Marriott International (NYSE:MAR) and Hyatt Hotels (NYSE:H) reported their third-quarter earnings, showing positive trends in the hotel industry.
Marriott reported solid revenue growth with a 4.3% increase in the US and Canada and a 21.8% rise in international markets for its comparable systemwide constant-dollar revenue per available room.
Marriott’s adjusted EBITDA reached $1.14 billion, slightly above projections. Revenues, excluding cost reimbursements, stood at just over $1.5 million, although lower-than-expected owned, leased, and other revenues slightly offset these gains.
The global average daily rate also increased by 4%.
However, wildfires in Maui impacted fee revenues. Marriott's operating income reached $1.09 billion in the third quarter.
Meanwhile, Hyatt reported net income of $68 million for the quarter, compared to $28 million the previous year. The group reported adjusted EBITDA of $282 million, which was slightly below expectations due to wide-ranging estimates complicated by deferrals and financed contracts.
Revenues, excluding cost reimbursements, were $880 million, driven by stronger management and franchise fees offset by lower distribution and destination management.
The company's comparable system-wide revenue per available room increased by 8.9%.
Analysts suggest that the report may not be sufficient to drive the shares significantly higher, primarily due to the low-risk tolerance of the market and a mid-range valuation.
Nevertheless, Marriott has provided a cautiously optimistic outlook for the future. The analysts also note that the company's capital return guidance, totaling $4.3-$4.5 billion, exceeds historical pre-COVID levels, highlighting Marriott's commitment to its shareholders.
Despite posting a slight miss on third-quarter adjusted EBITDA estimates, higher management and franchise fees helped mitigate the negative impact for Hyatt. However, analysts note that the normalization of ALG (Apple Leisure Group) and limited visibility present challenges.
The company's efforts to shift towards an asset-light strategy and updates from asset sales are viewed positively by Jefferies, however.
Shares of Marriott dropped 2.4% in New York by midday, while Hyatt was down 2.6%.