Wednesday, February 14, 2024
Marriott Intl. unveils Q4 & full-year 2023 financial results, highlighting growth in fees, income, and global portfolio expansion.
Marriott International, Inc. unveiled its financial outcomes for the fourth quarter and the entirety of 2023 today.
Anthony Capuano, President and Chief Executive Officer, said, “Our team delivered excellent results in 2023, as demand for our industry leading portfolio of properties and offerings around the world continued to grow. Full year global RevPAR[1] rose 15 percent, net rooms grew 4.7 percent, and our fee-driven, asset-light business model generated record levels of cash.
“In the fourth quarter, worldwide RevPAR rose 7 percent. International RevPAR grew 17 percent, with particular strength in Asia Pacific and Europe.
“In the U.S. & Canada, fourth quarter RevPAR rose over 3 percent. Group revenue at our hotels increased 7 percent compared to the 2022 fourth quarter, driven by solid rate increases. While already significantly above 2019 levels, hotel leisure revenue rose again, up 2 percent. Business transient revenue at our hotels grew 3 percent from the year-ago quarter, with demand from large corporate customers continuing to make gains.
“Our development team had a stellar 2023, signing a record 164,000 organic rooms globally, including 37,000 rooms from our deal with MGM Resorts International, and our development pipeline reached a new high of roughly 573,000 rooms at year end. During the year, we added nearly 81,300 rooms to our distribution, with one in four organic rooms from conversions.
“The power of our unparalleled Marriott Bonvoy loyalty program continues to increase, with 196 million members at year end. We’ve continued to leverage our global portfolio and have expanded our co-brand credit card offerings, with 31 cards now across 11 countries. In 2023, global card spend increased a remarkable 11 percent over the prior year.
“In 2024, we expect another year of solid growth and significant shareholder returns. With normalizing RevPAR growth around the world, we anticipate a worldwide full year RevPAR increase of 3 to 5 percent and net rooms growth of 5.5 to 6 percent. We expect this should yield adjusted EBITDA of approximately $4.9 billion to $5.0 billion for the year and enable us to return $4.1 billion to $4.3 billion to shareholders after factoring in $500 million to purchase the Sheraton Grand Chicago.”
For the final quarter of 2023, the organization saw its base management and franchise fees reach $1,026 million, marking a 9% growth from $945 million in the same period the previous year. This growth was mainly due to increased RevPAR and the expansion of units. Fees from franchises not related to RevPAR amounted to $220 million in the fourth quarter of 2023, a slight rise from $215 million in the corresponding quarter of the previous year, primarily driven by elevated co-brand credit card fees.
The quarter also witnessed incentive management fees climbing to $218 million, up 17% from $186 million in the fourth quarter of 2022, with managed hotels in international markets accounting for two-thirds of these fees.
Revenue from owned, leased, and other sources, after direct expenses, reached $151 million in the last quarter of 2023, up from $101 million in the same quarter of the previous year. This included a $63 million termination fee ($47 million after taxes and $0.16 per share) linked to a halted development project.
General, administrative, and other expenses for the last quarter of 2023 were reported at $330 million, up from $236 million in the prior year’s quarter. This increase reflects a $27 million litigation reserve ($20 million after taxes and $0.07 per share) concerning an international hotel, as well as elevated performance-related compensation, professional fees, and bad debt reserves.
Net interest expense for the quarter was $144 million, an increase from $107 million in the previous year’s quarter, mainly due to higher debt levels.
The company experienced a $267 million tax benefit in the fourth quarter of 2023, contrasting with a $218 million tax expense in the fourth quarter of 2022. This favorable shift was largely because of international intellectual property restructuring transactions, which resulted in $228 million ($0.77 per share) in benefits, and a $223 million ($0.75 per share) positive impact from the release of a tax valuation allowance.
Marriott reported an operating income of $718 million for the fourth quarter of 2023, down from $996 million in the same quarter of 2022. The net income reported was $848 million, a 26% increase from $673 million reported in the fourth quarter of 2022. The reported diluted earnings per share (EPS) for the quarter was $2.87, up from $2.12 in the same quarter of the previous year.
Adjusted operating income for the quarter stood at $992 million, compared to $926 million in the fourth quarter of 2022. Adjusted net income for the fourth quarter of 2023 was $1,055 million, a significant rise from $622 million in the same quarter of 2022. The adjusted diluted EPS for the quarter was $3.57, up from $1.96 in the corresponding quarter of the previous year.
The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter of 2023 was $1,197 million, a 10% increase from $1,090 million in the fourth quarter of 2022.
Over 2023, Marriott added 558 properties (81,281 rooms) to its global portfolio, including about 17,500 rooms from the City Express deal and over 43,000 rooms in international markets, while 63 properties (9,430 rooms) were removed. By year-end, Marriott’s global system comprised nearly 8,800 properties with over 1,597,000 rooms.
The company’s worldwide development pipeline at the end of 2023 included 3,379 properties with approximately 573,000 rooms, of which 1,066 properties with more than 232,000 rooms were under construction.
Worldwide RevPAR increased by 7.2% in the fourth quarter of 2023 compared to the same quarter in 2022, with a 3.3% increase in the U.S. & Canada and a 17.4% increase in international markets.
At the close of 2023, Marriott’s total debt stood at $11.9 billion, with cash and equivalents at $0.3 billion, compared to $10.1 billion in debt and $0.5 billion in cash and equivalents at the end of 2022.
The company repurchased 4.7 million shares of common stock for $965 million in the fourth quarter of 2023, and for the full year, 21.5 million shares were repurchased for $3.9 billion. As of February 9, an additional 1.3 million shares have been repurchased for $300 million.
Looking ahead, the company’s adjusted EBITDA and adjusted diluted EPS for the first quarter and the entire year of 2024 do not account for cost reimbursement
revenue, reimbursed expenses, merger-related charges, other expenses, or any asset sales, due to the unpredictable nature of these factors.
The acquisition of the Sheraton Grand Chicago and its land for $500 million, with $200 million accounted for in investment spending, is among the key investments for the year. This assumes the noted level of investment spending and no asset sales during the year.
Marriott International, Inc. is set to conduct its quarterly earnings briefing for investors and the media on February 13, 2024, at 8:30 a.m. Eastern Time. The conference call will be webcast live on Marriott’s investor relations site, with a replay available until February 13, 2025. The dial-in numbers for the conference call are listed for both U.S. Toll-Free and Global callers, with a replay accessible until February 20, 2024.
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