By Aishwarya Jain
(Reuters) -Hotel operator Marriott International raised its full-year 2025 profit forecast and beat third-quarter estimates on Tuesday as resilient demand for luxury accommodation countered soft sales in its budget and select-service hotels.
Shares of the company rose 2% in morning trading.
In the past year, Marriott has flagged hits from a fall in the nights booked by U.S. government agencies as President Donald Trump’s funding cuts triggered staff layoffs and tighter travel budgets.
Weaker performance at select-service hotels was largely driven by reduced government spending, Marriott said.
Sales in Marriott’s upscale segments, which include brands such as Ritz-Carlton and St. Regis, cater to economically resilient customers, cushioned the impact of slowing demand in its budget and select-service offerings. Room revenue in its U.S. and Canada luxury business rose 3.5% in the reported quarter.
“Higher-end chain scales are expected to continue to outperform lower-end chain scales as we look ahead to next year,” CFO Leeny Oberg said in an earnings call.
Demand for budget and mid-scale lodgings in the United States has also taken a hit as cost-conscious households pull back on travel spending, worried that a shifting tariff policy, coupled with inflation, would push up goods prices.
Room revenue from government spending fell 14% globally during the quarter, Oberg said.
Rival Hilton said last month it was “somewhat” impacted by the U.S. government shutdown, which has stretched into its sixth week amid a deadlock in Washington.
Marriott now expects 2025 adjusted profit per share of $9.98 to $10.06, the midpoint of which is higher than its earlier forecast of $9.85 to $10.08 apiece.
The Bethesda, Maryland-based company reported third-quarter adjusted profit per share of $2.47, compared with Wall Street estimates of $2.39 per share, according to data compiled by LSEG.
In the long run, this print should be taken well, with adjusted core profit growing ahead of Hilton’s despite a soft room revenue environment, Bernstein analyst Richard Clarke said.
Total revenue came in at $6.49 billion, higher than the expectation of $6.46 billion.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Pooja Desai)
