Marriott Issues Guidance That Doesn’t Account for Coronavirus

(Bloomberg) -- Marriott International Inc. issued profit guidance for 2020 that was in line with estimates, though the company didn’t account for any potential impact from the coronavirus.

• Marriott provided a first-quarter and full-year outlook that excluded the coronavirus. The company said the outbreak could cost it roughly $25 million in fee revenue per month, assuming that it sees low occupancy in its Asia-Pacific hotels but no meaningful impact outside the region. The shares slipped in late trading.

Key Insights

• Adjusted earnings per share will be in the range of $6.30 to $6.53 for the fiscal year, Marriott said, while analysts expected $6.46. Marriott’s earnings per share in the quarter amounted to $1.57, beating the estimate of $1.46. The company has relied on revenue from newly opened hotels to offset slowing industry growth.
• Hotel companies have warned investors that it’s difficult to estimate the virus’s impact on business, but early reports are discouraging. Hyatt Hotels Corp. said revenue per available room at its China hotels plummeted this month. Wyndham Hotels & Resorts Inc. said on Feb. 13 that 70% of its China hotels were closed, and that occupancy was way down at properties that remained open.
• Marriott has waived cancellation fees for reservations through March 15 at its hotels in mainland China, Hong Kong, Macau and Taiwan. It also waived cancellation fees for travel from those places to Marriott hotels in other destinations.

Market Reaction

• Marriott’s shares declined 16% this week through Wednesday, as investors worried that the virus’s spread outside of mainland China will chill demand for travel. The S&P 500 fell 6.6% over the same period.

Get More

• To read Marriott’s earnings statement, click here.
• The company will hold a conference call on Thursday at 10 a.m. New York time.

To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net

To contact the editors responsible for this story: Craig Giammona at cgiammona@bloomberg.net, Christine Maurus

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