Marriott executives are optimistic about travel demand worldwide, leading to a raise in their profitability forecast for 2024. However, analysts are concerned about the normalization of domestic U.S. vacation bookings after the pandemic. Despite this, Marriott’s strong loyalty program with over 203 million members and a strong dollar sending Americans overseas may lead to a profitable year worldwide.
The hotel operator raised its forecast for full-year EBITDA to $4.88 billion, indicating confidence in future profitability. Analysts focused on U.S. travel booking behavior during the earnings call, with concerns about cooling demand in the domestic market. Marriott saw higher year-over-year RevPAR growth in Asia Pacific, Europe, the Middle East, the Caribbean, and Latin America, but lower growth in the U.S., Canada, and Greater China.
Marriott’s first-quarter results showed a rise in revenue to $1.5 billion and adjusted net income of $620 million. Adjusted EBITDA was $1.14 billion, up 4% year-over-year. The company also added 46,000 rooms, including 37,000 from a licensing deal with MGM Resorts. Marriott’s loyalty program now has over 203 million members, indicating strong customer loyalty and engagement.
There is a noticeable normalization of U.S. demand patterns, particularly in leisure travel. While revenue per available room in the U.S. and Canada is above 2019 levels, adjusting for inflation shows a slight decrease from pre-pandemic performance. The strength of the U.S. dollar against other currencies is making international travel more affordable for Americans, leading to increased travel abroad compared to domestic travel.
American travel intent varies by age group, with older demographics, especially those over 55, feeling financially secure and traveling abroad more. This demographic is familiar with Marriott’s loyalty program and brand offerings. Marriott’s properties are predominantly premium, with a focus on midscale and above, making their customer base unique in the market compared to budget and premium economy brands.
Overall, Marriott seems well-positioned for a profitable year globally, despite concerns about a normalization of U.S. vacation bookings. With a strong loyalty program and increased international travel by Americans, the company is optimistic about future profitability. Analysts will continue to monitor travel booking behavior and demand patterns in the U.S. market to assess the impact on Marriott’s financial performance.
