Marriott International (MAR) reported second-quarter revenue below Wall Street's estimates on Monday amid headwinds related to the Middle East conflict, while the hotel giant provided a downbeat earnings outlook for the ongoing three-month period.
The company's revenue came in at $7.07 billion for the quarter ended June, up from $6.74 billion a year earlier, but below the FactSet-polled consensus of $7.19 billion. Adjusted earnings rose to $3.19 per share from $2.65, topping the Street's view for $3.08.
The stock fell 6.4% in Monday trade, reducing its year-to-date gain to 12%.
Global revenue per available room, or RevPAR, increased 3.4% in the quarter, amid "continued (average daily rate) strength," Chief Executive Anthony Capuano said in a statement. RevPAR in the US and Canada rose 5%, buoyed by broad-based increases across hotel tiers and customer segments, Capuano said.
In international markets, the metric slumped 0.5% as a 43% plunge in the Middle East due to the Iran war offset "solid" growth across other regions, Capuano said. The Middle East was still a "bit better than prior expectations on better-than-expected domestic demand," Capuano said during an earnings call, according to a FactSet transcript.
The US and Iran resumed hostilities last month, just weeks after signing a memorandum of understanding to end the conflict that began at the end of February.
In a client note emailed Monday, Truist Securities estimated Marriott's exposure to the Middle East at roughly 4%, the highest of the US-based hotel C corporations. Last week, rival Hilton Worldwide (HLT) reported better-than-expected quarterly results, with its system-wide comparable RevPAR gaining 3.9%. RevPAR in the Middle East dropped around 36%.
For the current quarter, Marriott anticipates adjusted EPS to be in a range of $2.74 to $2.82, while the Street is looking for $2.86. Worldwide RevPAR is projected to grow 3.5% to 4%.
Revenue in the third quarter is expected to be helped by the FIFA World Cup, although the US-Iran war is likely to continue to have an impact on the Europe, Middle East and Africa region, Chief Financial Officer Jen Mason said on the call. "In the fourth quarter, the Middle East faces difficult comparisons from the fourth quarter of 2025, where several large events drove meaningful ADR increases," according to Mason.
For the 2026 full year, the company now expects adjusted EPS to come in between $11.64 and $11.81, up from its previous guidance of $11.38 to $11.63. The Street is looking for non-GAAP EPS of $11.62. Global RevPAR is pegged to grow by 3% to 3.5%, compared with the prior outlook for a 2% to 3% increase.
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