Marriott forecasts quarterly profit below estimates as Middle East revenue slumps

By Anshuman Tripathy

Aug 3 (Reuters) - Marriott International ‌forecast third-quarter profit ​below ​Wall Street expectations on Monday as softer demand in the Middle East hurt hotel room revenue, sending shares 7% lower in early trading.

The ‌travel industry's outlook remains clouded for the year as the prolonged ⁠U.S.-Israeli war on Iran threatens consumer spending. Reduced airline operations in the Middle East have curbed travel ‌demand across the region.

CEO Anthony ‌Capuano said RevPAR — a key lodging metric that tracks average daily rate and occupancy — in Europe, Middle East and Africa (EMEA) fell over 5% as an increase ​in Europe was outweighed by a 43% decline in the Middle East.

Finance chief Jen Mason expects the conflict to continue to affect business in the region, ⁠although to a lesser extent than previously expected.

Marriott expects adjusted earnings per share for the current quarter to be ​in the range of $2.74 to $2.82, below analysts' estimates of $2.87, according to data compiled by LSEG.

The Courtyard-parent expects growth in net rooms ​for the year at the low end of ‌its 4.5% to 5% forecast, citing construction delays in the Middle East.

Marriott also hinted at headwinds from Japanese co-branded credit cards due ⁠to a decline in the yen.

U.S. DEMAND STAYS RESILIENT

Travel demand in the U.S. has bucked global trends, capitalizing on the FIFA World Cup and peak summer travel season.

Marriott's room revenue ⁠from the U.S. and Canada rose 5% in the second quarter, boosted by both luxury and ​budget brands.

The Bethesda, Maryland-based Marriott expects 2026 revenue per available room (RevPAR) to grow between 3% and 3.5%, compared with its prior forecast of a 2% to 3% increase.

Room revenue in Marriott's luxury ‌segments, including at brands such as Ritz-Carlton and Sheraton, was up 9.1%, as affluent travelers shrugged off economic uncertainties.

Last week, ‌peers Hilton and Hyatt also raised 2026 room revenue forecasts, while flagging a hit from ⁠the Middle East.

Revenue for the quarter ‌ended June 30 was $7.07 billion, ​below expectations of $7.2 billion. Second-quarter adjusted profit was $3.19 per share, above analysts' estimate of $3.09 apiece.

(Reporting by Anshuman Tripathy in Bengaluru; Editing by ‌Sahal Muhammed)

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