Marriott International Reports First Quarter 2021 Results

BETHESDA, Md., May 10, 2021 /PRNewswire/ -- 

• First quarter 2021 comparable systemwide constant dollar RevPAR declined 46.3 percent worldwide, 46.3 percent in the U.S. & Canada, and 46.1 percent in international markets, compared to the 2020 first quarter;
• First quarter 2021 comparable systemwide constant dollar RevPAR declined 59.1 percent worldwide, 57.1 percent in the U.S. & Canada, and 64.1 percent in international markets, compared to the 2019 first quarter;
• First quarter reported diluted loss per share totaled $0.03, compared to reported diluted EPS of $0.09 in the year-ago quarter. First quarter adjusted diluted EPS totaled $0.10, compared to first quarter 2020 adjusted diluted EPS of $0.49;
• First quarter reported net loss totaled $11 million, compared to reported net income of $31 million in the year-ago quarter. First quarter adjusted net income totaled $34 million, compared to first quarter 2020 adjusted net income of $160 million;
• Adjusted EBITDA totaled $296 million in the 2021 first quarter, compared to first quarter 2020 adjusted EBITDA of $442 million;
• The company added more than 23,500 rooms globally during the first quarter, including nearly 12,000 rooms in international markets and a total of about 7,300 conversion rooms;
• At quarter end, Marriott's worldwide development pipeline totaled over 2,800 properties and approximately 491,000 rooms, including roughly 18,000 rooms approved, but not yet subject to signed contracts. More than 222,000 rooms in the pipeline were under construction as of the end of the 2021 first quarter;
• At the end of the first quarter, the company's net liquidity totaled approximately $4.7 billion, representing $0.6 billion in available cash balances and $4.1 billion of unused borrowing capacity under its revolving credit facility.

Marriott International, Inc. (NASDAQ: MAR) today reported first quarter 2021 results, which were materially impacted by the COVID-19 global pandemic and efforts to contain it (COVID-19).

Tony Capuano, Chief Executive Officer, said, "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.   Occupancy[1] reached 66 percent in mainland China in March, nearly the same as in March 2019, on strong demand from both leisure and business travelers. 

"In our largest region, the U.S. & Canada, demand increased rapidly as vaccine rollouts accelerated.  Occupancy started the year at 33 percent in January and reached 49 percent by March.  Leisure demand gained momentum, particularly in ski and beach resort destinations.  We are encouraged to see green shoots in special corporate and group bookings, which have been improving as companies slowly begin to return to their offices.  The pickup in transient booking pace for the U.S. & Canada points toward continued improvement in consumer sentiment around travel.

"Our conversion signings were particularly strong in the quarter and included nearly 7,000 rooms that were part of an all-inclusive deal in our Caribbean and Latin America region.  More than 23,500 rooms joined our system in the quarter.  Consistent with our view a quarter ago, we expect gross rooms growth could accelerate to approximately 6 percent in 2021.  Including deletions, we continue to estimate our rooms distribution could grow 3 to 3.5 percent, net, for the full year.

"Throughout the pandemic we have been proactive in connecting with our Marriott Bonvoy members, and we continue to focus on enhancing our valuable loyalty platform for our 150 million members.  Over the last few weeks, we have announced several exciting new programs.   We introduced new co-brand credits cards in South Korea and Mexico, and we rolled out a new collaboration with Uber, allowing members in the U.S. to earn points through ride sharing and food delivery.

"As vaccines roll out around the world and government restrictions ease, I am optimistic that demand will continue to strengthen.  We have seen signs that there is a significant amount of pent-up demand, regardless of trip purpose, and we look forward to welcoming travelers in increasing numbers to our more than 7,600 properties around the world." 

First Quarter 2021 Results

Marriott's reported operating income totaled $84 million in the 2021 first quarter, compared to 2020 first quarter reported operating income of $114 million.  Reported net loss totaled $11 million in the 2021 first quarter, compared to 2020 first quarter reported net income of $31 million.  Reported diluted loss per share totaled $0.03 in the quarter, compared to reported diluted earnings per share (EPS) of $0.09 in the year-ago quarter.

Adjusted operating income in the 2021 first quarter totaled $138 million, compared to 2020 first quarter adjusted operating income of $293 million.  Adjusted operating income in the 2020 first quarter excluded impairment charges of $101 million.

