Marriott International, Inc. (MAR, Financial) released its second quarter results on Aug. 10 before the market opened. The company surpassed quarterly revenue projections, but posted an earnings miss.
Key highlights
The Bethesda, Maryland-based company recorded a net loss of $234 million in the second quarter, translating to loss of 72 cents per share. Adjusted loss came in at 64 cents per share vs. the loss of 44 cents that analysts expected. Revenue of $1.46 billion was down 72% year-over-year but beat analysts' projections of $1.39 billion.
Base management and franchise fees came in at $222 million. This was lower than the $834 million reported in the year-ago quarter. The decline in fees was mainly driven by decline in revenue per available room (RevPAR). Additionally, a decline in non-RevPAR related franchise fees adversely impacted the metric.
Reflecting on the company's performance, President and CEO Arne M. Sorenson commented:
"While our business continues to be profoundly impacted by COVID-19, we are seeing steady signs of demand returning. Worldwide RevPAR1 has climbed steadily since its low point of down 90 percent for the month of April, to a decline of 70 percent for the month of July. Worldwide occupancy rates, which bottomed at 11 percent for the week ended April 11, have improved each week, reaching nearly 34 percent for the week ended August 1. Currently, 91 percent of our worldwide hotels are now open compared to 74 percent in April, and 96 percent are open today in North America."
Global RevPAR plummeted 84.4% (down 84.6% in constant currency). In North America, RevPAR tumbled 83.6% (down 83.6% in constant currency), while international RevPAR was down 86.7% (down 87.1% in constant currency).
During the quarter, Marriott added as many as 75 properties (11,407 rooms) under its worldwide lodging system. At the end of the quarter, the company had 7,500 properties and timeshare resorts with approximately 1,401,000 rooms under its lodging portfolio.
Efforts to preserve liquidity
At the end of the quarter, the hotel company's cash balance stood at $2.3 billion. The company has also increased liquidity through debt issuance and modifying its co-brand credit card arrangements. As a result of this, net liquidity (both cash and debt) has reached roughly $4.4 billion.
To strengthen its financial position, the company announced in February that it is temporarily halting its stock buyback program. Additionally, the company has suspended the quarterly dividend beginning in the second quarter.
Guidance
The company did not issue 2020 guidance.
Disclosure: I do not hold any positions in the stocks mentioned.
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