© Reuters. FILE PHOTO: A Marriott flag hangs at the entrance of the New York Marriott Downtown hotel in Manhattan, New York November 16, 2015. REUTERS/Andrew Kelly
By Doyinsola Oladipo
NEW YORK (Reuters) -Marriott International Inc on Tuesday topped Wall Street estimates for quarterly revenue and profits, helped by higher by occupancy levels and pricier rates as travelers book more group travel and longer hotel stays.
Travelers (NYSE:) largely free of restrictions related to COVID-19 are spending heavily on hotels, airplane tickets and car rentals. That trend has so far showed no signs of slowing down, even as some worry about high inflation and the potential for an economic slowdown.
“The shift of spending towards experiences versus goods, sustained high levels of employment and the lifting of travel restrictions and opening borders in most markets around the world are fueling travel,” Marriott Chief Executive Officer Anthony Capuano told investors on a call.
The average length of stay is up 25% compared with 2019 as is the average size for new bookings, according to Marriott’s Chief Financial Officer Kathleen Oberg.
The company is seeing improvement in international travel, urban and luxury bookings, but occupancy levels in those segments still trail resort destinations.
“The continued dollar/euro parity which may entice Americans to go abroad while deter international travelers to come to the U.S.,” said CoStar group national director of hospitality analytics Jan Freitag, adding that this may lead to some weakness in U.S. high end leisure demand locations but could be a boom for cities such as Venice or Berlin.
The company said room nights from international guests more than doubled in Europe from the first quarter to the second.
Marriott said corporate room bookings in June were 9% below the same month in 2019, compared with about 20% down in the first quarter.
“Downtown office occupancies continue to lag and that ultimately puts a governor on the growth that urban hotels can expect since travelers can just substitute a Teams or Zoom call instead,” said CoStar group national director of hospitality analytics Jan Freitag.
Marriott said booking trends suggest travelers are combining leisure and business trips.
Revenue per available room (RevPAR) increased 70.6% worldwide, 66.1% in the United States and Canada, and 87.8% in international markets when compared to the same period a year earlier.
Marriott, which operates the Sheraton and Ritz-Carlton hotel chains, reported adjusted earnings of $1.80 per share, far higher than the Wall Street consensus of $1.56 a share, according to Refinitiv data.
Revenue rose 70% year on year to $5.34 billion. Analysts had expected $4.92 billion, Refinitiv data shows.
Looking ahead, the company expects third-quarter earnings per share, excluding items, of $1.59 to $1.69 per share. That compares with analysts’ estimates for $1.58 per share.
Shares in the company rose about 1% in midday trading.