First quarter 2021 adjusted net income totaled $34 million, compared to 2020 first quarter adjusted net income of $160 million.  Adjusted diluted EPS in the 2021 first quarter totaled $0.10, compared to adjusted diluted EPS of $0.49 in the year-ago quarter.  These adjusted 2021 first quarter results and adjusted 2020 first quarter results excluded impairment charges of $3 million after-tax ($0.01 per share) and $75 million after-tax ($0.23 per share), respectively.  

Adjusted results also excluded restructuring and merger-related charges, cost reimbursement revenue, and reimbursed expenses.  See pages A-2 and A-9 for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.

Base management and franchise fees totaled $412 million in the 2021 first quarter, compared to base management and franchise fees of $629 million in the year-ago quarter.  The year-over-year decline in these fees is primarily attributable to RevPAR declines related to COVID-19.  Other non-RevPAR related franchise fees in the 2021 first quarter totaled $141 million compared to $139 million in the year-ago quarter, aided by $11 million of higher residential branding fees.

Incentive management fees totaled $33 million in the 2021 first quarter.  The company recognized no incentive management fees in the first quarter of 2020.  Roughly 45 percent of the incentive management fees recognized in the quarter were earned at hotels in the Asia Pacific region, largely in Greater China.    

Contract investment amortization for the 2021 first quarter totaled $17 million, compared to $25 million in the year-ago quarter.  The year-over-year change largely reflects impairments of investments in management and franchise contracts recorded in the 2020 first quarter.

Owned, leased, and other revenue, net of direct expenses, totaled a $27 million loss in the 2021 first quarter, compared to $8 million of profit in the year-ago quarter as a result of RevPAR declines related to COVID-19.

Depreciation, amortization, and other expenses for the 2021 first quarter totaled $52 million, compared to $150 million in the year-ago quarter.  The year-over-year change largely reflects a $90 million impairment charge recorded in the 2020 first quarter.

General, administrative, and other expenses for the 2021 first quarter totaled $211 million, compared to $270 million in the year-ago quarter.  The lower expenses in the 2021 first quarter largely reflect $50 million of lower bad debt expense and $14 million of lower guarantee reserves.  Expenses in the 2021 quarter include $14 million of additional non-recurring  executive compensation related to leadership changes. 

Interest expense, net, totaled $100 million in the first quarter compared to $87 million in the year-ago quarter.  The increase is largely due to higher interest expense associated with 2020 debt issuances.

Equity in losses for the first quarter totaled $12 million, compared to a $4 million loss in the year-ago quarter.  The increase in losses largely reflects the negative impact on results at joint venture properties due to COVID-19.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $296 million in the 2021 first quarter, compared to first quarter 2020 adjusted EBITDA of $442 million.  See page A-9 for the adjusted EBITDA calculation.

Selected Performance Information

The company added 134 new properties (23,567 rooms) to its worldwide lodging portfolio during the 2021 first quarter, including roughly 7,300 rooms converted from competitor brands and nearly 12,000 rooms in international markets.  Additions in the 2021 first quarter included 11 all-inclusive conversion properties (3,700 rooms) in the company's Caribbean and Latin America region.  One hundred and fourteen properties (17,381 rooms) exited the system during the quarter, including 88 Service Properties Trust hotels (12,803 rooms).  At quarter end, Marriott's global lodging system totaled more than 7,600 properties, with over 1,429,000 rooms.

At quarter end, the company's worldwide development pipeline totaled 2,825 properties with approximately 491,000 rooms, including 1,141 properties with more than 222,000 rooms under construction and 105 properties with roughly 18,000 rooms approved for development, but not yet subject to signed contracts.

In the 2021 first quarter, worldwide RevPAR declined 46.3 percent (a 45.9 percent decline using actual dollars) compared to the 2020 first quarter.  RevPAR in the U.S. & Canada declined 46.3 percent (a 46.3 percent decline using actual dollars), and RevPAR in international markets declined 46.1 percent (a 44.8 percent decline using actual dollars).

