THE FIRST QUARTER of 2019 wasn’t the best Marriott International has seen, with decreases in net income and earnings per share. Still, President and CEO Arne Sorenson called it “solid” and said the company is building for the future.
Marriott’s reported net income in the first quarter was $375 million and its adjusted net income came to $482 million, according to the company’s earnings report. Those numbers are down from $420 million in reported net income and adjusted net income of $487 million in the first quarter of 2018. Reported diluted EPS was $1.09 in the quarter, down from $1.16 last year. However, the company’s adjusted diluted EPS increased 5 percent over last year from $1.34 to $1.41.
There were other positive signs during 2019’s first three months, Sorenson said.
“Marriott’s performance in the first quarter was solid. Worldwide systemwide RevPAR for comparable hotels increased 1.1 percent, net rooms grew 5.3 percent, and gross fee revenue rose 6 percent,” he said. “Despite modest RevPAR growth and higher labor costs, we increased North American house profit margins by 30 basis points and held worldwide house profit margins flat at our company-operated hotels through cost synergies, leading to strong incentive management fee performance in the quarter. Worldwide systemwide RevPAR index increased 100 basis points with index gains in the U.S. at nearly the same level.”
Sorenson also said the company opened its 7,000th property in the first quarter, as well as its 1000th Fairfield by Marriott. By the end of the quarter Marriott had approximately 475,000 rooms in its pipeline, he said (Marriott is one of three companies dominating the U.S. hotel pipeline) and membership in its Marriott Bonvoy loyalty program rose by 5 million people to 130 million.
“We continue to build our company for the future,” Sorenson said.
Other highlights of the first quarter include:
- Comparable systemwide constant dollar RevPAR rose 1.1percent worldwide, 1.9 percent outside North America and 0.8 percent in North America.
- The company added nearly 19,000 rooms, including some 3,000 rooms converted from other brands and approximately 8,000 rooms in international markets.
- At quarter-end, Marriott’s worldwide development pipeline totaled nearly 2,900 hotels and approximately 475,000 rooms, including roughly 25,000 rooms approved, but not yet subject to signed contracts.
- Adjusted EBITDA totaled $821 million in the quarter, a 7 percent increase over first quarter 2018.
- Marriott repurchased 6.7 million shares of the company’s common stock for $828 million during the first quarter. Year-to-date through May 8, the company had repurchased 8.1 million shares for $1.02 billion.
Sorenson, 60, recently announced that he had been diagnosed with stage 2 pancreatic cancer at Johns Hopkins Hospital in Baltimore. He will begin chemotherapy this week and his doctors anticipate surgery near the end of the year, and will stay on the job throughout.