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.
RevPAR growth in North America was hurt by the partial U.S. government shutdown in December and January and the lingering impact from a labor strike in Hawaii last year. For two months, about 8,000 Marriott union workers in several markets were on strike. The year-earlier period also benefited from strong bookings related to hurricane-recovery efforts in Florida and Texas.
“We’re quite prepared to sacrifice a few tenths on the top line if it makes sense to drive enhanced profitability,” Marriott Chief Executive Arne Sorenson told analysts on a conference call.
Overall, revenue was flat from a year earlier at $5.01 billion, and lower than analysts’ consensus forecast of $5.11 billion. Revenue generated from bookings through online travel agencies like Expedia declined 4%, while direct digital revenue bookings increased more than 20%.
Shares fell 2.8% to $131.71 in Friday trading, as Marriott’s results weighed on other lodging stocks including 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 Worldwide Holdings Inc., 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 by analysts polled by Refinitiv. If not for nonoperating items, earnings would have fallen short of consensus expectations, Sanford C. Bernstein analysts said in 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 due to unit growth as well as higher incentive fees and credit-card branding fees.
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 system for its Starwood properties may have exposed the personal information of up to 500 million guests, but that number was later revised lower.
Last week, Marriott said Mr. Sorenson, 60 years old, was diagnosed with stage-2 pancreatic cancer and would undergo chemotherapy. Mr. Sorenson, who has been CEO since 2012, said he expects to remain in his role.
“They believe we have caught it early, that it is operable and that the course of treatment is proven,” he said Friday. “With the support of an extraordinary, strong team of Marriott executives, we are going to soldier on.”
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.