Marriott Lifts Outlook Despite Middle East Headwinds

Marriott International ((MAR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Marriott International’s latest earnings call struck a broadly upbeat tone, with management underscoring strong first-quarter outperformance, rising fees and earnings, and a record development pipeline. At the same time, executives were candid about sizable headwinds from the Middle East conflict and pockets of regional softness, even as they raised full-year guidance and reaffirmed aggressive capital return plans.

Global RevPAR Growth and Raised Guidance

Global revenue per available room rose 4.2% in the first quarter, beating prior expectations and giving management confidence to lift full-year RevPAR guidance to a 2%–3% increase. The company cited ongoing strength in the U.S. and Canada as well as Greater China as key drivers, signalling that core demand fundamentals remain intact despite geopolitical noise.

U.S. & Canada Strength Across Chain Scales

In the U.S. and Canada, RevPAR climbed 4.0% as demand broadened across the portfolio, led by nearly 7% growth in luxury and a 3.5% rise in select-service hotels. The rebound in select service from a decline in the prior quarter suggests that both leisure and business travelers are returning, adding resilience across price points.

International and APAC Recovery

International markets delivered a 4.6% RevPAR increase, with Asia-Pacific standing out at more than 7% growth driven by higher room rates and stronger Chinese outbound demand. Greater China RevPAR rose nearly 6%, while Hong Kong and Hainan posted around 20% year-on-year gains, highlighting a powerful post-reopening recovery.

Strong Fee and Earnings Performance

Total gross fee revenue jumped 12% year on year to $1.43 billion in the quarter, underscoring the leverage in Marriott’s asset-light model. Adjusted EBITDA increased 15% to $1.4 billion and adjusted diluted EPS rose 17% to $2.72, reflecting both revenue growth and disciplined cost control.

Robust Development and Pipeline

Development momentum remained strong with record first-quarter global signings up 9% from a year ago and trailing 12-month net rooms growth of 4.5%. The global pipeline expanded more than 5% to roughly 618,000 rooms, with 43% already under construction, providing a visible runway for future fee growth.

Conversions Driving Growth

Hotel conversions continued to play a crucial role, accounting for more than 35% of new signings and over 40% of openings in the quarter. Management expects conversions to support net rooms growth of 4.5%–5.0% this year, helping Marriott add scale without the long lead times of ground-up development.

Credit Card & Residential Fee Momentum

Co-branded credit card fees surged about 37% in the quarter and are projected to rise around 35% for the full year, reflecting deeper engagement with loyalty members. Residential branding fees grew more than 70% and guidance was lifted to a 45%–50% increase, underscoring the earnings potential of Marriott’s extended brand ecosystem.

Large Loyalty Base and Direct Booking Focus

The Marriott Bonvoy loyalty program reached nearly 283 million members, giving the company a powerful direct demand engine. Management emphasized continued rollout of 37 co-branded cards across 13 countries and ongoing tech and AI investments aimed at driving direct bookings and more personalized guest experiences.

Technology Transformation and AI Initiatives

Marriott migrated its 1,000th property onto a new technology platform, a milestone in its multi-year systems overhaul. By the end of the second quarter, the company plans a phased launch of natural language search on its website and app, alongside AI pilots in customer engagement and sales tools to improve conversion and productivity.

Upgraded Financial Targets and Capital Return

Buoyed by first-quarter strength, Marriott raised full-year guidance for gross fees to $5.93–$5.99 billion, implying 9%–10% growth, and lifted adjusted EBITDA to $5.88–$5.97 billion. Adjusted EPS is now expected to rise 14%–16% to $11.38–$11.63, with management targeting more than $4.4 billion in shareholder returns in 2026 through dividends and buybacks.

Significant Middle East Impact

The conflict in the Middle East weighed heavily on results, with March RevPAR in the region down more than 30% and further deterioration anticipated in the second quarter. Marriott expects roughly a 50% RevPAR decline in the Middle East for Q2 and estimates the conflict could trim about 100–125 basis points from full-year global RevPAR.

EMEA and Middle East RevPAR Weakness

While overall EMEA RevPAR rose more than 3% in the quarter, the company flagged sustained weakness in Middle Eastern markets and a reduced regional outlook. The sharp March decline of over 30% in Middle East RevPAR is expected to remain a drag through year-end, offsetting otherwise solid performance in Europe and Africa.

Near-Term APAC Softness Linked to Airlift Disruption

Despite strong first-quarter results, Marriott trimmed short-term expectations for Asia-Pacific because of disrupted air capacity, particularly via Middle Eastern carriers. Markets such as India and the Maldives are experiencing softer long-haul demand, tempering the region’s near-term growth trajectory even as domestic and regional travel stays robust.

Regional Headwinds in CALA (Mexico)

In the Caribbean and Latin America region, RevPAR increased 2% overall, but Mexican luxury resorts underperformed and weighed on the outlook. Management slightly reduced full-year expectations for CALA, citing softer demand and increased competition at high-end Mexican resorts as key pressure points.

IMF Sensitivity and Expected Mid-Year Weakness

Incentive management fees rose 9% to $222 million in the quarter, but the company expects them to be roughly flat for the full year. Strong early performance will likely be offset by declining IMFs in the Middle East over the remaining three quarters, with second-quarter IMFs guided down by the mid-single digits.

Owned, Leased & Other Volatility and Portfolio Transactions

Owned, leased and other revenue, net, increased 21% in the quarter, but management signaled more volatility ahead. Full-year expectations of $215–$225 million incorporate the impact of major renovations, including in Barcelona and Frankfurt, as well as the planned sale of a long-held U.S. property.

Q2 Modest RevPAR Guidance and Near-Term Uncertainty

For the second quarter, Marriott is guiding to more modest global RevPAR growth of 1.5%–2.5%, a step down from first-quarter momentum. Executives emphasized that conflict-related effects and short booking windows, especially for transient business travel, are creating a fluid and uncertain near-term demand environment.

Pending Credit Card Renegotiations and Timing Risk

Negotiations with major card partners remain in progress, and management expects new agreements to take effect later in 2026. Because current guidance excludes potential benefits from these deals, the ultimate timing and economics introduce some uncertainty around the magnitude and cadence of future fee upside.

Forward-Looking Guidance and Outlook

Looking ahead, Marriott now anticipates full-year global RevPAR growth of 2%–3% and net rooms growth of 4.5%–5%, supported by a pipeline of roughly 618,000 rooms with nearly half under construction. The company expects adjusted EBITDA of $5.88–$5.97 billion, adjusted EPS of $11.38–$11.63, modest G&A growth, significant tech and contract investment, and more than $4.4 billion returned to shareholders, while acknowledging that a 1-point RevPAR swing can move fee revenue by roughly $55–$65 million.

Marriott’s earnings call painted a picture of a company balancing strong structural growth drivers against real geopolitical and regional risks. RevPAR gains, fee expansion, and a deep pipeline support a constructive medium-term view, but investors will be watching how Middle East disruptions, airlift constraints, and credit card negotiations unfold as the year progresses.