Marriott International, Inc. has reported fourth quarter and full year 2014 results: fourth quarter 2014 net income totalled $197 million, a 30 percent increase over 2013 net income. Fourth quarter 2014 diluted earnings per share (EPS) totalled $0.68, a 39 percent increase from 2013 diluted EPS. On October 28, 2014, the company forecast fourth quarter diluted EPS of $0.62 to $0.66.
Highlights
- Fourth quarter diluted EPS totaled $0.68, a 39 percent increase over prior year results;
- North American comparable systemwide RevPAR rose 6.7 percent in the fourth quarter and 7.0 percent for the full year;
- On a constant dollar basis, worldwide comparable systemwide RevPAR rose 6.2 percent in the fourth quarter and 6.6 percent for the full year;
- For full year 2014, Marriott repurchased 24.2 million shares of the company’s common stock for $1.5 billion including 7.7 million shares for $544 million in the fourth quarter;
- Comparable company-operated house profit margins increased 150 basis points in North America and 120 basis points worldwide for the full year;
- At year-end, the company’s worldwide development pipeline increased to nearly 240,000 rooms, including approximately 30,000 rooms approved, but not yet subject to signed contracts;
- Over 46,000 rooms were added in 2014 including nearly 9,000 rooms converted from competitor brands and over 10,000 rooms associated with the Protea transaction;
- The company signed a record 100,000 rooms in 2014;
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $384 million in the quarter, a 20 percent increase over fourth quarter 2013 adjusted EBITDA;
- Adjusted for cost reimbursements, the company’s full year 2014 operating income margin increased to 42 percent. Return on invested capital totaled 36 percent in 2014;
- For full year 2015, Marriott expects North American and worldwide comparable systemwide constant dollar RevPAR to increase 5 to 7 percent.
Never been better positioned
Arne M. Sorenson, president and chief executive officer of Marriott International commented:
“Today, we post both record earnings and unit growth and conclude 2014 with the strongest worldwide development pipeline of rooms in our history. Our powerful portfolio of brands has never been better positioned or more in demand by our owners, franchisees and guests. In 2014, we signed agreements for a record-breaking 100,000 rooms, boosting our development pipeline to nearly 240,000 rooms. At year-end, our system reached nearly 715,000 rooms in 79 countries and territories. With the strength of our portfolio, we expect to reach one million rooms open or under development well before the end of 2015, offering a growing number of travel opportunities for our 49 million loyal Rewards members.
RevPAR increased 6%+
“In the fourth quarter, our worldwide systemwide RevPAR increased more than 6 percent. In North America, business and leisure transient demand were strong, which drove limited-service systemwide RevPAR up 8 percent. We expect transient demand to remain strong. In fact, based on signings to date, we expect special corporate room rates across all our managed North American hotels will increase 5 to 6 percent in 2015.
“During the year, our calendar of group meeting business in North America favored the first three quarters of 2014, largely due to the timing of holidays. As expected, this tempered results at our full-service hotels during the fourth quarter, particularly at our largest convention hotels. We are seeing group business restrengthen for 2015. Group revenue bookings for our managed full-service hotels are up almost 5 percent for the full year 2015 and 6 percent in the first quarter alone.
“Our international hotels performed well in the fourth quarter. Strong leisure demand in the Caribbean and Mexico, good weather in Europe, increased travel to Egypt, and improving trends in India and Japan drove systemwide constant dollar RevPAR up nearly 5 percent. However, on an actual dollar basis, our international systemwide RevPAR increased only 0.5 percent. After hedges, the change in exchange rates reduced our income before taxes by $5 million in the fourth quarter and $23 million for the full year. The full year impact included $11 million related to the Venezuela devaluation earlier in 2014.
System size increased 6%
“We remain committed to driving growth, delivering results and returning excess cash to shareholders. In 2014, worldwide systemwide RevPAR increased just under 7 percent and we expanded our system size by 6 percent, net, including the rooms from the Protea transaction. Earnings per share increased by 27 percent and adjusted EBITDA rose 15 percent. In 2015, we expect worldwide systemwide constant dollar RevPAR will increase 5 to 7 percent, and we expect the number of rooms in our existing brands will increase by about 6 percent, net. In addition, we expect to add an additional 10,000 rooms with the closing of the anticipated Delta transaction. Excluding the impact of Delta, diluted EPS could total $3.00 to $3.12 in 2015, an 18 to 23 percent increase over 2014 and adjusted EBITDA could increase 13 to 16 percent. We returned nearly $1.75 billion to shareholders through share repurchase and dividends in 2014 and we expect to return at least as much in 2015. We are looking forward to another great year.”
For the 2014 fourth quarter, RevPAR for worldwide comparable systemwide properties increased 6.2 percent (a 5.3 percent increase using actual dollars). For the full year, RevPAR for worldwide comparable systemwide properties increased 6.6 percent (a 6.3 percent increase using actual dollars).
In North America, comparable systemwide RevPAR increased 6.7 percent in the fourth quarter of 2014, including a 4.2 percent increase in average daily rate. RevPAR for comparable systemwide North American full-service hotels (including Marriott Hotels, The Ritz-Carlton, Renaissance Hotels, Gaylord Hotels and Autograph Collection Hotels) increased 5.2 percent with a 4.4 percent increase in average daily rate. RevPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 8.2 percent in the fourth quarter with a 4.6 percent increase in average daily rate.
International comparable systemwide RevPAR rose 4.6 percent (a 0.5 percent increase using actual dollars) in the fourth quarter. For the full year, international comparable systemwide RevPAR rose 5.1 percent (a 4.0 percent increase using actual dollars).
New properties and pipeline
Marriott added 70 new properties (14,605 rooms) to its worldwide lodging portfolio in the 2014 fourth quarter, including the Atlantis Paradise Island, an Autograph Collection hotel, the Miami Beach EDITION and the Ritz-Carlton, Bali. Twenty-two properties (1,851 rooms) exited the system during the quarter. At year-end, the company’s lodging system encompassed 4,175 properties and timeshare resorts for a total of nearly 715,000 rooms.
The company’s worldwide development pipeline increased to nearly 1,450 properties with nearly 240,000 rooms at year-end, including 180 properties with approximately 30,000 rooms approved for development, but not yet subject to signed contracts. The company’s pipeline at year-end 2014 does not include the approximately 10,000 rooms associated with the expected Delta transaction announced on January 27, 2015.
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