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Mayank Marwah
Mayank Marwah
Articles (1054) 

Marriott International: 4th-Quarter Earnings Highlights

Base management and franchise fees amounted to $379 million

February 19, 2021 | About:

Marriott International, Inc. (NASDAQ:MAR) released its fourth quarter results on Feb. 18 before the market opened. The company surpassed quarterly earnings projections, but posted a revenue miss.

Key highlights

The Bethesda, Maryland-based hospitality company recorded a net loss of $164 million in the fourth quarter, translating to loss of 50 cents per share. Adjusted earnings came in at 12 cents per share vs. the 10 cents that analysts expected. Revenue of $2.17 billion was down 60% year-over-year and was below analysts' projections of $2.42 billion.

Base management and franchise fees came in at $379 million. This was lower than the $799 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, Marriott's Development, Design and Operations Services leader Tony Capuano commented:

"We are gratified that we continue to see strong demand for our industry leading brands from owners and franchisees despite the unprecedented challenges resulting from the pandemic. Our pipeline grew during the quarter to more than 498,000 rooms as of the end of 2020, with 46% of those rooms under construction. We are seeing strong interest in conversions, as demonstrated by our recent announcement of the planned conversion of 19 all-inclusive hotels with nearly 7,000 rooms to our system in the Caribbean and Latin America region during 2021. Looking ahead, we expect gross rooms growth could accelerate to approximately 6 percent in 2021."

Global RevPAR plummeted 64.1% (down 63.9% in constant currency). In North America (U.S. and Canada), RevPAR tumbled 64.6% (down 64.6% in constant currency), while international RevPAR was down 62.7% (down 62.2% in constant currency).

During the quarter, Marriott added as many as 109 properties (17,780 rooms) under its worldwide lodging system. At the end of the quarter, the company had more than 7,600 properties and timeshare resorts with approximately 1,423,000 rooms under its lodging portfolio.

Efforts to preserve liquidity

At the end of the quarter, the hotel company's cash balance stood at $800 million. In addition, the company had $3.6 billion of unused borrowing capacity under its revolving credit line. 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 2020 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 any earnings or revenue guidance.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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