• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Not the highest quality quarter but guidance was better.

MAR remains our favorite hotel company for the long-term.  The stock has had a nice ride and could take a breather, but numbers look like they are going higher.  Absent macro deterioration – MAR more defensive but clearly not immune – the stock should continue to work over the intermediate and long term.

MAR’s Q1 results were slightly below our projections numbers but in-line with the street.  A low tax rate contributed almost $0.02 to the Q.  Here’s where the miss vs. our numbers came from: 

  • Base mgmt and franchise fees were $13MM lower (~5%)
    • Lower managed room growth – only 0.3% YoY vs. our estimate of 1.6% (3.4k less rooms were added to the system than we modeled)
    • Base fees were also negatively impacted by a $3MM reversal of fees from 2 contract revisions
  • Incentive fees were $8MM higher, up 18%
    • 29% of managed hotels paid incentive fees vs. 25% last year
  • Owned leased/other profits were in-line but revenues were lower – so basically it was in-line since top line doesn’t really matter for this line item.  We don’t know what the breakout was yet between fees vs. owned/leased
  • G&A was $3MM lower
  • The tax rate was 3.7% lower than guided rate and contributing almost $0.02 in EPS
  • Net interest expense was $7MM higher than we modeled but equity earnings loss was $4MM lower as well

Other stuff:

  • WW RevPAR was 6.8% - above the 5-6% guidance range
  • MAR bought back $150MM of stock or 4.2MM shares in the Q – we modeled $200MM
  • Provided YoY comparison on Autograph hotels for RevPAR
  • There were a lot more hotel “exits” this quarter than prior quarters – hence, lower net rooms growth 

Guidance:

  • Increased WW RevPAR guidance to 6-8% from 5-7%
  • Increased FY fee guidance by $15MM or 1%
  • Increased owned, leased corporate housing and other, net result by $5-10MM
  • Raised EPS guidance 5-6 cents
  • Upped capex guidance by $50MM
  • Increased EBITDA guidance by $10-25MM