MARRIOTT International cut its annual profit forecast on Monday (Nov 4) as weak domestic travel in China overshadows strong group and international demand, sending its shares down 3.4 per cent in early trading.
Hotel operators have signalled weak demand in the world’s second-biggest economy nation during the reported quarter amid efforts by the government to boost consumer sentiment and restricted pricing power.
Severe weather and wealthier Chinese customers travelling abroad also weighed on domestic performance, Marriott said.
The company said it expects China to post negative revenue per available room (RevPAR), or room revenue, growth in the fourth quarter and for the full year.
System-wide RevPAR, an important metric in the hospitality industry, fell 7.9 per cent in Greater China in the third quarter.
Marriott forecast full-year adjusted profit to be between US$9.19 and US$9.27 per share, compared with the US$9.23 to US$9.40 it previously estimated.
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Global leisure room revenue remained flat year over year as higher-end travellers boosted results across regions including the US.
“Group remained the stand out customer segment, with global group RevPAR rising 10 per cent in the quarter and on pace to rise 8 per cent for full year 2024,” said CEO Anthony Capuano in a statement.
The Ritz-Carlton operator expects fourth-quarter room revenue growth of 2 per cent to 3 per cent and backed its 2024 guidance of 3 per cent to 4 per cent.
“Decelerating RevPAR growth is causing Ebitda estimates to slowly bleed lower,” said Joseph Greff, analyst at JPMorgan, noting 2024 Ebitda estimates have been lowered for a second quarter in a row.
The company expects full-year adjusted Ebitda between US$4.93 billion and US$4.96 billion.
Adjusted profit of US$2.26 per share for the quarter ended Sep 30 beat analysts’ average expectation of US$2.31.
Total quarterly revenue came in at US$6.26 billion, compared with analysts’ estimates of US$6.27 billion, according to data compiled by LSEG.
Marriott expects a 6.5 per cent increase in net rooms additions in 2024. REUTERS
