Marriott cuts 2024 sales view on China drag, slower North American demand
Business
Marriott cuts 2024 sales view on China drag, slower North American demand
(Reuters) - Hotel operator Marriott International lowered its forecast for 2024 room revenue growth on Wednesday, citing a weaker operating environment in China and expectations of softer demand in North America.
Its shares were down 4% before the bell.
Marriott expects its revenue per available room (RevPAR), an important metric in the hospitality industry, to grow between 3% and 4% this year, lowering the top end of the range from 5%.
Hotels are not immune to the consumer slowdown in China, Bernstein analyst Richard Clarke wrote.
Companies across the globe have been lowering their full-year sales and profit expectations as global consumer sentiment was hurt by weakness in the Chinese economy amid a protracted property downturn.
Marriott's quarterly RevPAR fell 4.6% in China, compared to a rise of 12% in other parts of Asia.
Marriott's room development pipeline increased to 559,000 rooms by the end of June, from 547,000 in the prior quarter.
Greater China is a big driver of net unit growth, so the pace of development signings and starts is important to watch, said Michael Bellasario, analyst at Baird.
Meanwhile, domestic travel in the U.S. has been weak since the beginning of the year as more tourists are choosing to travel internationally to destinations in Asia, Latin America and Europe.
The group's international RevPAR rose 6.4% in the quarter, led by a 16.8% increase in the Middle East and Africa.
Incentive management fees came in at $195 million, compared to $193 million in the same period last year.
Excluding items, Marriott reported a quarterly profit of $2.50 per share, above Wall Street expectations of $2.47 per share, according to LSEG data.
Total revenue for the quarter through June 30 was $6.44 billion, up about 6% from a year earlier.
Dan Wasiolek, analyst at Morningstar, said the slowdown in China would likely have a similar impact on rival Hilton Worldwide, which is expected to report quarterly results next week.
