Marriott beats the street and makes a play for China
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Marriott beats the street and makes a play for China

Luxury hotel group Marriott beat analysts’ expectations when it released earnings for its second quarter. The company reported that RevPAR (revenue per room – a critical metric in the hospitality industry) increased 2.2% worldwide, and 0.9% in the U.S. (its domestic market). Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 8%, with earnings per share increasing 13%. These last two figures are adjusted to take Marriott’s acquisition of Starwood Hotels, and its disposal of its timeshare business, into account. On a reported basis, the company saw EBITDA increase by 69% against the year-ago quarter.

Marriott’s share price is up 24% so far this year

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SOURCE: Yahoo Finance

Despite this strong performance, Marriot’s shares fell 3% in after hours trading, as investors reacted to what they felt was overly cautious guidance for the company’s third quarter. Marriot said it expects earnings per share in the range of $0.96 and $0.99. Analysts are expecting $1.02.

Marriott’s president and chief executive officer, Arne M. Sorenson, said that the company wasn’t only (successfully) integrating Starwood into its portfolio, but pursuing new innovations too, and announced a new partnership for the group:

“Today, we announced a joint venture agreement with Alibaba, the largest ecommerce platform in the world with over 500 million active mobile users, to develop a travel storefront that leverages Alibaba’s digital travel platform, retail expertise, and digital payment platform, Alipay. We expect that this joint venture will increase Chinese travel to our hotels worldwide, grow membership of our loyalty programs and reduce our distribution costs.”

Speaking about the results more generally, he said the group delivered “solid performance” in the quarter, and that the Starwood integration is “on track.”

Disclosure

Dominion holds Marriott International, Inc. in its Global Trends Luxury Fund. 


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