US hospitality firm Marriot International Inc has missed hitting the already reduced analysts' estimates for its first-quarter earnings. The figures the company reported on Monday missed estimates by a huge margin, with its report marred with massive declines due to a slump in its business caused by the ongoing coronavirus pandemic.
Following the release of its worse-than-expected first-quarter earnings, Marriot's share prices fell by as much as 6.5 percent. Since the start of the year, the company's shares have dropped by more than 42 percent. The decline correlates with the company's report of a 90 percent slump in the global hotel revenue per available room indicator.
Marriot is still optimistic about its prospects in the coming quarter, stating that the worse may be over. The company's chief executive officer, Arne Sorenson, stated that April may have been the bottom for the company as it is seeing an uptick in its operations, particularly in Asia.
Marriot revealed that bookings in Greater China has improved as the country slowly reopens its economy after months of shelter-in-place orders and lockdowns. Sorenson noted that demand in the industry is slowly crawling back and the trend line is moving towards additional hotel openings.
For its first quarter, Marriot reported a 22.5 percent decline in revenues per available room. Net income for the quarter fell to around $31 million, or 9 cents per share. Overall revenue dropped by 7 percent when compared to the same period last year to $4.68 billion. Total debt during its latest quarter had jumped by around 12 percent to $12.23 billion. Marriot stated that its net liquidity as of May 8 remained at about $4.3 billion.
Encouraged by its improving figures, Marriot stated that it will still be moving forward with plans to add thousands of new hotel rooms over the next two years, with most already under development. According to the company, its worldwide development pipeline for the year includes over 3,000 new hotels that sport about 516,000 new rooms. At the end of its first quarter, more than 230,000 rooms were already under construction.
However, given the current situation, Marriot stated that it will be scaling down its spending for the year. The Maryland-based firm stated that it is cutting its original 2020 spending forecast of between $700 million and $800 million by around 45 percent. Analysts have pointed out that the cutbacks on its investment and spending will likely begin to be visible in 2021 or 2022 as it already has several ongoing projects.
