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China performance buoys Marriott’s Q1 results

Marriott International’s 1Q21 earnings report showed mixed results with a modest EBITDA miss of US$296M and overall demand improvements led by China, where 66% occupancy in March was near pre-pandemic levels.

In the U.S., occupancy went from 33% in January to 49% in March with “green shoots” in special corporate and group bookings.

Marriott’s adjusted earnings per share of 10 cents topped consensus estimates of 4 cents, according to FactSet, while quarterly revenue of US$2.32 billion was below projections of US$2.38 billion.

Marriott CEO Tony Capuano told CNBC on Monday the distinction between business and leisure travel is fading and he does think a steady return of business is ahead.

Here is a breakdown of Marriott’s Q1 results:

  • First quarter 2021 comparable systemwide constant dollar RevPAR declined 46.3% worldwide, 46.3% in the U.S. & Canada, and 46.1% in international markets, compared to the 2020 first quarter;
  • Comparable systemwide constant dollar RevPAR declined 59.1% worldwide, 57.1% in the U.S. & Canada, and 64.1% in international markets, compared to the 2019 first quarter;
  • Diluted loss per share totaled US$0.03, compared to reported diluted EPS of US$0.09 in the year-ago quarter. First quarter adjusted diluted EPS totaled US$0.10, compared to first quarter 2020 adjusted diluted EPS of US$0.49;
  • Net loss totaled US$11 million, compared to reported net income of US$31 million in the year-ago quarter. First quarter adjusted net income totaled US$34 million, compared to first quarter 2020 adjusted net income of US$160 million;
  • Adjusted EBITDA totaled US$296 million in the 2021 first quarter, compared to first quarter 2020 adjusted EBITDA of US$442 million;
  • The company added more than 23,500 rooms globally during the first quarter, including nearly 12,000 rooms in international markets and a total of about 7,300 conversion rooms;
  • At quarter end, Marriott’s worldwide development pipeline totaled over 2,800 properties and approximately 491,000 rooms, including roughly 18,000 rooms approved, but not yet subject to signed contracts. More than 222,000 rooms in the pipeline were under construction as of the end of the 2021 first quarter;
  • At the end of the first quarter, the company’s net liquidity totaled approximately US$4.7 billion, representing US$0.6 billion in available cash balances and US$4.1 billion of unused borrowing capacity under its revolving credit facility.

Capuano, added, “In our largest region, the U.S. & Canada, demand increased rapidly as vaccine rollouts accelerated. Occupancy started the year at 33% in January and reached 49% by March. Leisure demand gained momentum, particularly in ski and beach resort destinations. We are encouraged to see green shoots in special corporate and group bookings, which have been improving as companies slowly begin to return to their offices. The pickup in transient booking pace for the U.S. & Canada points toward continued improvement in consumer sentiment around travel.

“Our conversion signings were particularly strong in the quarter and included nearly 7,000 rooms that were part of an all-inclusive deal in our Caribbean and Latin America region. More than 23,500 rooms joined our system in the quarter. Consistent with our view a quarter ago, we expect gross rooms growth could accelerate to approximately 6% in 2021. Including deletions, we continue to estimate our rooms distribution could grow 3% to 3.5% net, for the full year.

“Throughout the pandemic we have been proactive in connecting with our Marriott Bonvoy members, and we continue to focus on enhancing our valuable loyalty platform for our 150 million members. Over the last few weeks, we have announced several exciting new programs. We introduced new co-brand credits cards in South Korea and Mexico, and we rolled out a new collaboration with Uber, allowing members in the U.S. to earn points through ride sharing and food delivery.”

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