Marriott International, Inc. (NASDAQ: MAR) today reported fourth quarter 2021 results.
Anthony Capuano, Chief Executive Officer, said,
“The 2021 fourth quarter capped off a year that showed the incredible resilience of people’s desire to travel and the appeal of our broad portfolio of 30 global brands. We experienced significant progress in global RevPAR recovery in 2021 despite the emergence of new variants and ongoing headwinds from the global pandemic. By the fourth quarter, global RevPAR was 19 percent below 2019 levels, a 40-percentage point improvement from the decline in the first quarter of the year. Global average daily rate (ADR) nearly recovered to pre-pandemic levels in the 2021 fourth quarter, while occupancy came in at 58 percent, down 12 percentage points versus 2019. Leisure demand continued to shine in the fourth quarter, with slower, yet continued improvement in business transient and group demand.
“Each of our regions saw meaningful continued RevPAR recovery in the fourth quarter compared to the third quarter, with the exception of Greater China, where recovery stalled due to their zero COVID policy. In the U.S. & Canada, RevPAR declined 15 percent compared to fourth quarter 2019 levels versus a 20 percent decline in the third quarter compared to 2019. Compared to 2019 levels, our international hotels posted a 28-percent RevPAR decline in the fourth quarter, a 12-percentage point improvement from the third quarter. While Omicron caused a temporary setback in global demand recovery in January, especially for business transient and group travel, new bookings across customer segments have rebounded to pre-Omicron levels. We are optimistic that the global recovery will progress meaningfully throughout 2022.
“Our development team had a strong 2021, signing approximately 92,000 rooms, of which more than 50,000 were in international markets and more than 40 percent were in the upper upscale and luxury tiers. During the year, we added more than 86,000 gross rooms to our distribution, a new annual record, 21 percent of which were conversions. We were pleased to post 3.9 percent net rooms growth for 2021, exceeding our previous expectations. With our momentum around conversions and our industry-leading pipeline, we are bullish about our ability to increase our footprint over the next several years. For 2022, we expect gross rooms growth approaching 5 percent and deletions of 1 to 1.5 percent, resulting in anticipated net rooms growth of 3.5 to 4 percent.
“While we are keeping an eye on the continued impact from Omicron, we look forward to the day when we reach a new normal where the impact from COVID-19 on travel has essentially disappeared. In the meantime, we continue to focus on driving revenues, controlling costs, maximizing cash flow, and improving our credit metrics. Assuming no meaningful setback in the global recovery, we could begin returning cash to shareholders later in 2022.
“As I finish my first year as CEO, I could not be prouder of how our associates have managed through this crisis. They have worked tirelessly to serve our guests, support our owners and franchisees, and assist each other. I am incredibly optimistic about Marriott’s future and look forward to continued recovery in 2022 and the prospects for meaningful growth in the coming years.”
Fourth Quarter 2021 Results
Marriott’s reported operating income totaled $635 million in the 2021 fourth quarter, compared to 2020 fourth quarter reported operating loss of $128 million. Reported net income totaled $468 million in the 2021 fourth quarter, compared to 2020 fourth quarter reported net loss of $164 million. Reported diluted earnings per share (EPS) totaled $1.42 in the quarter, compared to reported diluted loss per share of $0.50 in the year-ago quarter.
Adjusted operating income in the 2021 fourth quarter totaled $578 million, compared to 2020 fourth quarter adjusted operating income of $148 million. Adjusted operating income in the 2020 fourth quarter excluded impairment charges of $44 million.
Fourth quarter 2021 adjusted net income totaled $430 million, compared to 2020 fourth quarter adjusted net income of $39 million. Adjusted diluted EPS in the 2021 fourth quarter totaled $1.30, compared to adjusted diluted EPS of $0.12 in the year-ago quarter. The 2020 fourth quarter adjusted results excluded income tax benefits of $74 million ($0.23 per share), impairment charges of $88 million after-tax ($0.27 per share), and loss on asset sales of $4 million after-tax ($0.01 per share).
Adjusted results also excluded restructuring and merger-related charges, cost reimbursement revenue, and reimbursed expenses. These items totaled $38 million of after-tax profits ($0.12 per share) in the 2021 fourth quarter and an after-tax loss of $185 million ($0.57 per share) in the 2020 fourth quarter. See pages A-3 and A-13 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 $737 million in the 2021 fourth quarter, compared to base management and franchise fees of $379 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. Other non-RevPAR related franchise fees in the 2021 fourth quarter totaled $186 million, compared to $133 million in the year-ago quarter, aided by higher credit card and residential branding fees.
Incentive management fees totaled $94 million in the 2021 fourth quarter, compared to $44 million in the 2020 fourth quarter. The year-over-year increase was split evenly between the International and U. S. & Canada segments.
Contract investment amortization for the 2021 fourth quarter totaled $19 million, compared to $38 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 fourth quarter.
Owned, leased, and other revenue, net of direct expenses, totaled a profit of $33 million in the 2021 fourth quarter, compared to a $27 million loss in the year-ago quarter, and reflects the ongoing recovery in lodging demand.
Depreciation, amortization, and other expenses for the 2021 fourth quarter totaled $54 million, compared to $71 million in the year-ago quarter. Expenses in the 2020 fourth quarter included $22 million of impairment charges.
General, administrative, and other expenses for the 2021 fourth quarter totaled $213 million, compared to $183 million in the year-ago quarter. The year-over-year increase primarily reflects higher compensation and legal costs.
Interest expense, net, totaled $91 million in the fourth quarter compared to $105 million in the year-ago quarter. The year-over-year decrease is largely due to lower debt balances.
Equity in losses were $0 million, an improvement of $87 million year over year, largely reflecting impairment charges recorded in the fourth quarter of 2020.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $741 million in the 2021 fourth quarter, compared to fourth quarter 2020 adjusted EBITDA of $317 million. See page A-12 for the adjusted EBITDA calculation.
Selected Performance Information
The company added 120 properties (20,440 rooms) to its worldwide lodging portfolio during the 2021 fourth quarter, including over 3,500 conversion rooms and approximately 10,000 rooms in international markets. Twenty-three properties (4,955 rooms) exited the system during the quarter. At year end, Marriott’s global lodging system totaled 7,989 properties, with more than 1,479,000 rooms.
At year end, the company’s worldwide development pipeline totaled 2,831 properties with roughly 485,000 rooms, including 1,008 properties with more than 202,000 rooms under construction and 98 properties with approximately 19,000 rooms approved for development, but not yet subject to signed contracts.
In the 2021 fourth quarter, worldwide RevPAR increased 124.5 percent (a 124.9 percent increase using actual dollars) compared to the 2020 fourth quarter. RevPAR in the U.S. & Canada increased 143.6 percent (a 143.9 percent increase using actual dollars), and RevPAR in international markets increased 83.3 percent (an 84 percent increase using actual dollars).