Marriott International, Inc. (MAR, Financial) released its first quarter results on May 10 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 $11 million in the first quarter, translating to loss of 3 cents per share. Adjusted earnings came in at 10 cents per share vs. the 3 cents that analysts expected. Revenue of $2.32 billion was down 51% year-over-year and was below analysts' projections of $2.5 billion.
Base management and franchise fees came in at $412 million. This was lower than the $629 million reported in the year-ago quarter. The decline in fees was mainly driven by decline in revenue per available room (RevPAR). A growth in non-RevPAR related franchise fees did very little to offset the overall decline.
Marriott International CEO Tony Capuano commented the following on the company's performance:
"We were pleased to see demand improve meaningfully during the first quarter. We are welcoming more and more guests to our hotels as consumers are traveling again once they feel it is safe. While recovery trajectories vary from region to region, the resiliency of demand has been most keenly demonstrated in mainland China, where occupancy is near the pre-pandemic level."
Global RevPAR plummeted 46.3% (down 45.9% in constant currency). In North America (U.S. and Canada), RevPAR tumbled 46.3% (down 46.3% in constant currency), while international RevPAR was down 46.1% (down 44.8% in constant currency).
During the quarter, Marriott added as many as 134 properties (23,567 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 1,429,000 rooms under its lodging portfolio.
Efforts to preserve liquidity
At the end of the quarter, the hotel company's cash and cash equivalents balance stood at $600 million. In addition, the company had $4.1 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, but mostly debt) has reached roughly $4.7 billion.
To strengthen its financial position, the company announced in February 2020 that it is temporarily halting its stock buyback program. Additionally, the company suspended the quarterly dividend beginning in the second quarter.
Disclosure: I do not hold any positions in the stocks mentioned.
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
