Marriott's Declining US Government Demand Leading to 'Softer' Growth
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Key Takeaways
Marriott International CFO Leeny Oberg said on the hotel chain's first-quarter earnings call Tuesday that the company expects a "continuation of declines" in U.S. government bookings.
Marriott lowered its full-year worldwide revenue per available room, or RevPAR, growth forecast to a range of 1.5% to 3.5% from the prior 2% to 4%.
Rivals Hyatt Hotels and Hilton Worldwide Holdings also lowered their full-year RevPAR growth forecasts in recent days.
Marriott International (MAR) CFO Leeny Oberg said on the hotel chain's first-quarter earnings call Tuesday that the company expects a "continuation of declines" in U.S. government bookings.
Marriott on Tuesday reported first-quarter adjusted earnings per share of $2.32 on revenue of $6.26 billion. Analysts polled by Visible Alpha expected $2.25 and $6.22 billion, respectively. It also posted comparable systemwide revenue per available room, or RevPAR, growth of 4.1% worldwide, above the consensus projection of 3.0%.
However, Marriott lowered its full-year worldwide RevPAR growth forecast to a range of 1.5% to 3.5% from the prior 2% to 4%. The new outlook "incorporates somewhat softer expectations in the U.S. & Canada region," Marriott said.
'Continuation of Declines in US Government Demand'
On Marriott's earnings call with analysts, Oberg said the lowered RevPAR growth forecast "is primarily due to an expected continuation of declines in U.S. government demand," according to a transcript provided by AlphaSense. In 2024, Oberg said, "the U.S. Government segment contributed around 4% of the U.S. and Canada region's room nights," and March brought "a 10% year-over-year decline in US government RevPAR" amid broad federal layoffs.
Rivals Hyatt Hotels (H) and Hilton Worldwide Holdings (HLT) also lowered their full-year RevPAR growth forecasts in recent days.
Marriott shares were up 1.6% in recent trading but are down about 10% for the year.
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