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Marriott (MAR) is trading lower after reporting mixed Q2 results this morning. Adjusted EPS increased 20% yr/yr to $3.19, comfortably ahead of expectations, while revenue rose 4.8% to $7.07 bln but fell short. MAR also raised its FY26 outlook to adjusted EPS of $11.64-$11.81 and worldwide RevPAR growth of 3.0-3.5%. However, Q3 adjusted EPS guidance of $2.74-$2.82 fell below expectations, even as MAR expects continued growth across RevPAR, fee revenue, and adjusted EBITDA.

• RevPAR: Worldwide RevPAR increased 3.4%, driven by 3.5% ADR growth as occupancy slipped 10 bps to 71.6%. U.S. and Canada RevPAR rose 5%, its strongest quarterly increase in 13 quarters, reflecting World Cup demand and broad strength across brand tiers and customer segments. Luxury RevPAR led with growth above 9%, while select-service RevPAR increased more than 4%.
• International: International RevPAR declined 0.5% as the Middle East conflict drove a 43% decline in Middle East RevPAR and pushed EMEA down just over 5%. However, Europe increased 4.2% on strong leisure demand, particularly in Mediterranean markets, while APEC grew 5.3%, Greater China rose 3.2%, and Caribbean and Latin America advanced 3.0%.
• Fees and profitability: Gross fee revenue increased 13% to $1.578 bln, primarily driven by a 19% increase in franchise fees to $1.023 bln, reflecting higher co-branded credit-card fees, additional franchised rooms, and higher RevPAR. Incentive management fees rose 6% to $212 mln, while adjusted EBITDA increased 13% to $1.592 bln.
• Development: Net rooms increased 4.5% yr/yr, while the pipeline reached a record 629,000 rooms, including more than 279,000 under construction. Conversions represented 40% of first-half openings. However, FY26 net rooms growth is now expected toward the low end of the prior 4.5-5.0% range.
• Outlook: MAR expects Q3 worldwide RevPAR growth of 3.5-4.0%, with broad demand strength that extended into July expected to continue. Middle East pressure is expected to persist, albeit at a lower level than previously anticipated, while adjusted EBITDA is expected to increase 7-9%.

Briefing.com Analyst Insight

MAR's Q2 results indicate that underlying lodging demand remains healthy, with U.S. and Canada RevPAR posting the region's strongest growth in 13 quarters and strength extending across brand tiers and customer segments. Although the World Cup contributed to domestic strength, demand also remained solid across non-World Cup markets, and MAR expects the broad trends that extended into July to continue. Internationally, RevPAR increased across Europe, APEC, Greater China, and the Caribbean and Latin America. However, the steep decline in the Middle East more than offset that growth and pushed overall international RevPAR slightly lower. Double-digit growth in gross fees and adjusted EBITDA highlights MAR's solid operating performance, while improved economics from its new co-branded card agreements could provide an additional tailwind to fee growth. The Middle East remains the primary risk, with the eventual impact dependent on the duration and extent of travel disruption. Overall, the revenue miss and below-consensus Q3 EPS guidance are likely driving today's weakness amid elevated expectations following the recent run in shares and anticipation of World Cup strength, rather than a meaningful deterioration in underlying travel demand.