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Marriott (MAR) Q3 Earnings Miss Estimates, Revenues Beat

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Marriott International, Inc. (MAR - Free Report) reported mixed third-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Notably, the top line surpassed the consensus estimate after lagging the same in the preceding six quarters. Following the quarterly results, shares of the company declined 1.7% in the after-hour trading session on Nov 4.

Adjusted earnings of $1.47 per share lagged the Zacks Consensus Estimate of $1.49 and decreased 13.5% year over year. The company’s earnings in the year-ago quarter included a gain of 26 cents from an asset sale.

Total revenues of $5,284 million surpassed the consensus mark of $5,157 million. The top line also increased 4.7% on a year-over-year basis.

At the end of the third quarter, Marriott's development pipeline totaled roughly 2,950 hotels, with approximately 495,000 rooms. Also, nearly 214,000 pipeline rooms were under construction. It exited 11 properties at the end of the reported quarter.

RevPAR & Margins

In the quarter under review, revenue per available room (RevPAR) for worldwide comparable system-wide properties increased 1.5% in constant dollars (up 0.9% in actual dollars), driven by a 0.7% improvement in average daily rate (ADR) and 0.6% increase in occupancy.

Comparable system-wide RevPAR in North America grew 1.3% in constant dollars (up 1.3% in actual dollars) owing to a 1% gain in ADR and 0.3% increase in occupancy.

On a constant-dollar basis, international comparable system-wide RevPAR rose 1.9% (down 0.2% in actual dollars), owing to a 1.5% rise in occupancy. The metric was partially offset by a 0.2% decline in ADR.

Meanwhile, worldwide comparable company-operated house profit margins decreased 30 basis points (bps) as robust cost control and synergies from the Starwood acquisition were offset by marginal growth in RevPAR and increase in wages.

North American comparable company-operated house profit margins contracted 70 bps. On the flip side, house profit margins for international comparable company-operated house profit margins increased 10 bps.
Total expenses increased 5% year over year to $4,677 million, mainly due to a rise in owned, leased and other expenses.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) summed $901 million, flat with the year-ago figure.

Marriott International Price, Consensus and EPS Surprise

 

Marriott International Price, Consensus and EPS Surprise

Marriott International price-consensus-eps-surprise-chart | Marriott International Quote

Fourth-Quarter 2019 View

For fourth-quarter 2019, the company expects comparable system-wide RevPAR to increase in the range of flat to up 1% in North America (in constant currency). Marriott anticipates the same to rise 1% outside North America and approximately 1% worldwide.

Furthermore, gross fee revenues are projected between $960 million and $970 million, pointing to 5-7% improvement on a year-over-year basis. Operating income is anticipated between $715 million and $730 million.

General, administrative and other expenses are expected within $250-$255 million. Adjusted EBITDA is anticipated in the range of $898-$913 million, indicating 4-6% year-over-year improvement. Earnings per share are envisioned in the $1.44-$1.47 band. Notably, the Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.56 per share.

2019 Guidance

For 2019, Marriott — currently carrying a Zacks Rank #3 (Hold) — anticipates earnings within $5.87-$5.9 per share compared with $5.97-$6.06 projected earlier. anticipates earnings within $5.87-$5.9 per share compared with $5.97-$6.06 projected earlier. The Zacks Consensus Estimate for full-year earnings is pegged at $6.01 per share. Gross fee revenues are expected between $3,809 million and $3,819 million, suggesting 5% growth from the year-ago period. You can see the complete list of today’s Zacks #1 Rank stocks here.

Comparable system-wide RevPAR is expected to increase approximately 1% in North America, 2% outside North America and 1% worldwide. Marriot now expects room additions to be nearly 5-5.25% in 2019.

Operating income is envisioned within $2,890-$2,905 million compared with 2,910-$2,950 million estimated earlier. General, administrative and other expenses are anticipated in the range of $921-$926 million. Adjusted EBITDA is projected in the band of $3,572-$3,587 million, implying 3% growth from 2018.

Peer Releases

Hilton Worldwide Holdings Inc. (HLT - Free Report) reported third-quarter 2019 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate. Hilton’s adjusted earnings of $1.05 per share surpassed the consensus estimate of $1.02 and improved 13% on a year-over-year basis. Revenues totaled $2,395 million, which surpassed the consensus mark of $2,377 million. Moreover, the reported figure improved 6.3% from the year-ago quarter on higher comparable RevPAR.

Marriott Vacations Worldwide Corporation (VAC - Free Report) reported mixed results in third-quarter 2019, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Adjusted earnings of $1.97 per share missed the consensus estimate of $2.04 by 3.4% but increased 38.7% year over year. Quarterly revenues were $1,139 million, which beat the consensus estimate of $1,127 million by 1.1% and increased 51.9% from the year-ago quarter.

Hyatt Hotels Corporation (H - Free Report) reported better-than-expected third-quarter 2019 results. The company’s bottom line has surpassed the Zacks Consensus Estimate for the 15th straight quarter, while the top line has outpaced the same for the third consecutive quarter. Adjusted earnings came in at 37 cents per share, which outpaced the Zacks Consensus Estimate of 26 cents. Total revenues were $1,215 million, which beat the consensus estimate of $1,178 million and improved 13.1% from the prior-year figure.

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