Marriott International reports outstanding second quarter results
Global RevPAR exceeded 2019 levels in June, average daily rate has closed 7% above pre-pandemic levels, and global occupancy reached 68%
Marriott International, Inc. (NASDAQ: MAR) today reported second quarter 2022 results.
Anthony Capuano, Chief Executive Officer, said, "Marriott's second quarter results highlight consumers' love for travel. We reported outstanding results, as momentum in global lodging recovery continued. With demand increasing across all customer segments throughout the quarter, and nearly all countries easing travel restrictions, worldwide RevPAR1 surpassed 2019 levels in June. Second quarter average daily rate was robust, at 7 percent above 2019 levels, and worldwide occupancy reached 68 percent.
"In the U.S. & Canada, June RevPAR increased 3 percent compared to 2019. Among customer segments, group RevPAR saw the most meaningful acceleration in the second quarter, down just 1 percent to 2019 in June, compared to down nearly 30 percent in the first quarter. We have not seen signs of leisure travel abating, with leisure roomnights in the region more than 15 percent higher than second quarter 2019, and ADR meaningfully outpacing pre-pandemic levels. Europe also experienced notably strong RevPAR recovery, in large part due to the return of international visitors, with June RevPAR exceeding 2019.
"Marriott Bonvoy hit 169 million members by quarter's end. As our loyal guests get back on the road, penetration in the U.S. stood at 59 percent in the second quarter, topping 2019. Members are increasingly engaging with us during and outside of hotel stays. Second quarter co-brand credit card fees increased nearly 40 percent year over year, driven by continued strength in global cardholder acquisitions and cardholder spend, both of which achieved record levels in the quarter.
"On the development front, signing activity has accelerated in 2022, setting a second quarter record. We signed 23,000 rooms around the world in the second quarter, nearly 30 percent of which were conversions from competitor brands. Conversions continue to be a meaningful growth driver, comprising roughly 25 percent of room additions in the quarter.
"I am proud of the remarkable work our team has accomplished since the beginning of the pandemic. This has been the most challenging period in our company's history, but the resiliency of our associates and our business model have never been more evident. With our robust cash flow and profits, we resumed share repurchases during the second quarter, in addition to paying a cash dividend. Looking ahead, we are optimistic about our financial outlook and strong cash generation and expect to return more than $2.2 billion to shareholders through dividends and share repurchases in 2022."
Second Quarter 2022 Results
Marriott's reported operating income totaled $950 million in the 2022 second quarter, compared to 2021 second quarter reported operating income of $486 million. Reported net income totaled $678 million in the 2022 second quarter, compared to 2021 second quarter reported net income of $422 million. Reported diluted earnings per share (EPS) totaled $2.06 in the quarter, compared to reported diluted EPS of $1.28 in the year-ago quarter.
Adjusted operating income in the 2022 second quarter totaled $857 million, compared to 2021 second quarter adjusted operating income of $406 million.
Second quarter 2022 adjusted net income totaled $593 million, compared to 2021 second quarter adjusted net income of $260 million. Adjusted diluted EPS in the 2022 second quarter totaled $1.80, compared to adjusted diluted EPS of $0.79 in the year-ago quarter. The 2022 second quarter adjusted results excluded $11 million after-tax ($0.03 per share) of gains on investees' property sales and a $2 million after-tax ($0.01 per share) gain on an asset disposition. The 2021 second quarter adjusted results excluded special tax items of $98 million ($0.30 per share).
Adjusted results also excluded cost reimbursement revenue, reimbursed expenses and restructuring, merger-related charges, and other expenses. See pages A-3 and A-12 for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.
Base management and franchise fees totaled $938 million in the 2022 second quarter, compared to base management and franchise fees of $587 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to RevPAR increases due to the ongoing recovery in lodging demand, as well as unit growth. Other non-RevPAR related franchise fees in the 2022 second quarter totaled $204 million, compared to $160 million in the year-ago quarter, aided by $40 million of higher credit card branding fees.
Incentive management fees totaled $135 million in the 2022 second quarter, compared to $55 million in the 2021 second quarter. More than one half of the incentive management fees recognized in the quarter were earned at hotels in the U.S. & Canada.
Owned, leased, and other revenue, net of direct expenses, totaled $83 million in the 2022 second quarter, compared to $19 million in the year-ago quarter. The $64 million increase in revenue net of expenses year over year largely reflects the ongoing recovery in lodging demand.
General, administrative, and other expenses for the 2022 second quarter totaled $231 million, compared to $187 million in the year-ago quarter. The year-over-year increase primarily reflects higher incentive compensation.
Interest expense, net, totaled $89 million in the second quarter compared to $102 million in the year-ago quarter. The decrease is largely due to lower interest expense associated with lower debt balances.
Equity in earnings/losses for the second quarter totaled $15 million of earnings, compared to an $8 million loss in the year-ago quarter. The improvement largely reflects $13 million of gains on joint ventures' sales of hotels and improved results at joint venture properties due to the ongoing recovery in lodging demand.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $1,019 million in the 2022 second quarter, compared to second quarter 2021 adjusted EBITDA of $558 million. See page A-12 for the adjusted EBITDA calculation.