Two industry giants, Marriott International and IHG, reported solid 2Q17 earnings yesterday with Marriott citing particularly strong transient demand in Europe and Asia, and IHG benefitting from strong first-half RevPAR growth of 6.2% in Europe.
Marriott’s adjusted EBITDA of US$834 million was well ahead of consensus of US$812 million. Adjusted diluted earnings per share came in at US$1.13 versus guidance of US$0.99-$1.03. The earnings beat was driven by better branding fees, relicensing fees and IMFs.
When asked about corporate rate negotiations, Marriott said its view is “up modestly.” SunTrust Robinson Humphrey analyst C. Patrick Scholes wrote, “This compares to the mid-single digit growth noted on the 1Q call. MAR explains this to be ‘probably a little bit of lengthening of the booking window…probably a little bit of tough comparisons’ but also ‘some corporate cautiousness.’”
IHG reported global RevPAR was up 2.1% for the first half of the year, with Americas RevPAR up 1.1% driven by 1.1% rate growth. Within the region, U.S. RevPAR was up .7%, and up 4.6% outside of the U.S., including solid demand in urban markets generated by 150th anniversary celebrations in Canada and growth in the Mexican economy.
IHG also reported that its system size is up 3.7% year-over-year, now sitting at 778,000 rooms (5,221 hotels). It has surpassed the landmark of more than 1 million open and pipeline rooms during this half and continues to see strong pipeline activity driving future growth with 32,000 rooms signed and 230,000 rooms in pipeline – of which approximately 45% is under construction.
IHG’s first-half EBITDA of US$417 million beat estimates of US$411 million. First-half EPS of US$1.12 compares to the Street’s US$1.17. At the same time, trims to operating expenses overcame some weakness in revenue projections.
IHG said it had a good first half with 2Q global RevPAR +1.5%, somewhat lower than Hilton and Marriott. IHG added that it remains confident in the outlook for the remainder of the year.