Travel demand rebounded to near pre-pandemic levels this summer, focusing attention on hotels and online bookers reporting this week. Both Marriott International and Hyatt Hotels stocks' relative strength hit new highs ahead of the companies' Thursday reports. Marriott and Hyatt both beat expectations for their quarterly results.
Meanwhile, Truist analyst Naved Khan anticipates strong demand and traffic trends to drive "healthy" results for online travel agent Expedia, reporting Thursday. Airbnb topped expectations in its Tuesday report, but ABNB tumbled on signs of weaker bookings.
But the strength of the U.S. dollar could eat into results, while concerns of recession domestically and abroad could create headwinds for the industry group. And rising Covid cases in Europe, along with another wave of lockdowns in China, could hamper travel.
Marriott Earnings
Q3 Expectations: FactSet analysts expected Marriott earnings to catapult 66% to $1.68 per share with revenue up 33% to $5.28 billion. Some other consensus forecasts were slightly higher.
Results: Marriott earnings jumped 71% to $1.69 per share and revenue grew to $5.31 billion.
The company's revenue per available room (RevPAR) rose 36.3% worldwide compared to last year, and was up nearly 2% from its 2019 levels before the coronavirus pandemic. Occupancy for Marriott's U.S. and Canada operations rose throughout the year to hit 72% in September, just 2% shy of its 2019 levels.
"We expect continued demand growth around the world in the fourth quarter and anticipate that global RevPAR could increase 2% to 4% compared to 2019," CEO Anthony Capuano said in the results.
Marriott raised its full year outlook following the performance. The company expects adjusted EPS between $6.51 and $6.58 for 2022, up from previous estimates of $6.33 to $6.59. And Marriott sees its adjusted EBITDA ranging from $3.77 billion to $3.8 billion.
Marriott has posted improving earnings and revenue for the last six quarters after recovering from major pandemic losses in 2020.
Marriott has repurchased $1.9 billion of its shares so far this year and expects to buy back $2.7 billion by the end of 2022.
On Oct. 19, Marriott announced it's buying the City Express from Mexico-based Hoteles City Express for $100 million. The acquisition is expected to close in the first half of 2023 and marks the 31st brand in Marriott's portfolio. The 152 City Express hotels will make Marriott the largest hotel company in the Caribbean and Latin America, with a total of 486 properties across 37 countries.
Marriott Stock Analysis
Marriott's Relative Strength Rating, which measures a stock's performance against its peers in the S&P 500, was 66 ahead of its earnings report. MAR stock has an 83 Composite Rating, which combines a number of technical indicators into one score that tops at 99. And the hotelier's solid earnings results have earned it a 78 EPS Rating.
MAR stock has climbed since mid-October and is up about 8% over the past month. Shares are down about 3.3% so far this year and struggling to retake support within a six-month consolidation.
MAR stock tumbled more than 4% in trading Thursday following the results. Shares declined 4.4% on Wednesday.
Hyatt Hotels Earnings
Expectations: However, Hyatt Hotels earnings were seen tanking 88% to 26 cents per share while revenue spiked 71% to $1.46 billion.
Results: Hyatt's adjusted earnings sank to 64 cents per share and revenue skyrocketed 81% to $1.54 billion.
Hyatt's total fee revenue beat its pre-pandemic 2019 numbers by 50%. While its system-wide RevPAR rose 2%, driven by a 13.6% average rate increase. For the year, Hyatt expects its net rooms to grow 6.5% as its pipeline expanded to 114,000 rooms.
"Our greater mix of fee-based earnings is driving record results and significant free cash flow," CEO Mark Hoplamazian said in the release. "We continue to see demand accelerating and our outlook remains optimistic based on our latest booking trends."
Hyatt is transitioning to an asset-light, fee-based revenue model, which should sharply increase its free cash flow over time, Evercore ISI analyst Duane Pfennigweth wrote in a late-September research note.
The company has generated positive revenue growth in the last five quarters. Earnings have been slow to rebound, and remain under pressure.
And in early October, Hyatt entered a collaboration agreement with German hospitality business Linder Hotels. The deal adds 30 hotels across seven countries in Europe and expands the Hyatt brand to 15 new markets.
H Stock Analysis
Hyatt stock's Relative Strength Rating hit a new high of 88 ahead of its earnings report. H stock has a Composite Rating of 77and an EPS Rating of 71.
H stock is up nearly 13% in the past three months. It gained 16% in October, retaking its 10-week moving average and scaling up the right side of an eight-month consolidation.
H stock fell 2% by Thursday close after it rose nearly 4% premarket following the results. Hyatt could test a possible buy point of 96.91. Shares sank 2.1% to 91.97 on Wednesday prior to the report.
You can follow Harrison Miller for more news and stock updates on Twitter @IBD_Harrison.
