Despite strong first-quarter results, Marriott International has lowered its full-year 2025 guidance amid growing concerns about a slowdown in economic activity in the United States and Canada. The world’s largest hotel chain is adjusting its guidance as the hospitality industry enters a period of greater uncertainty, particularly in North America.
Macroeconomic Landscape and Estimate Revision
“We operate in a cyclical industry, and it’s clear that we are currently in a period of heightened macroeconomic uncertainty,” Marriott Chairman and CEO Tony Capuano said on a conference call to present its first-quarter results. Concerns are centered primarily on the slowdown in economic activity and lower consumer confidence in the U.S.
In this context, Marriott has lowered its estimate for annual revenue per available room (RevPAR) growth for the U.S. and Canada by 50 basis points. Specifically, the new forecast for total RevPAR growth in constant currency in 2025 is now 1.5% to 3.5%, compared to 2% to 4% announced in late 2024.
Leeny Oberg, Marriott’s executive vice president and chief financial officer, clarified that the new forecast does not incorporate a recession scenario, but is based on current booking trends. However, given that 75% of room nights come from guests with a short booking horizon (on average three weeks in advance), demand can change quickly.
Factors weighing on expectations
The revision is primarily due to:
- Continued reduction in demand from the US government
- Gradual slowdown in demand for select-service hotels in the US, due to lower demand from individual travelers
- Marginal decline in group RevPAR
However, international trends remain resilient. Demand outside North America remains strong, with Marriott maintaining its international RevPAR guidance unchanged. Growth outside the US and Canada is expected to be significantly higher than in North America.
At the customer segment level, expectations have been slightly reduced. Marriott still expects the strongest growth from the group segment, although rates may decline by the end of the year. Business demand is expected to increase marginally, while leisure demand is forecast to be flat to slightly higher.
Strong Q1 Performance
Despite the subdued outlook, Q1 results were encouraging. Global RevPAR increased 4.1%, beating Marriott’s upper-end estimate of 3%-4%. Average daily revenue (ADR) increased 3%, and occupancy increased one percentage point.
In the U.S. and Canada, RevPAR increased more than 3%, with luxury full-service hotels outperforming select-service due to strong demand from both groups and individual guests. Internationally, RevPAR increased nearly 6%, with Asia Pacific leading the way (up 11%). India and Japan posted impressive increases of 16% and 17%, respectively.
In the Caribbean and Latin America, RevPAR increased 7%, while in Europe, the Middle East and Africa it increased 6%, driven by increases in both ADR and occupancy.
Strong Growth Momentum Despite Challenges
Marriott remains optimistic about the long-term outlook for the industry. In the first quarter, it added approximately 12,200 rooms (+4.6% year-over-year), with more than 7,300 of those in international markets. The company’s total network at the end of March was approximately 9,500 hotels with 1,719,000 rooms.
Marriott’s growth portfolio includes 3,808 hotels with more than 587,000 rooms — more than half of which are outside the U.S. Notably, room signings in the first quarter were the highest in any first quarter in the company’s history (+35% year-over-year).
Conversions also played a significant role in the growth, accounting for approximately one-third of the quarter’s new hotel signings and openings.
In addition, the $355 million acquisition of CitizenM will further strengthen Marriott’s lifestyle portfolio with 36 hotels and three under development. Known for its technologically advanced nature and distinctive design, CitizenM will join the AC, Moxy, and Aloft brands.
Management’s message
Despite the short-term challenges, Capuano emphasized Marriott’s long-term commitment to creating value and executing on the company’s proven growth strategy. As he noted, most Marriott owners and partners remain optimistic about the long-term dynamics of travel demand and are not discouraged by temporary turbulence.
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