International travel demand is expected to continue to drive hotel performance through 2026 for Marriott International while the U.S. and Canada continue to struggle.
During the company’s third-quarter earnings call, Marriott Chief Financial Officer and Executive Vice President of Development Leeny Oberg said that with the ongoing economic uncertainty, Marriott expects global revenue per available room to increase by 1% to 2% in the fourth quarter.
That acceleration from the third to the fourth quarter is partially due to calendar shifts and one-time events, she said.
“RevPAR growth is anticipated to still be meaningfully stronger internationally than in the U.S. and Canada, and higher-end chain scales are expected to continue to outperform lower-end chain scales,” she said.
During Marriott's second-quarter earnings call, executives said they were — like many other companies at the time — lowering their full-year guidance for 2025 over worries of slowing economic activity.
As Marriott continues to work on next year’s budget, the preliminary view is that 2026 year-over-year global RevPAR growth will be similar to the 1.5% to 2.5% growth expected this year, Oberg said.
“Growth is expected to again be higher internationally than in the U.S. and Canada, and next summer's World Cup could contribute around 30 to 35 basis points to full-year global RevPAR growth,” she said.
Third-quarter performance
Marriott's RevPAR growth for the third quarter was modest, as expected, reflecting the ongoing global macroeconomic uncertainty, President and CEO Tony Capuano said. Marriott’s hotels continued to gain RevPAR index, however.
Third-quarter global RevPAR grew by half a percent, with international markets growing RevPAR by 2.6% while RevPAR was down 0.4% in the U.S. and Canada, he said. RevPAR growth was strongest in the Asia-Pacific region excluding Greater China, growing nearly 5% due to robust average-daily-rate growth and higher demand from international travelers, particularly from Greater China and Europe. RevPAR in India grew by 2.5% due to an increase in both ADR and occupancy led by strong regional demand.
When excluding the impact of the Summer Olympics in France and the Euro 2024 in Germany last year, RevPAR in Europe, the Middle East and Africa would have been up by 5% year over year, he said. RevPAR in the Caribbean and Latin America rose nearly 3% with gains in both ADR and occupancy, helped by citywide events in Puerto Rico and Rio de Janeiro.
Macroeconomic conditions continue to challenge the operating environment in Greater China, but Marriott’s market share across the region continued to grow, he said.
“With year-over-year comps easing and demand stabilizing, RevPAR was flat and would have been slightly positive excluding the impact of multiple typhoons,” he said. “Leisure demand was solid, offsetting a decline in business-transient demand.”
RevPAR declines in the U.S. and Canada were fueled by underwhelming performance at Marriott's select-service hotel brands, Capuano said. The gains in luxury and calendar shifts affecting group demand helped offset those declines.
Third-quarter group RevPAR decreased by 3% while leisure was up slightly and business transient was down slightly compared to last year, he said. The 14% decline of government-related RevPAR further affected business transient.
By customer tier, global RevPAR growth was strongest at the higher end of Marriott's offerings, Capuano said, adding that “high-end consumers have demonstrated resilience to macroeconomic uncertainties and continue to prioritize travel.”
Luxury revenue grew by 4% as performance weakened down the chain scales, he said. Ten percent of Marriott’s hotel rooms portfolio is in the luxury segment, and another 42% of the rooms are in the full-service premium segment.
By customer segment on a global basis, leisure transient continued to lead RevPAR performance, rising 1%, he said. Business transient RevPAR was flat, and group RevPAR declined 2%, reflecting the timing of events.
Pipeline update
Marriott added about 17,900 net hotel rooms to its portfolio during the quarter, resulting in net room growth of 4.7% year over year, according to the company's earnings report. Of the rooms added, nearly 13,900 were in international markets. By the end of the quarter, Marriott’s global hotel system had more than 9,700 properties with more than 1.75 million rooms.
By the end of the quarter, Marriott had 3,923 hotels with more than 596,000 rooms in its worldwide development pipeline. Of those, 229 properties with nearly 36,000 rooms were approved for development but not yet subject to signed contracts. The pipeline included 1,536 properties with more than 250,000 rooms under construction, which includes those undergoing conversions. More than half of the hotels in the quarter-end pipeline are in international markets.
The pipeline figures do not include any rooms from Marriott’s acquisition of the CitizenM brand, which should integrate into the company's system and platforms next quarter.
Conversions remain a key driver of Marriott's portfolio expansion, accounting for about 30% of both signings and openings during the first nine months of the year, Capuano said.
During the quarter, Marriott launched its Outdoor Collection by Marriott Bonvoy, which includes the Postcard Cabins and Trailborn Hotels brands.
By the numbers
For the third quarter, Marriott reported total revenue of nearly $6.5 billion, up 4% year over year, according to the earnings release. It reported net income of $728 million, an increase of 25% year over year.
Adjusted earnings before interest, taxes, amortization and depreciation totaled nearly $1.4 billion, a 10% year-over-year increase.
At the end of the third quarter, Marriott reported it had a total debt of $16 billion and cash and equivalents of $700 million, according to the earnings report. By the end of 2024, Marriott had total debt of $14.4 billion and $400 million in cash and cash equivalents.
It repurchased 3 million shares of common stock in the third quarter for $800 million. Year to date through Oct. 30, it has repurchased 9.7 million shares for $2.6 billion.
As of press time, Marriott’s stock was trading at $274.15 per share, down 0.1% year to date. The NASDAQ Composite was up 22.4% for the same period.