Marriott International, Inc. (NASDAQ: MAR) today reported second quarter 2021 results.
Anthony Capuano, Chief Executive Officer, said, “The rate of global lodging recovery accelerated during the second quarter and momentum has continued into July. We are particularly pleased with the resilience of RevPAR [1] in markets where consumers feel safe traveling. Worldwide occupancy continued to build, reaching 51 percent for the quarter. We also saw strong improvement in global average daily rate in the second quarter, which was down only 17 percent compared to the second quarter of 2019.
“The swift resurgence of lodging demand once the virus has been largely contained and restrictions have eased has been most evident in Mainland China. Second quarter RevPAR in Mainland China was on par with the second quarter of 2019, and in April, for the first time since the pandemic began, leisure, business transient and group room nights were all ahead of 2019 levels.
“In our largest region, the U.S. & Canada, demand stepped up significantly during the quarter, particularly at our resorts. Leisure demand once again led the way, although business transient and group demand also continued to grow. We are seeing more blending of trip purposes, a trend we expect will continue.
“Owners continue to seek out our brands. Year to date through June, rooms signed were 36 percent ahead of the same period in 2020 and more than 30 percent of rooms signed in the first half of this year are conversions. We have also seen strong openings, with approximately 49,000 rooms added to our system in the first six months of the year. For the full year 2021, we continue to expect gross rooms growth will accelerate to approximately 6 percent, with net rooms growth now expected to be towards the top end of the 3 to 3.5 percent range.
“Marriott Bonvoy hit 153 million members by quarter’s end. We continue to focus on engaging with our loyal customers through multiple offerings beyond hotel stays. Second quarter co-brand credit card fees surpassed 2019 second quarter fees, thanks to strong cardholder spend and robust global cardholder acquisitions. Our recent international credit card launches in South Korea and Mexico have seen strong initial success as has our new Uber collaboration in the U.S. Last week, we began offering U.S. customers booking through our digital channels the opportunity to purchase Allianz travel insurance products, providing peace of mind to our customers throughout the travel journey.
“While we are keeping a close eye on the Delta and other variant strains, we are optimistic that the upward trajectory of the global recovery will continue. We anticipate that more workers returning to their offices on a hybrid basis will serve as a catalyst for a meaningful increase in business transient and group demand in the fall. Many of our associates are starting to get back on the road, and our largest corporate clients tell us they are beginning to do the same. Our recovery to date has shown us that there is tremendous pent-up demand for the travel experiences we consistently provide. Timelines are hard to predict and will continue to vary by region, but I believe that we are on our way to a full global recovery.”
Second Quarter 2021 Results
Marriott’s reported operating income totaled $486 million in the 2021 second quarter, compared to 2020 second quarter reported operating loss of $154 million. Reported net income totaled $422 million in the 2021 second quarter, compared to 2020 second quarter reported net loss of $234 million. Reported diluted earnings per share (EPS) totaled $1.28 in the quarter, compared to reported diluted loss per share of $0.72 in the year-ago quarter.
Adjusted operating income in the 2021 second quarter totaled $406 million, compared to 2020 second quarter adjusted operating loss of $85 million. Adjusted operating loss in the 2020 second quarter excluded impairment charges of $24 million.
Second quarter 2021 adjusted net income totaled $260 million, compared to 2020 second quarter adjusted net loss of $184 million. Adjusted diluted EPS in the 2021 second quarter totaled $0.79, compared to adjusted diluted loss per share of $0.57 in the year-ago quarter. These adjusted results excluded special tax items of $98 million ($0.30 per share) in the 2021 second quarter and impairment charges of $25 million after-tax ($0.08 per share) in the 2020 second quarter.
Adjusted results also excluded restructuring and merger-related charges, cost reimbursement revenue, and reimbursed expenses. See pages A-3 and A-12 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 $587 million in the 2021 second quarter, compared to base management and franchise fees of $222 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to RevPAR increases due to the ongoing recovery in lodging demand from the impacts of COVID-19. Other non-RevPAR related franchise fees in the 2021 second quarter totaled $160 million, compared to $107 million in the year-ago quarter, aided by a $43 million increase in credit card branding fees.
Incentive management fees totaled $55 million in the 2021 second quarter, compared to $12 million in the 2020 second quarter. Hotels in international markets earned $40 million of the fees in the quarter, with particular strength in Greater China.
Owned, leased, and other revenue, net of direct expenses, totaled a profit of $19 million in the 2021 second quarter, compared to a $72 million loss in the year-ago quarter. The $91 million increase in revenue net of expenses year over year largely reflects the ongoing recovery in lodging demand from the impacts of COVID-19 as well as $18 million of subsidies received from German government COVID-19 assistance programs.
Depreciation, amortization, and other expenses for the 2021 second quarter totaled $50 million, compared to $72 million in the year-ago quarter. The year-over-year change is primarily due to a $15 million impairment charge recorded in the 2020 second quarter.
General, administrative, and other expenses for the 2021 second quarter totaled $187 million, compared to $178 million in the year-ago quarter. The year-over-year increase primarily reflects lower compensation costs in 2020 as a result of reductions in executive pay, shortened work weeks and furloughs, partially offset by lower bad debt expense in the 2021 quarter.
Interest expense, net, totaled $102 million in the second quarter compared to $119 million in the year-ago quarter. The year-over-year decrease is largely due to lower debt balances.
Equity in losses for the second quarter totaled $8 million, compared to a $30 million loss in the year-ago quarter. The decrease in losses largely reflects improved results at joint venture properties due to the ongoing recovery in lodging demand from the impacts of COVID-19 and an $8 million impairment charge recorded in the 2020 second quarter.
In the 2021 second quarter, the provision for income taxes totaled a $41 million benefit, compared to a $64 million benefit in the 2020 second quarter. The change in benefit largely reflects higher income before taxes, partially offset by a $118 million reversal of reserves in the 2021 second quarter related to the closure of pre-acquisition Starwood audits.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $558 million in the 2021 second quarter, compared to second quarter 2020 adjusted EBITDA of $61 million. See page A-12 for the adjusted EBITDA calculation.
View full results here.
