MAR 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.

OVERALL

  • WORSE - Quarter was in-line but low quality and guidance was effectively reduced 

MAR 2Q REPORT CARD - mar222

CHINA GROWTH 

  • SLIGHTLY WORSE:  Supply growth continues to slow but MAR is not too concerned
    • As expected, MAR saw a slow down in supply growth in China similar to what they discussed on their last call. However, the slow down must have been more than what they expected since delays in China were a leading driver to lowering room openings by 5,000 in 2012. The government suggested slowdown in construction has caused some projects that were under construction to get temporarily put on hold until the governments gives their blessing for growth to resume. 

BOOKING PACE FOR 2012

  • IN LINE:  Group bookings pace for remainder of 2012 is 10% just a touch below the 11% pace at the end of March 
    • Booking pace remained strong for the balance of 2012 and 2013 booking pace is up 8% thus far.

MIDDLE EAST REVPAR

  • SAME: As expected, ME RevPAR improved from the 6% decline seen in 1Q12
    • MAR expects the ME to perform 'reasonably well' for the balance of the year as occupancies improved compared to last year’s interim spring results. However, travel wholesalers still aren’t jumping back into the market and therefore continued volatility in this market is expected

NEW ROOM OPENINGS 

  • WORSE:  They are now expecting 5k less room openings and 9k rooms leaving the system.  They continue to have slippage in opening dates for some new hotels in Asia, Middle East and Mexico. 

INCENTIVE FEE GROWTH

  • SAME:  Maintained 20% for FY 2012

EUROPEAN OUTLOOK

  • SAME:  Weak European economies will continue to be a headwind. European REVPAR outlook hasn't changed from previous guidance
    • Benefit of the Olympics and the Eurocup will be somewhat counteracted by weaker macro. Expect 3Q to be a little above 3% and 4Q to be a little worse 

LEASED HOTELS STRENGTH

  • BETTER:  Very strong performance at leased hotels in Tokyo and London partly contributed to outperformance and raised guidance in the owned, leased and other revenue segment

D.C. MARKET WEAKNESS

  • BETTER:  Expect DC to improve in 2H 2012 and 2013, due to strong group bookings 
    • Group revenue bookings in DC for the Marriott brand are up 10% for 2H12 and 16% for 2013. 2013 should be a good year overall in this market