Marriott International, Inc. reported that RevPAR dropped 46.3% in the first quarter of 2021, but said that demand is increasing.
“We were pleased to see demand improve meaningfully during the first quarter,” said Tony Capuano, CEO, Marriott International. “We are welcoming more and more guests to our hotels as consumers are traveling again once they feel it is safe. While recovery trajectories vary from region to region, the resiliency of demand has been most keenly demonstrated in mainland China, where occupancy is near the pre-pandemic level. Occupancy reached 66% in mainland China in March, nearly the same as in March 2019, on strong demand from both leisure and business travelers.”
He continued, “In our largest region, the U.S. and Canada, demand increased rapidly as vaccine rollouts accelerated. Occupancy started the year at 33% in January and reached 49% by March. Leisure demand gained momentum, particularly in ski and beach resort destinations. We are encouraged to see green shoots in special corporate and group bookings, which have been improving as companies slowly begin to return to their offices. The pickup in transient booking pace for the U.S. and Canada points toward continued improvement in consumer sentiment around travel.”
First quarter highlights:
- First quarter 2021 comparable systemwide constant dollar RevPAR declined 46.3% worldwide, 46.3% in the U.S. & Canada, and 46.1% in international markets, compared to the 2020 first quarter.
- First quarter 2021 comparable systemwide constant dollar RevPAR declined 59.1% worldwide, 57.1% in the U.S. & Canada, and 64.1% in international markets, compared to the 2019 first quarter.
- First quarter reported diluted loss per share totaled $0.03, compared to reported diluted EPS of $0.09 in the year-ago quarter. First quarter adjusted diluted EPS totaled $0.10, compared to first quarter 2020 adjusted diluted EPS of $0.49.
- First quarter reported net loss totaled $11 million, compared to reported net income of $31 million in the year-ago quarter. First quarter adjusted net income totaled $34 million, compared to first quarter 2020 adjusted net income of $160 million.
- Adjusted EBITDA totaled $296 million in the 2021 first quarter, compared to first quarter 2020 adjusted EBITDA of $442 million.
- The company added more than 23,500 rooms globally during the first quarter, including nearly 12,000 rooms in international markets and a total of about 7,300 conversion rooms.
- At quarter end, Marriott’s worldwide development pipeline totaled more than 2,800 properties and approximately 491,000 rooms, including roughly 18,000 rooms approved, but not yet subject to signed contracts. More than 222,000 rooms in the pipeline were under construction as of the end of the 2021 first quarter.
- At the end of the first quarter, the company’s net liquidity totaled approximately $4.7 billion, representing $0.6 billion in available cash balances and $4.1 billion of unused borrowing capacity under its revolving credit facility.
“Our conversion signings were particularly strong in the quarter and included nearly 7,000 rooms that were part of an all-inclusive deal in our Caribbean and Latin America region,” said Capuano. “More than 23,500 rooms joined our system in the quarter. Consistent with our view a quarter ago, we expect gross rooms growth could accelerate to approximately 6 percent in 2021. Including deletions, we continue to estimate our rooms distribution could grow 3 to 3.5 percent, net, for the full year.”
Marriott’s reported operating income totaled $84 million in the 2021 first quarter, compared to 2020 first quarter reported operating income of $114 million. Reported net loss totaled $11 million in the 2021 first quarter, compared to 2020 first quarter reported net income of$31 million. Reported diluted loss per share totaled $0.03 in the quarter, compared to reported diluted earnings per share (EPS) of $0.09 in the year-ago quarter.
Adjusted operating income in the 2021 first quarter totaled $138 million, compared to 2020 first quarter adjusted operating income of $293 million. Adjusted operating income in the 2020 first quarter excluded impairment charges of $101 million.
First quarter 2021 adjusted net income totaled $34 million, compared to 2020 first quarter adjusted net income of $160 million. Adjusted diluted EPS in the 2021 first quarter totaled $0.10, compared to adjusted diluted EPS of $0.49 in the year-ago quarter. These adjusted 2021 first quarter results and adjusted 2020 first quarter results excluded impairment charges of $3 million after-tax ($0.01 per share) and $75 million after-tax ($0.23 per share), respectively.
Base management and franchise fees totaled $412 million in the 2021 first quarter, compared to base management and franchise fees of $629 million in the year-ago quarter. The year-over-year decline in these fees is primarily attributable to RevPAR declines related to COVID-19. Other non-RevPAR related franchise fees in the 2021 first quarter totaled $141 million compared to $139 million in the year-ago quarter, aided by $11 million of higher residential branding fees.
Incentive management fees totaled $33 million in the 2021 first quarter. The company recognized no incentive management fees in the first quarter of 2020. Roughly 45% of the incentive management fees recognized in the quarter were earned at hotels in the Asia Pacific region, largely in Greater China.
The company added 134 new properties (23,567 rooms) to its worldwide lodging portfolio during the 2021 first quarter, including roughly 7,300 rooms converted from competitor brands and nearly 12,000 rooms in international markets. Additions in the 2021 first quarter included 11 all-inclusive conversion properties (3,700 rooms) in the company’s Caribbean and Latin America region. One hundred and fourteen properties (17,381 rooms) exited the system during the quarter, including 88 Service Properties Trust hotels (12,803 rooms). At quarter end, Marriott’s global lodging system totaled more than 7,600 properties, with more than 1,429,000 rooms.
At quarter end, the company’s worldwide development pipeline totaled 2,825 properties with approximately 491,000 rooms, including 1,141 properties with more than 222,000 rooms under construction and 105 properties with roughly 18,000 rooms approved for development, but not yet subject to signed contracts.
In the 2021 first quarter, worldwide RevPAR declined 46.3% (a 45.9% decline using actual dollars) compared to the 2020 first quarter. RevPAR in the U.S. and Canada declined 46.3% (a 46.3% decline using actual dollars), and RevPAR in international markets declined 46.1% (a 44.8% decline using actual dollars).
