Marriott International reported a strong showing during the first quarter, but the hotel company, like many others in the hospitality industry, has lowered its full-year outlook due to worries of slowing economic activity.
“We operate a cyclical business, and there is no doubt that today we are in a period of heightened macroeconomic uncertainty, especially here in the U.S, with many concerned about slowing economic activity and lower consumer confidence,” Marriott President and CEO Tony Capuano said during the company’s first-quarter earnings call.
Throughout Marriott’s history, it has shown itself to be agile and resilient while continuing to deliver solid growth through economic cycles, he said. In light of the macroeconomic backdrop, Marriott is lowering its full-year revenue per available room growth outlook by 50 basis points given the more cautious environment in the U.S. and Canada region.
“In whatever environment we find ourselves, we remain focused on driving returns to our hotels and executing our proven long-term growth strategy,” he said.
Marriott’s comparable systemwide constant dollar RevPAR growth outlook for full-year 2025 is now 1.5% to 3.5%, down from the 2% to 4% growth it forecast at the end of 2024.
“The updated view that we’re sharing today does not incorporate a recession,” said Leeny Oberg, Marriott's executive vice president of development and chief financial officer. “It reflects our current booking trends and assumes that, broadly speaking, they continue.”
Marriott has a short average booking window of about three weeks for its transient customers, which represents about three-quarters of its total room nights, she said. That means demand could change quickly.
Global hotel RevPAR is expected to increase 1.5% to 2.5% in the second quarter, which includes a negative impact from the Easter holiday shift in April, Oberg said. The full-year update incorporates lower than previously anticipated RevPAR growth in the U.S. and Canada for the second quarter through the fourth quarter this year.
“This is primarily due to an expected continuation of declines in U.S. government demand,” she said. “It also assumes slightly slower growth from U.S. select-service hotels due to lower transient demand and marginally lower group RevPAR.”
International demand trends for all regions except Greater China have remained strong, and there’s no change in Marriott’s outlook for international RevPAR, Oberg said. Full-year RevPAR growth should be meaningfully stronger internationally than in the U.S. and Canada. Even with Greater China, RevPAR should be roughly flat compared to last year on a global basis.
Expectations for each customer segment has softened slightly due to lower U.S. and Canada assumptions, she said. Marriott still expects the strongest growth from group, as for the full year, group demand was still pacing up 6% at the end of March. That could moderate over the remainder of the year, however.
Business transient demand could be up in the low single digits, and leisure transient is expected to be flat to up in the low single digits, she said.
First-quarter performance
Global RevPAR grew 4.1% during the first quarter, just above the top end of its 3% to 4% outlook range, Capuano said. Average daily rate grew 3%, and occupancy increased by 1 percentage point.
RevPAR in the U.S. and Canada grew more than 3%, with luxury full-service hotels outperforming Marriott's select-service properties due to solid demand across both group and transient guests, he said.
International RevPAR was up nearly 6%, led by growth in the Asia-Pacific region. RevPAR grew by 11% in the region, driven by strong ADR growth, he said. Growth was broad-based across the region, with RevPAR increases of 16% and 17%, respectively, in India and Japan.
In the Caribbean and Latin America region, RevPAR grew by 7% due to strong luxury and resort results, he said. In Europe, the Middle East and Africa, RevPAR grew by 6% thanks to solid increases in ADR and occupancy.
“This quarter, group was again a standout customer segment,” Capuano said. “Group RevPAR rose 8% both globally and in the U.S.”
First-quarter business transient and leisure transient each grew by 2% globally and 1% in the U.S., with growth driven by ADR increases, he said.
“While RevPAR trends internationally were strong throughout the quarter, our U.S. and Canada region saw softer growth in March, particularly in the select-service sector,” he said.
Development update
During the quarter, Marriott added approximately 12,200 net hotel rooms, a 4.6% increase compared to the first quarter of 2024, according to the company’s earnings release. Of those, more than 7,300 of those were in international markets. By the end of the quarter, the company’s global hotel system had nearly 9,500 properties with about 1,719,000 rooms.
By the end of the quarter, Marriott’s development pipeline totaled 3,808 properties with more than 587,000 rooms. That includes 171 properties with more than 27,000 rooms that are approved for development but not yet subject to signed contracts. Within the pipeline, there are 1,447 properties with almost 244,000 rooms under construction, including conversions. More than half of the rooms in the end-of-quarter pipeline are in international markets.
Marriott’s $355 million acquisition of CitizenM will add 36 open hotels with 8,544 rooms to Marriott’s system and three hotels with more than 600 rooms to its development pipeline once the deal closes.
Global signings so far this year have been excellent despite the uncertainty around construction costs and the challenging finance environment in the U.S. and Europe, Capuano said. First-quarter signings were up 35% year over year. Conversions represent a significant driver of growth, representing about one-third of signings and openings during the quarter.
The most encouraging metric on growth shared was Marriott signed more rooms in the first quarter than in any first quarter in its history, he said in response to a question about concerns over tariffs affecting new development.
“So that, in many ways, reinforces a theme we've talked about the last number of quarters, which is the vast majority of our owner and franchisee community are long-term investors in the sector, not necessarily getting spooked by some of this short-term turbulence,” he said. “They believe in the long-term opportunity and the long-term demand trends in travel.”
These developers are particularly excited about building in the U.S. and Canada with the historically low additions to supply, he said. They are frustrated about the relative lack of availability in debt financing for new construction, but they’re bullish on the long-term view.
There’s no doubt hotel owners are evaluating what’s going on with construction costs and raw materials, Oberg said. Though still below 2019 levels, the pace of construction starts has not dropped. Marriott had the most new construction starts in the U.S. and Canada in 2024.
“Quite a bit of watching to see what looks to be the impact on construction costs, but for the moment, it’s steady as she goes in the U.S. and Canada for new construction,” she said.
The addition of CitizenM to Marriott’s portfolio builds on the company’s commitment to expand its lifestyle offerings to guests, Capuano said.
“CitizenM is a differentiated brand with unique characteristics that we believe will be a great complement to our existing lifestyle select brands, AC, Moxy and Aloft,” he said. “CitizenM is known for its tech-savvy, in-hotel experience, highly efficient use of space and focus on art and design. We saw a large runway of growth for the brand in markets around the world.”
By the numbers
Marriott reported total revenue of $6.26 billion for the first quarter, up from $5.97 billion in the first quarter of 2024, according to its earnings release. The company’s net income was $665 million, up from $564 million the year before.
First-quarter adjusted earnings before interest, taxes, depreciation and amortization was more than $1.2 billion, a 7% year-over-year increase.
Marriott ended the quarter with $500 million in cash and cash equivalents, up from $400 million at year-end 2024. Its total debt was $15.1 billion, up from $14.4 billion at the end of the year.
Marriott repurchased 2.8 million shares of common stock in the first quarter for $800 million. Year to date through April 29, it has repurchased 3.9 million shares for $1 billion.
At publication time, Marriott's stock was trading at $253.43 per share, down 7.7% year to date. The NASDAQ Composite was was down 8.1% for the same period.