Marriott International reports strong fourth quarter and full year 2023 results

“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 rose 15 per cent, net rooms grew 4.7 per cent, and our fee-driven, asset-light business model generated record levels of cash, says Anthony Capuano, president and chief executive officer.

“In the fourth quarter, worldwide RevPAR rose 7 percent. International RevPAR grew 17 per cent, with particular strength in Asia Pacific and Europe.

“In the U.S. & Canada, fourth quarter RevPAR rose over 3 per cent. Group revenue at our hotels increased 7 per cent 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 per cent and net rooms growth of 5.5 to 6 per cent. 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.”

Fourth Quarter 2023 Results

Base management and franchise fees totaled $1,026 million in the 2023 fourth quarter, a 9 percent increase compared to base management and franchise fees of $945 million in the year-ago quarter. The increase is primarily attributable to RevPAR increases and unit growth. Non-RevPAR-related franchise fees in the 2023 fourth quarter totaled $220 million, compared to $215 million in the year-ago quarter. The increase was largely driven by higher co-brand credit card fees.

Incentive management fees totaled $218 million in the 2023 fourth quarter, a 17 per cent increase compared to $186 million in the 2022 fourth quarter. Managed hotels in international markets contributed two-thirds of the incentive fees earned in the quarter.

Owned, leased, and other revenue, net of direct expenses, totaled $151 million in the 2023 fourth quarter, compared to $101 million in the year-ago quarter. Results in the 2023 quarter included a $63 million ($47 million after-tax and $0.16 per share) termination fee related to a development project.

General, administrative, and other expenses for the 2023 fourth quarter totaled $330 million, compared to $236 million in the year-ago quarter. The year-over-year change reflects a $27 million ($20 million after-tax and $0.07 per share) litigation reserve related to an international hotel, as well as higher performance-related compensation expenses, professional fees, and bad debt reserves.

Interest expense, net, totaled $144 million in the 2023 fourth quarter, compared to $107 million in the year-ago quarter. The increase was largely due to higher interest expense associated with higher debt balances.

In the 2023 fourth quarter, the provision for income taxes totaled a $267 million benefit, compared to a $218 million expense in the 2022 fourth quarter. The favourable year-over-year change is primarily due to international intellectual property restructuring transactions completed in the quarter resulting in $228 million ($0.77 per share) of benefits and a $223 million ($0.75 per share) favourable impact from the release of a tax valuation allowance.

Marriott’s reported operating income totaled $718 million in the 2023 fourth quarter, compared to 2022 fourth quarter reported operating income of $996 million. Reported net income totaled $848 million in the 2023 fourth quarter, a 26 per cent increase compared to 2022 fourth quarter reported net income of $673 million. Reported diluted earnings per share (EPS) totaled $2.87 in the quarter, compared to reported diluted EPS of $2.12 in the year-ago quarter.

Adjusted operating income in the 2023 fourth quarter totaled $992 million, compared to 2022 fourth quarter adjusted operating income of $926 million. Fourth quarter 2023 adjusted net income totaled $1,055 million, compared to 2022 fourth quarter adjusted net income of $622 million. Adjusted diluted EPS in the 2023 fourth quarter totaled $3.57, compared to adjusted diluted EPS of $1.96 in the year-ago quarter.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $1,197 million in the 2023 fourth quarter, a 10 per cent increase compared to fourth quarter 2022 adjusted EBITDA of $1,090 million.

Selected Performance Information

Marriott added 558 properties (81,281 rooms) to its worldwide portfolio during 2023, including approximately 17,500 rooms associated with the City Express transaction and more than 43,000 other rooms in international markets. Sixty-three properties (9,430 rooms) exited the system during the year. At the end of the year, Marriott’s global system totaled nearly 8,800 properties, with more than 1,597,000 rooms.

At the end of the year, the company’s worldwide development pipeline totaled 3,379 properties with roughly 573,000 rooms, including 126 properties with over 21,000 rooms approved for development, but not yet subject to signed contracts. The year-end pipeline included 1,066 properties with more than 232,000 rooms under construction, or 41 percent, including approximately 37,000 rooms from the MGM deal.

In the 2023 fourth quarter, worldwide RevPAR increased 7.2 percent (a 7.6 per cent increase using actual dollars) compared to the 2022 fourth quarter. RevPAR in the U.S. & Canada increased 3.3 per cent (a 3.3 per cent increase using actual dollars), and RevPAR in international markets increased 17.4 per cent (an 18.7 per cent increase using actual dollars).

Balance Sheet & Common Stock

At year-end 2023, Marriott’s total debt was $11.9 billion and cash and equivalents totaled $0.3 billion, compared to $10.1 billion in debt and $0.5 billion of cash and equivalents at year-end 2022.

The company repurchased 4.7 million shares of common stock in the 2023 fourth quarter for $965 million. For full year 2023, Marriott repurchased 21.5 million shares for $3.9 billion. Year to date through February 9, the company has repurchased 1.3 million shares for $300 million.

Company Outlook