Global hospitality company Marriott (NASDAQ: MAR) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 4.8% year on year to $6.26 billion. Its non-GAAP profit of $2.32 per share was 3.1% above analysts’ consensus estimates.

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StockStory’s Take

Marriott’s first quarter results reflected revenue and adjusted earnings per share ahead of Wall Street estimates, with management crediting continued global demand, robust group bookings, and international strength for the outperformance. CEO Anthony Capuano noted that premium and luxury segments outpaced select service hotels, while international regions such as Asia-Pacific, EMEA, and CALA saw strong RevPAR (revenue per available room) growth. However, the U.S. and Canada experienced softer trends late in the quarter, especially in select service and government-related business.

Looking forward, management reiterated its full-year profit outlook but acknowledged reduced visibility in the back half of the year, particularly in the U.S. and Canada. CFO Leeny Oberg attributed the modest reduction in RevPAR growth guidance to persistent weakness in U.S. government demand and the uncertain macroeconomic environment. The company expects international markets to remain a relative bright spot. Capuano emphasized that Marriott’s focus remains on executing its long-term growth strategy, expanding its brand portfolio, and advancing its digital transformation initiatives.

Key Insights from Management’s Remarks

Marriott’s leadership highlighted several operational trends and strategic developments that influenced the quarter’s results and will shape performance in upcoming periods.

• International RevPAR Strength: International regions—especially Asia-Pacific and EMEA—contributed to overall RevPAR momentum, with APAC markets like India and Japan delivering double-digit growth, offsetting weaker results in Greater China.
• Premium and Luxury Outperformance: The luxury and full-service segments outperformed select service hotels, with Capuano noting sustained demand from both group and transient guests, and little evidence of customers trading down to lower-priced offerings.
• Group Segment Resilience: Group bookings remained a leading growth segment, with Group RevPAR up 8% globally and in the U.S. Management indicated forward bookings into next year are pacing above current levels, supporting future revenue visibility.
• Development and Conversions: Marriott recorded record first-quarter global signings, with conversions (hotels switching brands) representing about one-third of all openings and signings. The pending citizenM acquisition is expected to add a distinctive lifestyle brand to Marriott’s portfolio.
• Digital and Technology Transformation: Ongoing upgrades to Marriott’s reservations and property management systems are progressing, with rollouts scheduled to begin in the back half of the year. Management expects these changes to enhance operational efficiency, customer experience, and ancillary revenue opportunities.

Drivers of Future Performance

Management’s outlook for the remainder of the year is shaped by softening U.S. and Canada trends, but remains supported by strong international demand, disciplined cost control, and ongoing digital investments.

• International Demand Resilience: Marriott expects international markets, particularly in Asia-Pacific and EMEA, to continue offsetting U.S. softness, aided by domestic travel in China and broad-based growth in other regions.
• Brand Portfolio Expansion: The upcoming integration of citizenM and continued focus on conversions are anticipated to drive net room growth close to 5% this year, expanding Marriott’s global footprint and revenue base.
• Operational Efficiency Initiatives: Management is targeting an 8-10% reduction in general and administrative expenses for the year, leveraging savings from enterprise-wide productivity programs to mitigate margin pressures and support profit growth.

Top Analyst Questions

• Michael Bellisario (Baird): Asked about the drivers of weaker select service performance and the relative impact of Easter and regional trends; management attributed softness to a one-time shock from government layoffs and tariff announcements but expects steady demand moving forward.
• Shaun Kelley (Bank of America): Inquired about development risk amid tariffs and financing uncertainty; management reported continued owner enthusiasm and stable construction starts, with signings up in nearly every region.
• David Katz (Jefferies): Sought clarity on net rooms growth guidance, especially the impact of citizenM; Oberg explained that visibility has improved, with guidance now approaching 5% net room growth for the year.
• Stephen Grambling (Morgan Stanley): Probed on fee per room trajectory and capital support for development; Oberg noted growing fees per key, especially from international and full-service properties, and disciplined use of key money for high-value deals.
• Lizzie Dove (Goldman Sachs): Requested an update on Marriott’s digital transformation; Capuano confirmed strong progress with system testing and expected rollouts to select hotel brands later this year.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the pace of international RevPAR growth and its ability to offset persistent U.S. and Canada softness, (2) execution and guest adoption of Marriott’s upgraded digital and technology platforms as they begin rolling out, and (3) progress on the integration and performance of the citizenM brand. Additional attention will be paid to trends in group bookings and operational cost discipline as key drivers of sustained profitability.

Marriott currently trades at a forward P/E ratio of 26.5×. In the wake of earnings, is it a buy or sell? Find out in our free research report.

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