2024 was a year of solid rooms growth for Marriott International, which President and CEO Anthony Capuano credits to the long-term strategic licensing agreements the company signed with MGM Resorts International and with Sonder Holdings over the summer. Capuano estimated that the MGM agreement added 38,000 rooms to Marriott’s booking platform while Sonder added approximately 9,000 rooms.
As noted in January, Marriott opened a record 123,000 gross rooms over the year with net rooms growth of 6.8 percent. The company had more than 577,000 rooms in its development pipeline at year-end, having signed a record of more than 1,200 deals with owners, franchisees and developers—an average of more than three deals a day—representing nearly 162,000 rooms globally.
Rooms Growth
Net rooms grew 6.8 percent from year-end 2023, as the company added roughly 109,000 net rooms globally during 2024, including more than 45,000 net rooms in international markets. At the end of the year, Marriott’s global system totaled over 9,300 properties, with roughly 1,706,000 rooms.
At the end of the year, the company’s worldwide development pipeline totaled 3,766 properties with over 577,000 rooms, including 175 properties with roughly 29,000 rooms approved for development, but not yet subject to signed contracts. “We are seeing an uptick in construction starts,” Capuano said during the call—“not back to pre-pandemic levels, to be sure, but that's encouraging.” The company, he added, had the “leading share” of new-build construction starts for the year, which he credited to banks preferring deals associated with established brands and an established company.
The year-end pipeline included 1,381 properties with more than 229,000 rooms under construction, including hotels that are in the process of converting to Marriott’s system. Fifty-five percent of rooms in the year-end pipeline are in international markets.
CFO Leeny Oberg said that conversions added to Marriott’s system in 2024 had been in the pipeline for 14 months on average, and nearly 20 percent of those conversions opened so quickly that they were not in any quarter-end pipeline number.
Fourth Quarter 2024 Results
In the fourth quarter, Marriott’s worldwide revenue per available room increased 5 percent (a 5 percent increase using actual dollars) compared to the 2023 fourth quarter. RevPAR in the U.S. & Canada increased 4.1 percent (a 4 percent increase using actual dollars) while RevPAR in international markets increased 7.2 percent (a 7.1 percent increase using actual dollars).
Marriott’s reported operating income totaled $752 million in the quarter, compared to 2023 fourth quarter reported operating income of $718 million. Reported net income totaled $455 million in the quarter, compared to Q3 2023 reported net income of $848 million.
Adjusted operating income in the 2024 fourth quarter totaled $1.07 billion, compared to 2023 fourth quarter adjusted operating income of $992 million. Fourth quarter 2024 adjusted net income totaled $686 million, compared to 2023 fourth quarter adjusted net income of $1.05 billion. (Adjusted results excluded cost reimbursement revenue, reimbursed expenses, restructuring and merger-related charges and gain on asset dispositions.)
Adjusted earnings before interest, taxes, depreciation, and amortization totaled $1.29 billion in the 2024 fourth quarter, a 7 percent increase compared to fourth quarter 2023 adjusted EBITDA of $1.2 billion.
Key Money
While Marriott has “lots of financial tools” in its proverbial toolbox for deals that its leadership thinks will provide “outsized volumes of fees here in the U.S. and Canada,” Capuano said the competitive landscape has shifted towards key money being the “tool of preference.” Key money is an upfront payment from a hotel operator or franchisor to a hotel owner to secure a management or franchise agreement, and Oberg said this is primarily used for investments in new growth.
“We are seeing a bit more key money required across more tiers, meaning [that] occasionally we're seeing it used in lower chain scales, which is a bit of a new development given our rapidly growing scale,” Capuano told investors during the call. While the company reported “slightly less” key money used per deal, when comparing 2019 to 2024, the “absolute volume” of dollars grows as the system grows dramatically, he added. “But key money investment per deal is down compared to where we were back [before the] pandemic.”
Still, Oberg acknowledged that “there continues to be a good premium for the deals that involve key money compared to deals that don't involve key money.”
Continuing the metaphor of tools in a toolbox, Oberg said that owners and franchisees use these various tools in a “variety” of ways. “Sometimes it's a fee ramp. Sometimes [it’s] how we participate in a renovation, etc. But I think, overall … we continue to see the contracts coming in with very, very strong returns on invested capital.”
Fees and Revenue
Base management and franchise fees totaled $1.13 billion in the 2024 fourth quarter, a 10 percent increase compared to base management and franchise fees of $1.03 billion in the year-ago quarter. The increase is primarily attributable to increases in revenue per available room increases and unit growth, as well as higher residential and co-branded credit card fees.
Incentive management fees totaled $206 million in the 2024 fourth quarter, compared to $218 million in the 2023 fourth quarter, with growth in APEC offset by declines in the U.S., Canada and Greater China.
Owned, leased and other revenue, net of direct expenses, totaled $100 million in the 2024 fourth quarter, compared to $151 million in the 2023 fourth quarter. The decrease was primarily driven by a $63 million termination fee related to a development project in the year-ago quarter.
General, administrative and other expenses for the 2024 fourth quarter totaled $289 million, compared to $330 million in the year-ago quarter. The year-over-year decline largely reflects lower administrative, bad debt and litigation expenses.
Interest expense, net, totaled $170 million in the quarter, compared to $144 million in the same quarter a year ago. The increase was largely due to higher interest expense associated with higher debt balances.
In the quarter, the provision for income taxes totaled a $143 million expense compared to a $267 million benefit in the 2023 fourth quarter. The unfavorable year-over-year change is primarily due to 2023 fourth quarter international intellectual property transactions resulting in $228 million of benefits and a $223 million release of a tax valuation allowance in the year-ago quarter.
Looking Ahead
Marriott expects net rooms growth of four to five percent, with 30 to 40 percent of that growth coming from conversions, Oberg said.
While Capuano did not rule out further brand acquisitions in 2025 and beyond, he said that “the vast, vast majority” of Marriott’s room growth, going forward, would be organic.