Marriott International Inc is set to report its second-quarter earnings on Tuesday before US markets open, with investors closely watching whether the global hotel operator can sustain strong profit growth despite signs of slowing demand.
Wall Street expects Marriott to post adjusted earnings of US$3.06 per share on revenue of US$7.18 billion, representing year-on-year increases of 15.5 per cent and 6.5 per cent, respectively. The estimates also mark an improvement from the first quarter, when the company reported adjusted earnings of US$2.72 per share on revenue of US$6.65 billion.
Analysts continue to maintain a positive outlook on the stock, assigning it a Buy rating with an average price target of US$384.83, implying modest upside from Thursday’s closing price of US$375.48. Earnings estimates have also edged higher over the past two months, although revenue forecasts have remained largely unchanged.
Despite the optimistic earnings outlook, attention has shifted to Marriott’s revenue per available room (RevPAR), a key indicator of hotel performance. After recording worldwide RevPAR growth of 4.2 per cent in the first quarter, exceeding the company’s guidance, Marriott has projected second-quarter comparable RevPAR growth of between 1.5 per cent and 2.5 per cent, signalling a slowdown in business momentum.
The moderation has raised concerns over whether the company can maintain pricing power and occupancy levels as persistent inflation continues to increase labour, utility and maintenance costs across the hospitality industry.
Investors are also expected to focus on the company’s fee-based revenue streams, which remain central to Marriott’s asset-light business model. Analysts at Stifel project gross fee growth of between 10 per cent and 11 per cent during the second quarter, supported by stronger income from credit card partnerships and residential branding.
International operations will also remain under scrutiny. Marriott has expressed confidence in global travel demand, citing the FIFA World Cup as a catalyst for higher international tourism, with management expecting the positive impact to extend into the third quarter. Investors will be looking for updates on tournament-related bookings and broader overseas travel trends.
Marriott entered the earnings season on the back of a stronger-than-expected first quarter. In May, the company reported adjusted earnings of US$2.72 per share, comfortably exceeding analysts’ expectations of US$2.54, while revenue also surpassed forecasts. The performance prompted Marriott to raise its full-year RevPAR growth guidance to between 2 per cent and 3 per cent, up from its previous forecast of 1.5 per cent to 2.5 per cent.
The upcoming results are expected to provide a clearer indication of whether Marriott’s diversified revenue streams and global presence can continue to drive double-digit earnings growth amid a moderating demand environment, or whether growth is beginning to normalise as the year progresses.
