Marriott Says Travel Demand Is Resilient Amid Economic Jitters – WSJ

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“We are not seeing any signs of any demand pullback at this point,” finance chief

Leeny Oberg

said Tuesday in an interview. “People want to get out there and travel.”

In the U.S., Americans are seeking out leisure travel after years of deferred trips, she said. Businesses, too, are setting up trips, either to create in-person connections among remote workforces or to re-establish and firm up client relationships.

The hotel company, with more than 8,100 properties globally, reported a roughly 70% jump in second-quarter revenue to $5.34 billion, topping the $4.92 billion expected by Wall Street. It is the latest sign of Americans shifting their spending from goods toward travel and services, and follows similarly positive readouts from airlines and other hotel chains even amid concerns about inflation and other macroeconomic factors.

The company said that global occupancy came in at nearly 68%, just 7 percentage points below prepandemic levels.

Marriott


MAR -0.24%

continued to raise prices, too, with global average daily room rates for the quarter coming in more than 7% above 2019 levels.

Travel to major cities, which lagged behind the recovery in resort destinations earlier this year, is beginning to bounce back. The company’s hotels in Washington, D.C., San Francisco, Los Angeles and New York City all saw occupancy in the quarter come in between 76% and 86%, Chief Executive Tony Capuano said on the company’s earnings call.

Shares of Marriott, which also issued guidance for the year that surpassed Wall Street expectations, rose about 1% in morning trading to $161.30 a share.

Demand for Marriott’s hotel rooms rose across all of its customer segments as nearly all countries eased travel restrictions in the quarter, Mr. Capuano said.

Worldwide revenue per available room, a closely watched industry metric known as RevPAR, surpassed 2019 levels in June, Mr. Capuano said. RevPAR in the U.S. and Canada had already passed prepandemic levels in April, but the global figure was dragged down by the sluggish recovery in parts of Europe and Asia. In June, European RevPAR exceeded 2019 levels, largely due to the return of international travelers, Mr. Capuano said.

In the U.S. & Canada, group travel, which has been slower to return than leisure travel, came in just 1% lower than 2019 levels for June, he said. In the first quarter of the year, group travel in the region was nearly 30% lower than before the pandemic, he said.

Mr. Capuano said some areas haven’t bounced back entirely. Cross-border travel, for example, has yet to return to prepandemic levels. The U.S. only ended its requirement that inbound international travels produce a negative Covid-19 test at the end of the quarter. “We think that’s going to be another accelerant for cross-border travel,” he said.

It’s looking like a chaotic and expensive travel season. WSJ travel columnist Dawn Gilbertson shares advice on how to save time at airport security, rebook flights faster and find the best prices for airfares and gas. Illustration: Adele Morgan

Large companies are still holding back on business trips, he said, as opposed to small- and medium-size businesses, which are mostly traveling at levels they did before the pandemic.

Overall for the three months ended June 30, the company posted net income of $678 million, or $2.06 a share, compared with $422 million, or $1.28 a share, a year earlier. Stripping out one-time charges, adjusted earnings were $1.80 a share. Analysts surveyed by FactSet were expecting adjusted earnings of $1.57 a share.

The company also said it expects full-year adjusted earnings of $6.33 a share to $6.59 a share, better than the $6.01 a share that analysts surveyed by FactSet had been expecting. Worldwide RevPAR for the year is expected to be between 6% and 3% lower than in 2019.

The company said it also resumed share buybacks in the recently ended quarter, repurchasing 1.9 million shares for $300 million.

Write to Will Feuer at [email protected]

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