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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Marriott International    MAR

MARRIOTT INTERNATIONAL

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Marriott Predicts Coronavirus Will Hurt Fee Revenue -- 2nd Update

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02/26/2020 | 06:58pm EDT

By Dave Sebastian

Marriott International Inc. expects the coronavirus epidemic to weigh on its fee revenue in 2020, as the pathogen's spread outside of China stokes fears and disrupts travel.

The world's largest hotel company said Wednesday that it could have about $25 million less in fee revenue a month this year, compared with its outlook, assuming current low occupancy rates in the Asia-Pacific region continue.

Excluding the epidemic's effect, Marriott expects 2020 global room growth of 5% to 5.25%, and gross fee revenue -- or revenue that it collected for maintaining its properties and from franchise agreements -- to rise 4% to 6%, to $3.96 billion to $4.04 billion, compared with last year.

The Bethesda, Md., company, which has roughly 7,300 properties, expects earnings of $6.30 to $6.53 a share for the year.

The company predicted 2020 comparable systemwide revenue per available room, an industry metric that measures performance, on a constant-currency basis to be flat to up 2% world-wide, with its rise in North America to be in the middle of the range.

For the first quarter, when the epidemic began to trigger travel restrictions, the company expects earnings of $1.47 to $1.50 a share on gross fee revenue of $940 million to $950 million. Marriott said its overall quarterly forecast excludes the epidemic's impact, because of the outbreak's fluid nature.

"We certainly do see lower occupancies in Asia Pacific outside of Greater China, but nowhere near the same reduction in occupancy levels as in Greater China," finance chief Leeny Oberg said in an interview.

Ms. Oberg said Marriott has about 800 hotels in the Asia-Pacific region. Of those, 89 hotels in Greater China -- an area that encompasses mainland China, Hong Kong, Macau and Taiwan -- aren't accepting reservations at the moment.

Companies with high exposure to travel and tourism have borne the brunt of the epidemic, with hotels closing some operations, airlines canceling flights, cruise ships becoming incubators for the pathogen and casinos closed off for two weeks in the gaming enclave of Macau.

Originating in the central Chinese city of Wuhan, the epidemic has widened globally, with cases recently surging in South Korea and Italy and new infections diagnosed in Brazil, Spain, Germany and Switzerland, as well as elsewhere.

Ms. Oberg said Marriott isn't able to determine the epidemic's effect on the company beyond the Asia-Pacific region, though cancellations of corporate events have occurred in certain cities outside that area. Fears over the epidemic have prompted global companies to drop plans for industry gatherings, such as Facebook Inc.'s cancellation of its annual marketing conference originally scheduled for San Francisco in March.

For the fourth quarter, the company's comparable systemwide revenue per available room rose 1.1% world-wide, 1.5% outside North America and 0.9% in North America. The metric fell 5.2% in Greater China.

Marriott posted net income of $279 million, or 85 cents a share, compared with $317 million, or 92 cents a share, a year earlier. Adjusted earnings were $1.57 a share, beating the $1.47 a share analysts polled by FactSet had expected.

Revenue rose 1.6% to $5.37 billion, missing the $5.51 billion analysts were targeting. The company's net fee revenue rose to $957 million from $896 million.

The company added more than 78,000 rooms last year. At the end of 2019, it had 3,050 hotels and about 515,000 rooms in its development pipeline.

Write to Dave Sebastian at dave.sebastian@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
EURO / BRAZILIAN REAL (EUR/BRL) -0.24% 5.6862 Delayed Quote.28.30%
FACEBOOK 1.98% 168.83 Delayed Quote.-19.34%
MARRIOTT INTERNATIONAL 4.58% 73.82 Delayed Quote.-53.38%
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Financials (USD)
Sales 2020 14 755 M
EBIT 2020 1 411 M
Net income 2020 754 M
Debt 2020 10 567 M
Yield 2020 1,55%
P/E ratio 2020 35,1x
P/E ratio 2021 13,0x
EV / Sales2020 2,34x
EV / Sales2021 1,73x
Capitalization 23 934 M
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Mean consensus HOLD
Number of Analysts 28
Average target price 106,42  $
Last Close Price 73,82  $
Spread / Highest target 103%
Spread / Average Target 44,2%
Spread / Lowest Target -26,8%
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Managers
NameTitle
Arne M. Sorenson President, Chief Executive Officer & Director
John Willard Marriott Executive Chairman
Raymond Bennett Chief Global Officer-Global Operations
Kathleen Kelly Oberg Chief Financial Officer & Executive Vice President
Stephanie C. Linnartz Group President-Consumer Operations & Technology
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