(Reuters) – Marriott International Inc raised its full-year profit forecast on Tuesday, as the U.S. hotel operator bets on higher room rates and rebounding demand in China to boost its earnings.
Hotel operators have begun to reap benefits from a strong rebound in international travel as the easing of pandemic-related restrictions and a strong dollar have emboldened U.S. consumers to travel overseas.
“While there is still a level of macroeconomic uncertainty, as we look into the third quarter, the consumer is generally holding up well and our forward bookings remain solid,” Chief Financial Officer Kathleen Oberg said on a call with investors.
Shares of the company were down 1% in early morning trading.
The company expects full-year adjusted profit of $8.36 to $8.65 per share, up from the prior forecast of between $7.97 and $8.42 per share.
It posted second-quarter revenue of $6.08 billion, which beat analysts’ average estimate of $5.99 billion, according to data from Refinitiv Eikon.
Marriott’s revenue per available room, or RevPAR, an important metric in the hospitality industry, rose about 13.5% in the second quarter from a year earlier.
International room revenue rose 39%, led by rebounding revenue in China, which surpassed 2019 levels once travel restrictions were lifted in January, according to the company.
“With the region’s international airlift still only around 40% of 2019 capacity at the end of the second quarter, we believe there is still meaningful growth opportunity in and from Greater China,” said CEO Anthony Capuano.
Room revenue in the U.S. and Canada rose 6% in the second quarter.
The hotel operator reported earnings of $2.38 per share, compared with analysts’ forecast of $2.18 per share.
The company raised its full-year forecast for the growth in the number of rooms in its portfolio to between 6.4% to 6.7% from prior guidance of 4% to 4.5%. The U.S. hotel operator expects to benefit from a licensing deal with casino operator MGM Resorts (NYSE:MGM) International which added 17 resorts to its portfolio in the U.S.
Two of the key pushbacks from investors have been slowing U.S. revenue per available room and the room growth guidance, which, excluding MGM, is a touch lower than guidance shared in the first quarter, said Bernstein analyst Richard Clarke.
