Marriott beats on earnings, but weak guidance holds share price back
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Marriott beats on earnings, but weak guidance holds share price back

Marriott International, the world’s largest luxury hotelier, reported earnings last week that exceeded analysts’ predictions. That was a nice surprise for investors, but less-welcome was an underwhelming guidance for the coming year and second-quarter. Despite this mixed release, Marriott’s underlying business remains strong, showing consistent growth – and it’s worth remembering that the company has managed to beat on the bottom line in every quarter since 2014. That’s quite the track-record.

Marriott’s share price has increased by 23% so far this year

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Source: Yahoo Finance

Marriott’s top-line figure logged a slight miss against consensus estimates. The company reported revenues of $5.01 billion for the three-month period against analysts’ expectations for revenues of $5.16 billion. However, it fared better on the bottom-line, reporting earnings of $1.41 per share against the Street’s predictions for a figure of $1.34. That’s a year on year increase of 7%. Meanwhile, the company’s revenue per available room (RevPAR – a crucial figure in the hospitality industry) rose by 1.1% worldwide against the same quarter in the previous year.

On the company’s earnings call, President and CEO Arne M. Sorenson took the time to reassure listeners that his recent diagnosis with pancreatic cancer was a manageable problem, saying: “the medical team at Johns Hopkins has seen this many times before. They believe we have caught it early, that it is operable and that the course of treatment is proven […] with the support of an extraordinary strong team of Marriott executives, we are going to soldier on.”

Sorenson also singled out Marriott’s joint venture with Alibaba, the Marriott Bonvoy brand, for praise, adding: I visited several markets in China in late March. The big news there is Marriott Bonvoy and Alibaba. Less than two years ago, we formed a new joint venture with Alibaba to improve service and sales for Chinese guests. In the first quarter of 2019, property revenue from our newly designed Alibaba channel more than tripled year-over-year, while the level of Marriott Bonvoy enrolments in China doubled over the prior year quarter. We are excited to welcome these new members to our hotels around the world.”

Disclosure

Dominion holds Marriott International in its Global Trends Luxury Fund.


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