Marriott International Reports Outstanding Second Quarter 2022 Results and Resumes Share Repurchases
- Second quarter 2022 comparable systemwide constant dollar RevPAR increased 70.6 percent worldwide, 66.1 percent in the U.S. & Canada, and 87.8 percent in international markets, compared to the 2021 second quarter;
- Second quarter 2022 comparable systemwide constant dollar RevPAR declined 2.9 percent worldwide and 14.1 percent in international markets, while RevPAR increased 1.3 percent in the U.S. & Canada, compared to the 2019 second quarter;
- Second quarter reported diluted EPS totaled $2.06, compared to reported diluted EPS of $1.28 in the year-ago quarter. Second quarter adjusted diluted EPS totaled $1.80, compared to second quarter 2021 adjusted diluted EPS of $0.79;
- Second quarter reported net income totaled $678 million, compared to reported net income of $422 million in the year-ago quarter. Second quarter adjusted net income totaled $593 million, compared to second quarter 2021 adjusted net income of $260 million;
- Adjusted EBITDA totaled $1,019 million in the 2022 second quarter, compared to second quarter 2021 adjusted EBITDA of $558 million;
- The company added roughly 17,000 rooms globally during the second quarter, including approximately 9,200 rooms in international markets and nearly 4,400 conversion rooms;
- At quarter end, Marriott’s worldwide development pipeline totaled nearly 2,950 properties and more than 495,000 rooms, including roughly 27,400 rooms approved, but not yet subject to signed contracts. Approximately 203,300 rooms in the pipeline were under construction as of the end of the 2022 second quarter;
- Marriott resumed share repurchases in the second quarter, repurchasing 1.9 million shares of the company’s common stock for $300 million. Year-to-date through July 29, the company has repurchased 2.9 million shares for $448 million.
Marriott International, Inc. (NASDAQ: MAR) today reported second quarter 2022 results.
Anthony Capuano, Chief Executive Officer, said, “Marriott’s second quarter results highlight consumers’ love for travel. We reported outstanding results, as momentum in global lodging recovery continued. With demand increasing across all customer segments throughout the quarter, and nearly all countries easing travel restrictions, worldwide RevPAR1 surpassed 2019 levels in June. Second quarter average daily rate was robust, at 7 percent above 2019 levels, and worldwide occupancy reached 68 percent.
“In the U.S. & Canada, June RevPAR increased 3 percent compared to 2019. Among customer segments, group RevPAR saw the most meaningful acceleration in the second quarter, down just 1 percent to 2019 in June, compared to down nearly 30 percent in the first quarter. We have not seen signs of leisure travel abating, with leisure room nights in the region more than 15 percent higher than second quarter 2019, and ADR meaningfully outpacing pre-pandemic levels. Europe also experienced notably strong RevPAR recovery, in large part due to the return of international visitors, with June RevPAR exceeding 2019.
“Marriott Bonvoy hit 169 million members by quarter’s end. As our loyal guests get back on the road, penetration in the U.S. stood at 59 percent in the second quarter, topping 2019. Members are increasingly engaging with us during and outside of hotel stays. Second quarter co-brand credit card fees increased nearly 40 percent year over year, driven by continued strength in global cardholder acquisitions and cardholder spend, both of which achieved record levels in the quarter.
“On the development front, signing activity has accelerated in 2022, setting a second quarter record. We signed 23,000 rooms around the world in the second quarter, nearly 30 percent of which were conversions from competitor brands. Conversions continue to be a meaningful growth driver, comprising roughly 25 percent of room additions in the quarter.
“I am proud of the remarkable work our team has accomplished since the beginning of the pandemic. This has been the most challenging period in our company’s history, but the resiliency of our associates and our business model have never been more evident. With our robust cash flow and profits, we resumed share repurchases during the second quarter, in addition to paying a cash dividend. Looking ahead, we are optimistic about our financial outlook and strong cash generation and expect to return more than $2.2 billion to shareholders through dividends and share repurchases in 2022.”
Second Quarter 2022 Results
Marriott’s reported operating income totaled $950 million in the 2022 second quarter, compared to 2021 second quarter reported operating income of $486 million. Reported net income totaled $678 million in the 2022 second quarter, compared to 2021 second quarter reported net income of $422 million. Reported diluted earnings per share (EPS) totaled $2.06 in the quarter, compared to reported diluted EPS of $1.28 in the year-ago quarter.
Adjusted operating income in the 2022 second quarter totaled $857 million, compared to 2021 second quarter adjusted operating income of $406 million.
Second quarter 2022 adjusted net income totaled $593 million, compared to 2021 second quarter adjusted net income of $260 million. Adjusted diluted EPS in the 2022 second quarter totaled $1.80, compared to adjusted diluted EPS of $0.79 in the year-ago quarter. The 2022 second quarter adjusted results excluded $11 million after-tax ($0.03 per share) of gains on investees’ property sales and a $2 million after-tax ($0.01 per share) gain on an asset disposition. The 2021 second quarter adjusted results excluded special tax items of $98 million ($0.30 per share).
