Hotel giant Marriott International reported better-than-expected first-quarter earnings early Wednesday, helped by leisure and luxury demand. Booking Holdings soared on an earnings and revenue win reported after Wednesday's close.
Both travel stocks reported after rival Hilton Worldwide slumped Tuesday on mixed results and a weak outlook. That stock had better luck — along with most of the stock market — on Wednesday.
But the results from both travel stocks come as industry executives report little pushback to rising prices, as a cooped-up U.S. population's enthusiasm for vacationing — for now — outweighs concerns about more expensive airfares, hotel rooms and basic goods like food and gas.
Both hotel chains said their ability to more quickly reprice rooms helped nurture the bottom line, as they manage their own rising costs. However, Wall Street remains zeroed in on signs of faltering demand, after a two-year rebound for the travel industry. And the broader stock market sell-off has also weighed on travel names.
Marriott Earnings
Marriott earnings jumped to $1.25 a share, well above expectations for 90 cents per share. Revenue leapt 81% to $4.2 billion, just above estimates for $4.17 billion.
Comparable systemwide constant dollar revenue per available room, or revPAR, surged 96.5%, or 99.1% in the U.S. and Canada. Marriott also reinstated a quarterly dividend of 30 cents a share.
Shares surged 4.7% to 181.24 in the stock market today. The sent the stock past a 179.40 buy point of a cup-with-handle base.
The relative strength line for MAR stock is near a two-year best.
Marriott also runs chains like the Ritz-Carlton and Sheraton. Demand for its luxury hotels, like the Ritz-Carlton and W Hotels, were a "standout" during the quarter, CEO Anthony Capuano on Marriott's earnings call. And abroad, he said, the impact from Russia's invasion of Ukraine — a big cause of the world's current inflation — had been muted.
"We are keeping a close eye on trends in Europe," Capuano said on Marriott's earnings call. "But outside of Russia, the war in Ukraine has not yet impacted demand. Cancellations have been minimal."
Marriott has a 97 Composite Rating out of 99. Its EPS Rating is 80.
Hilton Earnings
Hilton, on Tuesday, said it earned 71 cents per share, above expectations for 66 cents. Revenue shot up 97% to $1.72 billion, but it was below estimates for $1.746 billion.
Hilton said it expected to earn 98 cents to $1.03 per share in the second quarter, slightly below analyst forecasts.
It expects full-year earnings per share of $3.77 to $4.02, also below consensus. Hilton said it expected full-year comparable revenue per available room, or revPAR, to jump 32% to 38% compared 2021 — largely driven by rising prices to book hotel rooms. However, that forecast would still be down 5% to 9% compared to 2019.
Hilton also said it had declared a 15-cent per-share quarterly cash dividend this month. The company resumed share buybacks in March.
CEO Christopher Nassetta, during the company's earnings call on Tuesday, said many consumers had saved cash under lockdown in 2020 and 2021. As fuel costs inflate airfares, more travelers were opting to put in more hours driving instead, he said.
"In fact, there's a very low correlation between what's going on with fuel prices and demand in our business," Nassetta said during the company's call.
Shares on Wednesday reversed early losses and rose 1.6% to 151.39. That was enough to regain support at the stock's 50-day line. Wednesday's early losses sent shares 7.9% below a 156.17 buy point of a cup-with-handle base.
The relative strength line for Hilton stock backed off a high.
Along with its namesake hotels, Hilton oversees the luxury chain Waldorf Astoria and names like DoubleTree and Hampton. HLT stock has an 86 Composite Rating. Its EPS Rating is 74.
Among other hotel operators, Wyndham, whose results topped views last week, lost 1.2%. Hyatt, which reports May 10, fell 3.8%.
Online Travel Sites
Expedia reported largely in-line results for Q1 late Monday, but said leisure travel remains strong. EXPE stock plunged 14% Tuesday, diving through its 200-day line. Shares were down 0.5% Wednesday.
Airbnb beat Q1 views late Tuesday, and forecast a first-ever full-year profit. ABNB stock jumped almost 8% Wednesday.
Results from Booking Holdings late Wednesday showed adjusted earnings of $3.90 per share, vs. views for 85 cents. Revenue climbed to $2.7 billion, above the consensus target of $2.5 billion. BKNG stock rocketed 12% higher in late trade, after closing down 0.1% in regular trade Wednesday.
Mixed Signals For Travel Rebound, Travel Stocks
The hotel chains' earnings arrive as leisure-travel demand in the U.S. leads the travel industry's rebound. But the backdrop for travel stocks has been messy.
Business travel has been slower to recover. Covid-related lockdowns in China have hurt sales in the region. Russia's invasion of Ukraine has made trends in Europe more difficult to measure. Rising rates, ongoing supply-chain disruptions and difficulties attracting construction workers have threatened plans to build new hotels.
Luxury-hotel demand has remained strong, in ski and beach resorts, and locations in Florida and Hawaii. But the industry has faced difficulty attracting staff, particularly among luxury hotels, whose surrounding areas can be too expensive for employees.
Some hotel chains, in the process, have limited the amount of rooms they make available as a result. That, along with demand, has also kept prices elevated. Hotel occupancy levels are still down from pre-pandemic levels.
Marriott, during its call on Wednesday, said it expected wages to keep rising, as the industry tries to fill positions. The hospitality industry has struggled to attract workers, who have been turned of by low pay, few benefits, stressful schedules and the stress of working during a pandemic.
Jefferies analysts, in a note last month, said a recent survey their firm conducted found that "price will begin to matter in domestic leisure travel, which could mitigate full demand recovery." And they found that roughly half of the survey respondents "are reducing their expected travel days due to cost."
Airline executives and other hotel executives say rising prices have had little effect on demand.
A number of factors have caused inflation to swell in recent months, including for travel. Thin staffing has at some hotels prompted their owners or operators to pay more.
Russia's invasion of Ukraine has driven fuel costs higher, a cost that airlines pass through via higher airfares. The war has hiked the price of wheat and corn, with the costs trickling through to consumers' grocery bills.
