Marriott CEO on summer travel demand: We haven't seen any softness
Marriott's (MAR) business isn't succumbing to a cooler economy — yet.
"Today, am I seeing any of the softness that you described? No, but ... we've got to be transparent," Marriott CEO Anthony Capuano told Yahoo Finance at the Cannes Lions International Festival of Creativity on Tuesday. "That could change given how short that booking window [is]."
He added that group bookings were the strongest segment in the first quarter, and the company has the most visibility into that business because rooms are typically reserved far in advance. Business and leisure travel, on the other hand, are more prone to change as the lead times for booking are usually three weeks.
Capuano said the international market remains an area of growth. The company is seeing double-digit RevPAR (revenue per available room) growth in Asia Pacific (excluding China). Meanwhile, southern Europe is projected to have strong leisure summer travel, and many markets in the Middle East remain strong despite conflicts.
However, Marriott's first quarter performance and outlook added some fuel to the fire on concerns that a slowing US economy was beginning to spill over to the hotel industry.
The purveyor of the Ritz-Carlton and J.W. Marriott brands cut its closely watched RevPAR metric when it reported earnings in early May. It projected full-year RevPAR growth of 1.5% to 3.5%, compared to the 2% to 4% it forecast previously.
Read more: Here's how much Marriott points are actually worth (and what you can do with them)
In the first quarter, global RevPAR rose 4% year over year, cooling from the 5% growth it clocked in Q4. RevPAR in the US and Canada rose over 3%, versus over 4% in the fourth quarter.
Marriott reiterated its full-year earnings per share (EPS) outlook of $9.82 to $10.19.
Over the past 30 days, Yahoo Finance data shows sell-side analysts have largely maintained their full-year EPS projection on Marriott at $10.08.
Marriott shares are down about 7% in the past month as economic concerns build. Hilton (HLT) and Hyatt (H) are down 3% and 4%, respectively.
"Economic indicators such as unemployment, business confidence and consumer confidence all reflect a stable outlook," lodging industry research firm STR wrote in a new note. "Slowing TSA screenings are a concern; however this may be a function of travelers shifting to car travel and slowing outbound international travel due to the falling U.S. dollar."
STR expects a slower summer season for the hotel industry, citing weakening booking trends already for July and August. The firm blames fewer blockbuster events compared to last year, such as the Olympics, Taylor Swift's Eras Tour, and the EURO 2024.
But the economy and Trump administration policies look to be a headwind too.
"The falling U.S. dollar may slow the flood of Americans traveling overseas and U.S. immigration policies could possibly deter some foreign-born U.S. citizens, representing around 16% of the U.S. population, from traveling abroad," STR researchers wrote.
Read more from Yahoo Finance's coverage of the Cannes Lions International Festival of Creativity
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Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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