Key facts
- Q3 EPS forecast
- $2.74-$2.82 vs analysts' $2.87
- Q2 revenue
- $7.07 billion vs expected $7.2 billion
- Q2 adjusted EPS
- $3.19 vs analysts' $3.09
- 2026 RevPAR growth forecast
- 3%-3.5% (raised from 2%-3%)
- Middle East RevPAR decline
- 43%
- US/Canada room revenue growth
- 5% in Q2
Background
Marriott International, the Bethesda, Maryland-based hotel operator, reported its second-quarter results on Monday, revealing a mixed performance. While revenue for the quarter ended June 30 came in at $7.07 billion, below expectations of $7.2 billion, adjusted profit of $3.19 per share beat analysts' estimate of $3.09.
The company's outlook for the year has been shaped by the prolonged U.S.-Israeli war on Iran, which has reduced airline operations in the Middle East and curbed travel demand across the region. This has led to a significant drop in hotel room revenue in the Middle East, offsetting gains in other regions.
Current situation
Marriott forecast third-quarter profit below Wall Street expectations, with adjusted earnings per share expected in the range of $2.74 to $2.82, compared with analysts' estimates of $2.87, according to data compiled by LSEG. The news sent shares 7% lower in early trading.
CEO Anthony Capuano said revenue per available room (RevPAR) in Europe, Middle East and Africa (EMEA) fell over 5% as an increase in Europe was outweighed by a 43% decline in the Middle East. Finance chief Jen Mason expects the conflict to continue to affect business in the region, although to a lesser extent than previously expected.
Despite these headwinds, Marriott raised its 2026 RevPAR growth forecast to between 3% and 3.5%, compared with its prior forecast of a 2% to 3% increase. The company also expects growth in net rooms for the year at the low end of its 4.5% to 5% forecast, citing construction delays in the Middle East.
| Metric | Value | Expectation |
|---|---|---|
| Revenue | $7.07 billion | $7.2 billion |
| Adjusted EPS | $3.19 | $3.09 |
| Q3 EPS forecast | $2.74-$2.82 | $2.87 |
| 2026 RevPAR growth | 3%-3.5% | Prior 2%-3% |
Impacts
The Middle East conflict has directly impacted Marriott's performance in the region, with a 43% decline in room revenue. This has been partially offset by strong demand in the US and Canada, where room revenue rose 5% in the second quarter, boosted by both luxury and budget brands. The FIFA World Cup and peak summer travel season have contributed to this resilience.
Marriott's luxury segments, including brands such as Ritz-Carlton and Sheraton, saw room revenue up 9.1%, as affluent travelers shrugged off economic uncertainties. However, the company also hinted at headwinds from Japanese co-branded credit cards due to a decline in the yen, which could affect future revenue.
The company's shares have broadly outpaced peer Hilton and the S&P 500 benchmark over the past six months, indicating investor confidence despite the current challenges. Peers Hilton and Hyatt also raised their 2026 room revenue forecasts last week, while flagging a hit from the Middle East.
Future outlook
Scenario analysis: The possibilities below are not certain predictions.
If the Middle East conflict continues to ease, Marriott's finance chief expects the impact on business to be less severe than previously anticipated. This could allow the company to meet or exceed its revised RevPAR growth forecast of 3% to 3.5% for 2026.
However, if the conflict escalates or construction delays persist, the company may face further challenges in achieving its net rooms growth target, which is already expected to be at the low end of its 4.5% to 5% forecast. The decline in the yen could also continue to weigh on revenue from Japanese co-branded credit cards.
The resilience of US travel demand, supported by events like the FIFA World Cup, may help offset some of these risks. If global travel demand remains strong, Marriott could see continued growth in its luxury segments, which have proven less sensitive to economic uncertainties.
Source: hospitalityireland.com
