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Marriott Profit Forecast Lowered for 2024 Amid Weak U.S., China Tourism Demand

Marriott lowers its 2024 profit forecast due to weak U.S. and China tourism demand, impacting revenue projections. Read more on Marriott profit forecast and financial outlook.

Marriott International (MAR) recently announced a lowered 2024 profit forecast, citing weakened domestic travel demand in both the U.S. and China. This revised Marriott profit forecast has led to a 4.1% drop in shares during pre-market trading as investors react to the news. The decision reflects the challenging economic conditions in two of Marriott’s key markets, which have not fully recovered to pre-pandemic tourism levels.

Marriott Profit Forecast for 2024 Revised Due to Weak Tourism Demand

The hotel operator now expects its full-year adjusted profit to range between $9.19 and $9.27 per share, a decrease from the earlier forecast of $9.23 to $9.40. This updated Marriott profit forecast comes as domestic tourism remains sluggish in both the U.S. and China, two major regions that contribute significantly to Marriott’s global revenue.

Revenue per available room (RevPAR), a primary metric for the hospitality industry, dropped by 8.4% in Greater China. This decline in RevPAR highlights the ongoing challenges Marriott faces in the region, where domestic travel demand has not yet returned to pre-pandemic levels. While there are signs of recovery in other parts of the world, China’s economy has shown slower-than-expected growth, affecting consumer confidence and, consequently, travel expenditure.

U.S. and China Tourism Demand Impacts Marriott Profit Forecast

Domestic tourism demand in the U.S. and China remains weak, significantly affecting Marriott's revenue and profit expectations. In both markets, domestic travelers are either choosing alternative travel options or postponing plans, impacting hotel operators like Marriott. This trend has raised concerns about the possibility of extended softness in these regions if economic pressures continue, making it difficult for hotel chains to project strong growth in the near term.

The Marriott profit forecast revision is also reflected in the company’s recent earnings report. Adjusted profit per share for the third quarter ending Sept. 30 rose to $2.26, up from $2.11 per share a year prior. However, this increase did not fully offset the effects of softening tourism demand in these key regions. Marriott’s leadership highlighted the importance of a steady recovery but acknowledged that lingering economic uncertainties could continue to weigh on demand.

Strategic Adjustments Needed Amid Profit Forecast Downgrade

Marriott’s lowered profit forecast raises questions about its revenue strategy for 2024. As demand in critical markets like China and the U.S. remains unpredictable, Marriott may need to consider strategic adjustments in pricing, marketing, and operations to maintain growth in a shifting landscape. The company has already shown interest in exploring more budget-friendly options and digital enhancements to capture the domestic traveler segment better, especially in regions where high-end travel demand has softened.

To address the challenges of weak U.S. and China tourism demand, Marriott has focused on expanding its mid-range and luxury offerings, aiming to attract a broader customer base. Additionally, the adjustments in the Marriott profit forecast may prompt further diversification strategies to broaden Marriott’s appeal across various traveler demographics. Targeting different market segments could help Marriott balance its revenue streams and reduce the impact of localized market slowdowns.

Marriott’s Financial Outlook and Long-Term Strategy

Looking ahead, Marriott’s adaptability to the fluctuating demand in the tourism industry will be critical. The company's recent efforts to expand in emerging markets and diversify its offerings demonstrate an awareness of the need for resilience. Marriott has also started investing in eco-friendly initiatives and smart technology integration to appeal to environmentally conscious travelers—a trend that’s growing among younger demographics worldwide.

The global hospitality sector is recovering unevenly, and Marriott’s response to these conditions, including maintaining profitability under a revised profit forecast, will be closely observed by investors and analysts alike. Analysts suggest that if Marriott can successfully navigate these challenges, it could solidify its position in the hospitality industry and regain investor confidence in its long-term growth potential.

The recent Marriott profit forecast adjustment underscores the challenges faced by hotel operators in a recovering yet inconsistent travel environment. As Marriott explores new strategies, its ability to meet these challenges will play a key role in its overall performance for 2024 and beyond.