Marriott beats estimates as customers book longer stays

A Marriott flag hangs at the entrance of the New York Marriott Downtown Hotel in Manhattan, New York November 16, 2015. REUTERS/Andrew Kelly

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NEW YORK, Aug. 2 (Reuters) – Marriott International Inc (MAR.O) beat Wall Street estimates for quarterly revenue and profits on Tuesday, helped by higher occupancy and more expensive rates as travelers book more group tours and longer hotel stays.

Travelers, largely free from COVID-19-related restrictions, are spending heavily on hotels, airline tickets and rental cars. This trend has so far shown no sign of slowing down, although some are concerned about high inflation and the possibility of an economic slowdown.

“The shift in spending toward experiences rather than goods, sustained high employment levels, and the lifting of travel restrictions and opening of borders in most markets around the world are fueling travel,” Marriott chief executive officer Anthony Capuano told investors on a call.

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Average length of stay is up 25% compared to 2019, as is the average size of new bookings, according to Marriott’s Chief Financial Officer, Kathleen Oberg.

The company is seeing improvements in international travel, city and luxury bookings, but occupancy in these segments still lags behind vacation destinations.

“The sustained dollar/euro parity that could entice Americans to go abroad while deterring international travelers from coming to the US,” said Jan Freitag, CoStar Group’s national director of hospitality analytics, adding add that this could lead to some weakness in US high-end leisure locations, but could be a boom for cities like Venice or Berlin.

The company said international overnight stays in Europe more than doubled from the first to the second quarter.

Marriott said corporate room bookings in June were 9% down from the same month in 2019, compared to a roughly 20% decline in the first quarter.

“Downtown office occupancies continue to lag, and that ultimately puts a governor on the growth city hotels can expect as travelers can simply replace a Team or Zoom call instead,” said Jan Freitag, national director of hospitality analytics the CoStar group.

According to Marriott, booking trends suggest travelers are mixing leisure and business travel.

Revenue per available room (RevPAR) increased 70.6% globally, 66.1% in the US and Canada and 87.8% in international markets compared to the same period last year.

Marriott, which operates the Sheraton and Ritz-Carlton hotel chains, reported adjusted earnings of $1.80 per share, well above the Wall Street consensus of $1.56 per share, according to Refinitiv data.

Revenue rose 70% year over year to $5.34 billion. Analysts had expected $4.92 billion, according to data from Refinitiv.

Looking ahead, the company expects third-quarter earnings per share, excluding special items, to be in the range of $1.59 to $1.69 per share. That compares to analyst estimates of $1.58 per share.

Shares of the company rose about 1% in midday trade.

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Reporting by Doyinsola Oladipo; Edited by David Goodman, Mark Potter and Mike Harrison

Our standards: The Thomson Reuters Trust Principles.

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