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Marriott (MAR) Beats on Earnings in Q3, Issues Guidance
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Shares of Marriott International Inc. (MAR - Free Report) declined nearly 3% in afterhours trading on Nov 7 after the company posted mixed third-quarter 2016 results. Though earnings surpassed the Zacks Consensus Estimate, revenues failed to beat the same.
Meanwhile, we note that on Sep 23, 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide Inc., which led to the creation of the world's largest hotel company.
Earnings and Revenue Discussion
Adjusted earnings per share of 91 cents per share beat the Zacks Consensus Estimate of 90 cents by 1.1% and rose 16.7% year over year on the back of higher revenues.
Total revenue increased 10.2% year over year to $3.94 billion given higher base management, franchise and incentive management fees as well as an increase in owned, leased and other revenues. Revenues include $168 million related to the eight days of Starwood’s results in the quarter.
However, revenues lagged the Zacks Consensus Estimate of $3.96 billion by 0.6%.
RevPAR & Margins
Increase in demand and occupancy rate led to RevPAR growth in the third quarter. RevPAR for worldwide comparable system-wide properties grew 2.2%, driven by a 1.4% rise in average daily rate (ADR) and 0.5% growth in occupancy.
Comparable system-wide RevPAR in North America grew 2.6%. Both ADR and occupancy rate increased 2.4% and 0.1%, respectively, on a year-over-year basis.
International comparable system-wide RevPAR inched up 1.1%. Though occupancy rate increased 1.6%, ADR witnessed a decline of 1.2%.
Adjusted EBITDA was $474 million, up 10% year over year, supported by revenue growth.
Total expenses increased 16.4% year over year to $3.77 billion mainly due to higher reimbursement costs, merger-related costs and charges as well as general, administrative and other costs.
Notably, Marriott's outlook is for the combined company and does not include merger-related costs.
For the fourth quarter, earnings per share are estimated between 80 cents and 85 cents. The Zacks Consensus Estimate of 87 cents is above the guided range.
Marriott expects comparable system-wide RevPAR to be flat to up 1% on a constant dollar basis in North America and worldwide. Outside North America, the company expects the same to be roughly flat.
Moreover, the company expects fee revenues between $695 million and $705 million while operating income is expected in the range of $530–$555 million. On the other hand, general, administrative and other expenses are expected between $235 million to $240 million.
2017 View
The company expects comparable system-wide RevPAR for the combined portfolio to be flat to up 2% in North America, outside North America and worldwide.
Marriott notes that its group booking pace at company-operated North American full-service hotels for 2017 is up 2% with about 70% expected group business volume booked thus far. Though special corporate rate negotiations are still underway, the company expects room rates for comparable customers to increase at a mid single-digit rate in most markets.
Also, the company anticipates worldwide net room additions of 6% in 2017.
Zacks Rank & Stocks to Consider
Marriott presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include China Lodging Group, Limited (HTHT - Free Report) , Peak Resorts, Inc. and Intrawest Resorts Holdings, Inc. (SNOW - Free Report) . While China Lodging and Peak Resorts sport a Zacks Rank #1 (Strong Buy), Intrawest Resorts carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
China Lodging’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 54.33%. Further, for 2016, EPS is expected to grow 65.7%.
The Zacks Consensus Estimate for Peak Resorts’ fiscal 2017 earnings climbed 27.8% over the last 60 days. Further, EPS is expected to grow a momentous 200%.
Intrawest Resorts’ trailing four-quarter average earnings surprise is a positive 2.20%. The Zacks Consensus Estimate for Intrawest Resorts’ fiscal 2017 earnings moved up substantially over the last 60 days.
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Marriott (MAR) Beats on Earnings in Q3, Issues Guidance
Shares of Marriott International Inc. (MAR - Free Report) declined nearly 3% in afterhours trading on Nov 7 after the company posted mixed third-quarter 2016 results. Though earnings surpassed the Zacks Consensus Estimate, revenues failed to beat the same.
Meanwhile, we note that on Sep 23, 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide Inc., which led to the creation of the world's largest hotel company.
Earnings and Revenue Discussion
Adjusted earnings per share of 91 cents per share beat the Zacks Consensus Estimate of 90 cents by 1.1% and rose 16.7% year over year on the back of higher revenues.
Total revenue increased 10.2% year over year to $3.94 billion given higher base management, franchise and incentive management fees as well as an increase in owned, leased and other revenues. Revenues include $168 million related to the eight days of Starwood’s results in the quarter.
However, revenues lagged the Zacks Consensus Estimate of $3.96 billion by 0.6%.
RevPAR & Margins
Increase in demand and occupancy rate led to RevPAR growth in the third quarter. RevPAR for worldwide comparable system-wide properties grew 2.2%, driven by a 1.4% rise in average daily rate (ADR) and 0.5% growth in occupancy.
Comparable system-wide RevPAR in North America grew 2.6%. Both ADR and occupancy rate increased 2.4% and 0.1%, respectively, on a year-over-year basis.
International comparable system-wide RevPAR inched up 1.1%. Though occupancy rate increased 1.6%, ADR witnessed a decline of 1.2%.
Adjusted EBITDA was $474 million, up 10% year over year, supported by revenue growth.
Total expenses increased 16.4% year over year to $3.77 billion mainly due to higher reimbursement costs, merger-related costs and charges as well as general, administrative and other costs.
MARRIOTT INTL-A Price, Consensus and EPS Surprise
MARRIOTT INTL-A Price, Consensus and EPS Surprise | MARRIOTT INTL-A Quote
Fourth-Quarter 2016 Outlook
Notably, Marriott's outlook is for the combined company and does not include merger-related costs.
For the fourth quarter, earnings per share are estimated between 80 cents and 85 cents. The Zacks Consensus Estimate of 87 cents is above the guided range.
Marriott expects comparable system-wide RevPAR to be flat to up 1% on a constant dollar basis in North America and worldwide. Outside North America, the company expects the same to be roughly flat.
Moreover, the company expects fee revenues between $695 million and $705 million while operating income is expected in the range of $530–$555 million. On the other hand, general, administrative and other expenses are expected between $235 million to $240 million.
2017 View
The company expects comparable system-wide RevPAR for the combined portfolio to be flat to up 2% in North America, outside North America and worldwide.
Marriott notes that its group booking pace at company-operated North American full-service hotels for 2017 is up 2% with about 70% expected group business volume booked thus far. Though special corporate rate negotiations are still underway, the company expects room rates for comparable customers to increase at a mid single-digit rate in most markets.
Also, the company anticipates worldwide net room additions of 6% in 2017.
Zacks Rank & Stocks to Consider
Marriott presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include China Lodging Group, Limited (HTHT - Free Report) , Peak Resorts, Inc. and Intrawest Resorts Holdings, Inc. (SNOW - Free Report) . While China Lodging and Peak Resorts sport a Zacks Rank #1 (Strong Buy), Intrawest Resorts carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
China Lodging’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 54.33%. Further, for 2016, EPS is expected to grow 65.7%.
The Zacks Consensus Estimate for Peak Resorts’ fiscal 2017 earnings climbed 27.8% over the last 60 days. Further, EPS is expected to grow a momentous 200%.
Intrawest Resorts’ trailing four-quarter average earnings surprise is a positive 2.20%. The Zacks Consensus Estimate for Intrawest Resorts’ fiscal 2017 earnings moved up substantially over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>