Marriot Posts Wider-Than-Expected 2Q Loss, Sees ‘Gradual Recovery’

Marriot International recorded a wider-than-expected 2Q loss of $0.64 per share, compared with analysts’ expectations of a loss of $0.42 per share. Its revenues of $1.46 billion also fell short of the Street estimates of $1.68 billion, due to hotel closures and a plunge in room bookings amid the coronavirus pandemic crisis. Marriot shares are up about 2% in Monday’s midday US trading.

Marriot’s (MAR) 2Q loss of $0.64 per share compared with adjusted earnings of $1.56 year-on-year. Revenues declined 72% from the year-ago period. The company also suffered a global decline of 84.4% in revenue per available room (RevPAR), which is a key performance indicator for the hotel industry.

Marriot said that it has now reopened 91% of its worldwide hotels, compared with 74% in April. Further, the occupancy levels reached 60% as of early May, compared with 70% a year ago. The hotel operator said it is witnessing a gradual recovery in occupancy rates across all regions, especially in Greater China. “While the full recovery from COVID-19 will clearly take time, the current trends we are seeing reinforce our view that when people feel safe traveling, demand returns quickly,” Marriot CEO Arne Sorenson said.

Following the results, Deutsche Bank analyst Carlo Santarelli said that while the company provided data points on RevPAR, he anticipates that “investor focus remains primarily on management’s commentary surrounding franchisee health and what the trajectory of unit growth might look like over the next few years.” He maintained a Hold rating on the stock and a price target of $88 (6.4% downside potential). (See MAR stock analysis on TipRanks)

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 7 Holds, 3 Buys, and 1 Sell. After shares plunged 38% this year, the average price target of $97.3 now implies upside potential of about 3.4%.