Hotel rooms cost more this fall. More of them are full, too. That's the whole Marriott (MAR) story in two lines. On Monday, Nov. 2, the company said revenue per available room rose 6.5% in the third quarter. Then it raised its outlook for the year. The stock closed up 4.26%.
The Journal has the details on B3. Marriott earned $794 million, or $3.04 a share. A year earlier it was $728 million, or $2.67. Adjusted earnings were $3.02 a share. Analysts had expected $2.84. Revenue rose 8% to $7.01 billion, above the $6.93 billion analysts expected. The company pointed to broad demand in the U.S. and Canada. Travel in the Middle East is improving, too.
Revenue per room, in plain words
Revenue per available room, or RevPAR, is the hotel industry's key number. Take all the money a hotel makes from rooms. Divide it by every room it has, full or empty. When it rises, the hotel is charging more, filling more rooms, or both. Marriott said it was both. RevPAR rose 7.4% in the U.S. and Canada. It rose 4.4% in international markets, led by Asia-Pacific.
CEO Anthony Capuano said the Middle East conflict still weighs on results. But trends improved from the second quarter. So Marriott raised its full-year outlook. It now expects RevPAR growth of 4.5% to 5%, up from 3% to 3.5%. It expects adjusted earnings of $12.07 to $12.14 a share, up from $11.64 to $11.81. For the current quarter it sees $3.14 to $3.21 a share. Analysts had $3.01.
Our read
Cash Flow · M5. When a hotel chain raises its outlook because rates are higher, that's your travel budget it's talking about. A 6.5% rise in revenue per room is partly fuller hotels. It's also partly a higher price on the same room. For a family that travels twice a year, that could mean a few hundred dollars more for the same trips. Marriott isn't held in any of our model books. We're reading this as a price signal, not a stock call.
Here's the check for your plan. Open the travel line in your budget, or make one if you don't have it. Take what you spent on hotels in the past year and add 6.5% as a cushion. Some of Marriott's rise was fuller hotels, not higher rates, so you're budgeting on the safe side. If that number doesn't fit, the fix is booking earlier or going fewer nights, not skipping the trip. For retirees, travel is often the biggest line that isn't a bill. It deserves its own number, set in advance, and it belongs on the list we go over at your next review. You set the budget before the trip, the way you grab the umbrella before the clouds open.