Balance Sheet and Liquidity

At quarter end, Marriott's net debt was $9.6 billion, representing total debt of $10.2 billion less cash and cash equivalents of $0.6 billion.  At year-end 2020, the company's net debt was $9.5 billion, representing total debt of $10.4 billion less cash and cash equivalents of $0.9 billion.

In the first quarter, the company issued $1.1 billion of Series HH Senior Notes due in 2031 with a 2.85 percent interest rate coupon. 

The company's net liquidity was approximately $4.7 billion at the end of the first quarter, representing $0.6 billion in available cash balances and $4.1 billion of unused borrowing capacity under its revolving credit facility.

The company halted share repurchases in February of 2020 and suspended its quarterly dividend beginning in the second quarter of 2020.

COVID-19

Due to the numerous uncertainties associated with COVID-19, Marriott cannot presently estimate the impact of this unprecedented situation on its future results, which is highly dependent on the severity and duration of the pandemic and its impacts, but expects that COVID-19 will continue to be material to the company's results. 

The company expects to provide additional information about the current impact of COVID-19 on its business on its call later this morning.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Monday, May 10, 2021 at 8:30 a.m. Eastern Time (ET).  The conference call will be webcast simultaneously via Marriott's investor relations website at http://www.marriott.com/investor, click on "Events & Presentations" and click on the quarterly conference call link.  A replay will be available at that same website until May 9, 2022.

The telephone dial-in number for the conference call is 1-706-679-3455 and the conference ID is 9559023.  A telephone replay of the conference call will be available from 2:00 p.m. ET, Monday, May 10, 2021 until 8:00 p.m. ET, Monday, May 17, 2021.  To access the replay, call 1-404-537-3406.  The conference ID for the recording is 9559023.

Note on forward-looking statements:  All statements in this press release and the accompanying schedules are made as of May 10, 2021. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. This press release and the accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements related to the possible effects on our business of the COVID-19 pandemic and efforts to contain it (COVID-19); travel and lodging demand; future performance of the company's hotels; booking trends; our development pipeline, rooms growth and conversions; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including those we identify below and other risk factors that we identify in our Securities and Exchange Commission filings, including our most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K. Risks that could affect forward-looking statements in this press release include the duration and scope of COVID-19, including the availability and distribution of effective vaccines or treatments; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; actions governments, businesses and individuals have taken or may take in response to the pandemic, including limiting, banning, or cautioning against travel and/or in-person gatherings or imposing occupancy or other restrictions on lodging or other facilities; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; the ability of our owners and franchisees to successfully navigate the impacts of COVID-19; the pace of recovery when the pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps we and our property owners and franchisees have taken and may continue to take to reduce operating costs and/or enhance certain health and cleanliness protocols at our hotels; the impacts of our employee furloughs and reduced work week schedules, our voluntary transition program and our other restructuring activities; competitive conditions in the lodging industry and in the labor market; relationships with customers and property owners; the availability of capital to finance hotel growth and refurbishment; the extent to which we experience adverse effects from data security incidents; and changes in tax laws in countries in which we earn significant income. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release.

Marriott International, Inc. (NASDAQ: MAR) is based in Bethesda, Maryland, USA, and encompasses a portfolio of more than 7,600 properties under 30 leading brands spanning 133 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world. The company offers Marriott Bonvoy™, its highly-awarded travel program.  For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.  In addition, connect with us on Facebook and @MarriottIntl on Twitter and Instagram.

Marriott may post updates about COVID-19 and other matters on its investor relations website at www.marriott.com/investor or Marriott's news center website at www.marriottnewscenter.com. Marriott encourages investors, the media, and others interested in the company to review and subscribe to the information Marriott posts on these websites, which may be material. The contents of these websites are not incorporated by reference into this press release or any report or document Marriott files with the SEC, and any references to the websites are intended to be inactive textual references only.

¹ All occupancy and RevPAR statistics are systemwide constant dollar and include hotels that have been temporarily closed due to COVID-19.  Unless otherwise stated, all changes refer to year-over-year changes for the comparable period.  RevPAR comparisons between 2021 and 2020 reflect properties that are comparable in both years. RevPAR comparisons between 2021 and 2019 reflect properties that are defined as comparable as of March 31, 2021, even if they were not open and operating for the full year 2019 or they did not meet all the other criteria for comparable in 2019.

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