ($0.03 per share) of impairment charges and a $6 million after-tax ($0.02 per share) gain on an investee’s property sale.

Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and merger-related charges and other expenses. See pages A-2 and A-8 for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.

Base management and franchise fees totaled $932 million in the 2023 first quarter, a 31 percent increase compared to base management and franchise fees of $713 million in the year-ago quarter. The increase is primarily attributable to RevPAR increases and unit growth. Other non-RevPAR related franchise fees in the 2023 first quarter totaled $197 million, a 16 percent increase compared to $170 million in the year-ago quarter, largely driven by higher co-branded credit card and residential branding fees.

Incentive management fees totaled $201 million in the 2023 first quarter, a 97 percent increase compared to $102 million in the 2022 first quarter. Managed hotels in international markets contributed 57 percent of the fees earned in the quarter.

Owned, leased, and other revenue, net of direct expenses, totaled $75 million in the 2023 first quarter, compared to $65 million in the year-ago quarter. The year-over-year change largely reflects improved performance at owned and leased hotels, partially offset by the $33 million of government subsidies received in the year ago quarter.

General, administrative, and other expenses for the 2023 first quarter totaled $202 million, a 3 percent decrease compared to $208 million in the year-ago quarter.

Interest expense, net, totaled $111 million in the 2023 first quarter, compared to $88 million in the year-ago quarter. The increase was largely due to higher interest expense associated with higher debt balances.

In the 2023 first quarter, the provision for income taxes totaled $87 million, a 10 percent effective rate, compared to $99 million, a 21 percent effective rate, in the year ago quarter. The 2023 first quarter provision included a $103 million benefit primarily from the release of reserves due to the completion of a prior year tax audit.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $1,098 million in the 2023 first quarter, compared to first quarter 2022 adjusted EBITDA of $759 million. See page A-8 for the adjusted EBITDA calculation.

Selected Performance Information
The company added 79 properties (11,015 rooms) to its worldwide lodging portfolio during the 2023 first quarter, including more than 2,700 rooms converted from competitor brands and roughly 5,800 rooms in international markets. Fourteen properties (2,351 rooms) exited the system during the quarter. At the end of the quarter, Marriott’s global lodging system totaled nearly 8,400 properties, with over 1,534,000 rooms.

At the end of the quarter, the company’s worldwide development pipeline totaled 3,060 properties with approximately 502,000 rooms, including 1,018 properties with roughly 200,000 rooms under construction, or 40 percent of the pipeline, and 127 properties with more than 21,000 rooms approved for development, but not yet subject to signed contracts.

In the 2023 first quarter, worldwide RevPAR increased 34.3 percent (a 32.6 percent increase using actual dollars) compared to the 2022 first quarter. RevPAR in the U.S. & Canada increased 25.6 percent (a 25.4 percent increase using actual dollars), and RevPAR in international markets increased 63.1 percent (a 55.1 percent increase using actual dollars).

Balance Sheet & Common Stock
At the end of the quarter, Marriott’s total debt was $10.7 billion and cash and equivalents totaled $0.6 billion, compared to $10.1 billion in debt and $0.5 billion of cash and equivalents at year-end 2022.

In the first quarter, the company issued $800 million of Series KK Senior Notes due in 2029 with a 4.9 percent interest rate coupon.

Year to date through April 28, the company has repurchased 8.2 million shares for $1.4 billion.

Company Outlook
The company is raising its guidance for full year 2023. One month into the second quarter, global booking trends remain robust.

Given short-term booking windows and a high level of macroeconomic uncertainty, there is less visibility in forecasting the company’s financial performance for the second half of 2023.

[1] See pages A-9 and A-10 for the adjusted EBITDA calculations.

[2] Adjusted EBITDA and Adjusted EPS – diluted for second quarter and full year 2023 do not include cost reimbursement revenue, reimbursed expenses, merger-related charges and other expenses, special tax items, or any asset sales that may occur during the year, each of which the company cannot forecast with sufficient accuracy and without unreasonable efforts, and which may be significant. Adjusted EPS – diluted for full year 2023 excludes a special tax item of $100 million reported in the first quarter of 2023. See page A-2 for the Adjusted EPS – diluted calculation for the first quarter of 2023.

[3] Assumes the level of capital return to shareholders noted above.

[4] Investment spending includes capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities.

[5] Assumes the level of investment spending noted above and that no asset sales occur during the remainder of the year.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Tuesday, May 2, 2023, at 8:30 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott’s investor relations website at http://www.marriott.com/investor, click on “Events & Presentations” and click on the quarterly conference call link. A replay will be available at that same website until May 1, 2024.

The telephone dial-in number for the conference call is US Toll Free: 800-267-6316, or Global: +1 203-518-9783. The conference ID is MAR1Q23. A telephone replay of the conference call will be available from 1:00 p.m. ET, Tuesday, May 2, 2023, until 8:00 p.m. ET, Tuesday, May 9, 2023. To access the replay, call US Toll Free: 800-756-0554 or Global: +1 402-220-7213.

[1] All occupancy, Average Daily Rate (ADR) and RevPAR statistics and estimates are systemwide constant dollar. Unless otherwise stated, all changes refer to year-over-year changes for the comparable period. Occupancy, ADR and RevPAR comparisons between 2023 and 2022 reflect properties that are comparable in both years.

Note on forward-looking statements
All statements in this press release and the accompanying schedules are made as of May 2, 2023. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. This press release and the accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements related to our RevPAR, rooms growth and other financial metric estimates, outlook and assumptions; our growth prospects; the effect of changes in global economic conditions; travel and lodging demand trends and expectations; booking, occupancy, ADR and RevPAR trends and expectations; our development pipeline, deletions, and growth expectations; our expectations regarding opportunities to expand the City Express brand portfolio; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risk factors that we identify in our Securities and Exchange Commission filings, including our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release.

Marriott International, Inc. (NASDAQ: MAR) is based in Bethesda, Maryland, USA, and as of March 31, 2023 encompassed a portfolio of nearly 8,400 properties under 30 leading brands spanning 138 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world. The company offers Marriott Bonvoy®, its highly-awarded travel program. For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com. In addition, connect with us on Facebook and @MarriottIntl on Twitter and Instagram.

Marriott encourages investors, the media, and others interested in the company to review and subscribe to the information Marriott posts on its investor relations website at www.marriott.com/investor or Marriott's news center website at www.marriottnewscenter.com, which may be material. The contents of these websites are not incorporated by reference into this press release or any report or document Marriott files with the SEC, and any references to the websites are intended to be inactive textual references only.

Media Contacts
Melissa Froehlich Flood Corporate Relations
Marriott International
+1 (301) 380-4839
newsroom@marriott.com

Jackie Burka McConagha
Investor Relations
Marriott International
+1 (301) 380-5126
jackie.mcconagha@marriott.com

Betsy Dahm
Investor Relations
Marriott International
+1 (301) 380-3372
betsy.dahm@marriott.com

Download MAR Q1 2023 Press Release Schedules or visit http://Marriott.com/Investor.

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