Marriott Shares Rise on Report of China Hotel Reopenings

Marriott shares are higher as the hotel chain is reopening some China properties that it had shuttered due to the spread of the coronavirus.
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Marriott International (MAR) - Get Report checked into the Nasdaq 100 penthouse on reports the renowned hotel chain is reopening hotels in China despite the spread of the deadly coronavirus.

Shares of the Bethesda, Md., chain were up about 1.7% to $121.69, at the top of the Nasdaq 100 Index, on a day when the broad market was roiled by coronavirus concern.

"We are actually now reopening hotels in China every day," Chief Financial Officer Leeny Oberg said during the company's fourth-quarter earnings call.

A company spokesperson did not have an exact number of hotels being reopened.

In February, Oberg said revenue per available room, or RevPAR, at hotels in Greater China declined almost 90% from the year-earlier period.

RevPAR is calculated by dividing a hotel's total guest-room revenue by the room count and the number of days in the period being measured.

"At the end of last year, we had 375 properties with roughly 122,000 rooms across Greater China, representing 9% of our total global rooms," Oberg said on the call. "Currently 90 of these properties are closed."

Marriott operates properties under several brands including JW Marriott, Ritz-Carlton, Ritz-Carlton Reserve, and W Hotels.

“This will pass, and when it does, the impact to our business will quickly fade,” said Arne Sorenson, CEO of Marriott International, during the call.

On Wednesday, Marriott reported fourth-quarter earnings of $279 million, or 85 cents a share, compared with $317 million, or 92 cents, in the year-earlier quarter. The latest adjusted earnings came to $1.57 a share, beating the call in a FactSet analyst survey for $1.47.

Sales totaled $5.4 billion, up from $5.3 billion a year earlier but short of FactSet's forecast of $5.5 billion. 

"Given the fluid nature of the situation," Sorenson said in the company's earnings release, "we have not reflected the impact from the outbreak in our base-case outlook for this year. 

"For full-year 2020, our base-case outlook assumes comparable systemwide RevPAR on a constant-dollar basis will be flat to up 2%, with RevPAR growth in North America around the middle of that range. We assume net rooms additions of 5% to 5.25% in 2020."

Hotels and airlines have been among the sectors hardest hit by the virus, which originated in China.