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and restructuring, merger-related charges, and other expenses. See pages A-3 and A-12 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 $938 million in the 2022 second quarter, compared to base management and franchise fees of $587 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to RevPAR increases due to the ongoing recovery in lodging demand, as well as unit growth. Other non-RevPAR related franchise fees in the 2022 second quarter totaled $204 million, compared to $160 million in the year-ago quarter, aided by $40 million of higher credit card branding fees.
Incentive management fees totaled $135 million in the 2022 second quarter, compared to $55 million in the 2021 second quarter. More than one half of the incentive management fees recognized in the quarter were earned at hotels in the U.S. & Canada.
Owned, leased, and other revenue, net of direct expenses, totaled $83 million in the 2022 second quarter, compared to $19 million in the year-ago quarter. The $64 million increase in revenue net of expenses year over year largely reflects the ongoing recovery in lodging demand.
General, administrative, and other expenses for the 2022 second quarter totaled $231 million, compared to $187 million in the year-ago quarter. The year-over-year increase primarily reflects higher incentive compensation.
Interest expense, net, totaled $89 million in the second quarter compared to $102 million in the year-ago quarter. The decrease is largely due to lower interest expense associated with lower debt balances.
Equity in earnings/losses for the second quarter totaled $15 million of earnings, compared to an $8 million loss in the year-ago quarter. The improvement largely reflects $13 million of gains on joint ventures’ sales of hotels and improved results at joint venture properties due to the ongoing recovery in lodging demand.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $1,019 million in the 2022 second quarter, compared to second quarter 2021 adjusted EBITDA of $558 million. See page A-12 for the adjusted EBITDA calculation.
Selected Performance Information
The company added 97 properties (16,917 rooms) to its worldwide lodging portfolio during the 2022 second quarter, including nearly 4,400 rooms converted from competitor brands and approximately 9,200 rooms in international markets. Twenty-five properties (3,661 rooms) exited the system during the quarter. At quarter end, Marriott’s global lodging system totaled more than 8,100 properties, with over 1,500,000 rooms.
At quarter end, the company’s worldwide development pipeline totaled 2,942 properties with more than 495,000 rooms, including 1,014 properties with approximately 203,300 rooms, or 41 percent of the pipeline, under construction and 197 properties with roughly 27,400 rooms approved for development, but not yet subject to signed contracts.
In the 2022 second quarter, worldwide RevPAR increased 70.6 percent (a 69.1 percent increase using actual dollars) compared to the 2021 second quarter. RevPAR in the U.S. & Canada increased 66.1 percent (a 66.0 percent increase using actual dollars), and RevPAR in international markets increased 87.8 percent (an 80.4 percent increase using actual dollars).
At quarter end, Marriott’s net debt was $8.3 billion, representing total debt of $8.8 billion less cash and cash equivalents of $0.5 billion. At year-end 2021, the company’s net debt was $8.7 billion, representing total debt of $10.1 billion less cash and cash equivalents of $1.4 billion.
Marriott Common Stock
The company repurchased 1.9 million shares of common stock in the 2022 second quarter for $300 million at an average price of $157.38 per share. Year-to-date through July 29, the company has repurchased 2.9 million shares for $448 million at an average price of $152.99 per share.
The increase in expected deletions compared to the company’s prior expectation is due to the company’s suspension of its operations in Russia.
Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Tuesday, August 2, 2022, 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 August 2, 2023.
The telephone dial-in number for the conference call is US Toll Free: 800-891-3968, or Global: +1 785-424-1675. The conference ID is MAR2Q22. A telephone replay of the conference call will be available from 1:00 p.m. ET, Tuesday, August 2, 2022, until 8:00 p.m. ET, Tuesday, August 9, 2022. To access the replay, call US Toll Free: 800-753-8831 or Global: +1 402-220-0687. All occupancy, Average Daily Rate (ADR) and RevPAR statistics and estimates are systemwide constant dollar and include hotels that have been temporarily closed due to COVID-19. Unless otherwise stated, all changes refer to year-over-year changes for the comparable period. Occupancy, ADR and RevPAR comparisons between 2022 and 2021 reflect properties that are comparable in both years. Occupancy, ADR and RevPAR comparisons between 2022 and 2019 reflect properties that are defined as comparable as of June 30, 2022, even if they were not open and operating for the full year 2019 or they did not meet all the other criteria for comparable in 2019. Unless otherwise stated, all comparison to pre-pandemic or 2019 are comparing to the same time period each year.
Note on forward-looking statements
All statements in this press release and the accompanying schedules are made as of August 2, 2022. 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 the possible effects on our business of the COVID-19 pandemic (COVID-19); our RevPAR, rooms growth and other financial metric estimates, outlook and assumptions; travel and lodging demand trends and expectations; occupancy, ADR and RevPAR recovery trends and expectations; future performance of the company’s hotels; our development pipeline, signings, rooms growth, deletions and conversions; our investment spending and capital return expectations; 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 encompasses a portfolio of more than 8,100 properties under 30 leading brands spanning 139 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. 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 News Center, 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.
Melissa Froehlich Flood
Jackie Burka McConagha
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