Marriott trims 2024 profit forecast on sluggish China domestic travel demand
Updates shares
By Aishwarya Jain and Doyinsola Oladipo
Nov 4(Reuters) -Marriott International MAR.O cut its annual profit forecast on Monday as weak domestic travel in China overshadowed strong group and international demand, sending its shares down 2% in late morning trading.
Hotel operators have signaled weak demand in the world's second-biggest economy nation during the reported quarter amid efforts by the government to boost consumer sentiment and restricted pricing power.
Severe weather and wealthier Chinese customers traveling abroad also weighed on domestic performance, Marriott said.
The company said it expects China to post negative revenue per available room (RevPAR), or room revenue, growth in the fourth quarter and for the full year.
System-wide RevPAR, an important metric in the hospitality industry, fell 7.9% in Greater China in the third quarter.
Marriott forecast full-year adjusted profit to be between $9.19 and $9.27 per share, compared with the $9.23 to $9.40 it previously estimated.
Global leisure room revenue remained flat year-over-year as higher-end travelers boosted results across regions including the U.S.
"Group remained the stand out customer segment, with global group RevPAR rising 10% in the quarter and on pace to rise 8% for full year 2024," said CEO Anthony Capuano in a statement.
The Ritz-Carlton operator expects fourth-quarter room revenue growth of 2% to 3% and backed its 2024 guidance of 3% to 4%.
"Decelerating RevPAR growth is causing EBITDA estimates to slowly bleed lower," said Joseph Greff, analyst at J.P. Morgan, noting 2024 EBITDA estimates have been lowered for a second quarter in a row.
The company expects full-year adjusted EBITDA between $4.93 billion and $4.96 billion.
Adjusted profit of $2.26 per share for the quarter ended Sept. 30 missed analysts' average expectation of $2.31.
Total quarterly revenue came in at $6.26 billion, compared with analysts' estimates of $6.27 billion, according to data compiled by LSEG.
Marriott expects a 6.5% increase in net rooms additions in 2024.
Reporting by Aishwarya Jain in Bengaluru and Doyinsola Oladipo in New York; Editing by Sriraj Kalluvila
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