Marriott International had a rise in third-quarter profit as demand for upscale properties countered softness in its budget and select-service hotels although RevPAR growth in the quarter "was modest, reflecting ongoing global macro economic uncertainty," President and CEO Anthony Capuano said during the earnings call.
Global RevPAR rose 0.5 percent in the third quarter, impacted by calendar shifts and ongoing macroeconomic uncertainty. In the U.S. & Canada, RevPAR declined 0.4 percent due to weaker demand in the lower chain scales, largely reflecting reduced government travel. International RevPAR increased 2.6 percent, led by APEC, which delivered nearly 5 percent growth fueled by strong performance in key markets like Japan, Australia and Vietnam.
"Globally, our luxury hotels continued to outperform, driven by robust demand and strong rate performance, with luxury RevPAR rising 4 percent in the quarter," Capuano said.
“Our diverse portfolio of brands, that range from midscale to luxury, and include traditional, extended stay and unique lodging options like cabins and safari lodges, continues to drive strong owner preference. During the first nine months of the year, we had record year-to-date signings, and our momentum on conversions continued, comprising around one third of our signings and openings. We still expect net rooms growth to approach 5 percent for full year 2025 and be in the mid-single-digit range over the next few years."
Third Quarter 2025 Results
The company added roughly 17,900 net rooms during the quarter, including nearly 13,900 net rooms in international markets. At the end of the quarter, Marriott’s global system totaled over 9,700 properties, with approximately 1,754,000 rooms. "Conversions remain a key driver of our portfolio expansion, reflecting the many revenue and cost related benefits of being part of the Marriott ecosystem, conversions counted for around 30 percent of both signings and openings in the first nine months of the year," Capuano said.
At the end of the quarter, the company’s worldwide development pipeline totaled 3,923 properties with more than 596,000 rooms, including 229 properties with nearly 36,000 rooms approved for development, but not yet subject to signed contracts. The quarter-end pipeline included 1,536 properties with over 250,000 rooms under construction, including hotels that are in the process of converting to our system. Over half of the rooms in the quarter-end pipeline are in international markets. The quarter-end system size and pipeline do not reflect any rooms from our acquisition of the citizenM brand, which we expect to integrate into our system and platforms in the 2025 fourth quarter.
Marriott remain keenly focused on driving growth and on being in more places around the world with the best brands and experiences, Capuano said. "In September, we launched Outdoor Collection by Marriott Bonvoy, which includes Postcard Cabins and Trailborn hotels," he continued. "This new portfolio offers guests unique outdoor focused days with easy access to popular activities like skiing, snowboarding, biking and hiking. We also announced the US debut of Series by Marriott less than three months after the brand's initial launch, with an agreement to convert five select-service hotels in major U.S. cities."
In the 2025 third quarter, worldwide RevPAR increased 0.5 percent (a 1.3 percent increase using actual dollars) compared to the 2024 third quarter. RevPAR in the U.S. & Canada declined 0.4 percent (a 0.4 percent decrease using actual dollars) year-over-year, and RevPAR in international markets increased 2.6 percent (a 5.3 percent increase using actual dollars) year-over-year.
Base management and franchise fees totaled $1,190 million in the 2025 third quarter, a nearly 6 percent increase compared to base management and franchise fees of $1,124 million in the year-ago quarter. The increase was primarily driven by rooms growth and higher co-branded credit card fees.
Incentive management fees totaled $148 million in the 2025 third quarter, compared to $159 million in the 2024 third quarter, primarily reflecting declines in the U.S. & Canada. Managed hotels in international markets contributed roughly three-quarters of the incentive fees earned in the quarter.
Owned, leased, and other revenue, net of direct expenses, totaled $94 million in the 2025 third quarter, compared to $81 million in the 2024 third quarter. The increase was mainly driven by the addition of the Sheraton Grand Chicago to our portfolio of owned hotels in the 2024 fourth quarter.
General, administrative, and other expenses for the 2025 third quarter totaled $234 million, compared to $276 million in the year-ago quarter. The year-over-year change largely reflects a $19 million operating guarantee reserve for a U.S. hotel in the 2024 third quarter, as well as lower compensation costs.
In the 2025 third quarter, restructuring and merger-related recoveries/charges, and other expenses totaled a $40 million benefit compared to a $9 million expense in the year-ago quarter. The year-over-year change was primarily driven by insurance recoveries related to the 2018 Starwood guest reservations database security incident.
Interest expense, net, totaled $194 million in the 2025 third quarter, compared to $168 million in the year-ago quarter. The increase was largely due to higher interest expense associated with higher debt balances.
In the 2025 third quarter, the provision for income taxes totaled $266 million compared to $202 million in the 2024 third quarter.
Marriott’s reported operating income totaled $1,180 million in the 2025 third quarter, compared to 2024 third quarter reported operating income of $944 million. Reported net income totaled $728 million in the 2025 third quarter, a 25 percent increase compared to 2024 third quarter reported net income of $584 million. Reported diluted earnings per share totaled $2.67 in the quarter, compared to reported diluted EPS of $2.07 in the year-ago quarter.
Adjusted operating income in the 2025 third quarter totaled $1,119 million, compared to 2024 third quarter adjusted operating income of $1,017 million. Third quarter 2025 adjusted net income totaled $674 million, compared to 2024 third quarter adjusted net income of $638 million. Adjusted diluted EPS in the 2025 third quarter totaled $2.47, compared to adjusted diluted EPS of $2.26 in the year-ago quarter.
Adjusted results excluded cost reimbursement revenue, reimbursed expenses, and restructuring and merger-related recoveries/charges, and other expenses. See the press release schedules for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.
Adjusted earnings before interest, taxes, depreciation, and amortization totaled $1,349 million in the 2025 third quarter, a 10 percent increase compared to third quarter 2024 adjusted EBITDA of $1,229 million.
The Marriott Bonvoy platform added another 12 million members in the quarter, bringing total global membership to nearly 260 million. Member penetration remained strong at 75 percent in the U.S. & Canada and 68 percent globally.