10-QPeriod: Q3 FY2023

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 2, 2023For Securities:MAR

Summary

Marriott International, Inc. (MAR) reported strong financial results for the third quarter and the first nine months of 2023, showcasing a robust recovery in the lodging industry. Net income increased significantly year-over-year, driven by substantial growth in revenues across all fee categories including base management, franchise, and incentive management fees. This revenue expansion is attributed to strong RevPAR (Revenue Per Available Room) growth globally, fueled by both higher Average Daily Rates (ADR) and improved occupancy, reflecting a rebound in leisure, group, and business transient demand. The company continues to expand its global footprint, with a notable increase in properties and rooms, including contributions from the recent acquisition of the City Express brand portfolio. Marriott also demonstrated a commitment to returning capital to shareholders through substantial share repurchases and dividend payments. Despite increased interest expenses due to higher debt levels and rates, the company maintains a strong liquidity position and anticipates continued growth, with net rooms growth expected to be around 4.2% to 4.5% for the full year 2023.

Financial Highlights

44 data points
Beta

Revenue

$5.93B

Net Income

$752.00M

12.7% Net Margin

EPS (Diluted)

$2.51

Total Assets

$25.27B

Cash & Equivalents

$717.00M

Free Cash Flow

$757.00M

Financial Statements
Beta
Revenue$5.93B
Operating Expenses$4.83B
Operating Income$1.10B
Interest Expense$146.00M
Net Income$752.00M
EPS (Basic)$2.52
EPS (Diluted)$2.51
Shares Outstanding (Basic)298.60M
Shares Outstanding (Diluted)300.10M

Key Highlights

  • 1Net income for the nine months ended September 30, 2023, was $2,235 million, a significant increase from $1,685 million in the prior year period.
  • 2Gross fee revenues grew by 13% in Q3 2023 and 21% year-to-date compared to the same periods in 2022, driven by higher RevPAR, unit growth, and increased co-branded credit card fees.
  • 3Worldwide RevPAR increased by 8.8% in Q3 2023 and 17.5% for the nine months ended September 30, 2023, indicating a strong recovery in lodging demand.
  • 4The company's property count grew to 8,675 properties (1,581,002 rooms) by the end of Q3 2023, with a development pipeline of nearly 557,000 hotel rooms.
  • 5Marriott repurchased $3.3 billion of common stock year-to-date through October 31, 2023, and paid $435 million in dividends during the first nine months of 2023.
  • 6Interest expense increased by 46% in Q3 2023 and 43% year-to-date, primarily due to higher commercial paper borrowings, increased debt balances from new note issuances, and higher interest rates on floating-rate debt.
  • 7The company acquired the City Express brand portfolio for $100 million, adding 149 properties in Latin America.

Frequently Asked Questions

Marriott International reported a net income of $2,235 million for the first nine months of 2023, a substantial increase from $1,685 million in the same period of 2022. This growth was driven by a 21% increase in gross fee revenues to $3,580 million, reflecting strong RevPAR growth, unit expansion, and higher incentive management fees.

In the third quarter of 2023, Marriott's gross fee revenues increased by 13% to $1,197 million, compared to $1,059 million in the third quarter of 2022. This growth was fueled by a 10% rise in franchise fees, a 35% surge in incentive management fees, and a 11% increase in base management fees, all benefiting from improved RevPAR and property-level profitability.

Marriott continues to prioritize returning capital to shareholders through share repurchases and dividends. Year-to-date through October 31, 2023, the company repurchased $3.3 billion of its common stock. Additionally, it declared and paid quarterly cash dividends totaling $0.52 per share in the third quarter of 2023.

Marriott is addressing a data security incident that occurred in 2018 involving the Starwood reservations database. While the company has accrued for estimated loss contingencies related to litigation and government investigations, the ultimate financial impact remains uncertain. Additionally, the company has a contingent purchase obligation related to the Sheraton Grand Chicago, which carries a $300 million liability.