By Aisha Al-Muslim
Marriott International Inc., the world's largest hotel company, posted weaker than expected revenue growth from guest stays in the latest period, but said its business is stable as it generates more money in fees and expands its portfolio.
Marriott, the parent of hotel brands including Ritz-Carlton, Westin and Renaissance, said Friday that comparable systemwide revenue per available room rose 1.1% excluding currency fluctuations in the first quarter. RevPAR, which reflects pricing power, grew at a faster pace outside North America than it did on the continent, but both regions still missed Marriott's outlook for the quarter.
Overall, revenue was flat from a year earlier at $5.01 billion, beneath analysts' consensus forecast of $5.11 billion.
The stock fell 5.5% to $128.03 in morning trading. Marriott's results dragged on other lodging stocks including Hilton Worldwide Holdings Inc., Hyatt Hotels Corp. and Wyndham Hotels & Resorts Inc.
Despite a sluggish start to the year, Marriott maintained its full-year forecast for RevPAR to rise 1% to 3% world-wide. The company said it still plans for its hotel room count to increase about 5.5% for the year.
Hotel companies have signaled they expect RevPAR to slow down this year compared with 2018 because of pressure from a maturing global economy, a relative slowdown in China and worries about the impact of Brexit on Europe.
In recent weeks, Hilton, Hyatt and Wyndham have also reaffirmed their full-year RevPAR growth outlook of about 1% to 3%. On Thursday, Choice Hotels International Inc. lowered the high-end of its prior RevPAR guidance.
In the latest period, Marriott's first-quarter profit fell to $375 million, or $1.09 a share, from $420 million, or $1.16 a share, a year earlier. Last year's results benefited from one-time gains from hotels sold.
Excluding special items, adjusted earnings were $1.41 a share, higher than the $1.34 a share expected from analysts polled by Refinitiv. If not for nonoperating items, earnings would have fallen short of consensus expectations, Sanford C. Bernstein analysts said a note.
Marriott raised its full-year adjusted profit forecast on Friday, due in part to a lower effective tax rate. Marriott guided earnings per share of $5.97 to $6.19, compared with its prior estimate of $5.87 to $6.10. It also raised its forecast on gross fee revenue this year.
The company said it incurred $44 million of expenses and had $46 million of insurance recoveries related to a data breach disclosed in November. Marriott has said a hack in the reservation database for its Starwood properties may have exposed the personal information of up to 500 million guests, but that number was later revised lower.
Consumers and others have filed about 100 hack-related lawsuits in U.S. state and federal courts as well as in Canada, the company said in a regulatory filing Friday.
Last week, Marriott said its chief executive, Arne Sorenson, 60 years old, was diagnosed with stage-2 pancreatic cancer and was expected to undergo chemotherapy this week. Mr. Sorenson, who has been CEO since 2012, would remain in his role, the company said.
Under his leadership, Marriott also plans to move deeper into the home-sharing space, competing even more with Airbnb Inc., Expedia Group Inc.'s Vrbo and others. In late April, Marriott said it would begin offering accommodations starting this week in about 2,000 high-end homes throughout 100 markets across the U.S., Europe and Latin America. Hilton said last week that alternative accommodations isn't a business it is currently pursuing.
Mr. Sorenson led the acquisition of Starwood Hotels & Resorts Worldwide in September 2016, creating a giant with more than 5,500 hotels and 30 hotel brands. In March, Marriott said it was planning to open more than 1,700 hotels over the next three years.
Marriott is still working through problems associated with its Starwood acquisition. There have also been difficulties integrating the rewards-points system, and an activist investor has criticized the company for having too many brands.
The company has focused recently on boosting its rewards programs and driving customers to book directly on its websites. In February, Marriott International changed the name of its loyalty program to Marriott Bonvoy. The program's membership rose by 5 million to nearly 130 million members, the company said Friday.
Write to Aisha Al-Muslim at email@example.com